Ready, Set, Go! The Clock is On for Medicare Civil Money Penalties!

Rafael Gonzalez, Esq.

On October 11, 2023, CMS published its final rule on Medicare Secondary Payer (MSP) Mandatory Insurer Reporting (MIR) $1,000 Civil Money Penalties (CMP). The final rule became effective on December 11, 2023, 60 days after date of publication in the Federal Register, and applicable as of October 11, 2024, 1 year after its publication in the Federal Register. Therefore, we are now on the CMP clock, with potential civil money penalties to be imposed at least 1 year (365 days) after the later of: (1) the applicability date of the final rule (October 11, 2024); or (2) the coverage effective date or settlement date an RRE is required to report.

What follows are the major five components of the regulations setting forth the details of Medicare Secondary Payer mandatory insurer reporting noncompliance civil money penalties found at 42 CFR 402.1(c)(21) and (c)(22), and 42 CFR 105(b)(2) and (b)(3).

1) Final Rule Eliminates All Penalties Except Untimely Reporting

The only method of noncompliance that would be ripe for a CMP would be untimely reporting. Timeliness is determined by comparing the date a record is submitted and accepted against the date CMS should have received the record. The date CMS should receive a record is determined by the effective date of coverage (GHP) or the date of settlement (NGHP) plus 1 year (365 days). For every day a record is submitted that is past the date that CMS should have received the information, a penalty of up to $1,000 per day for NGHP RREs or $1,000 per day for GHP RREs, will be imposed.

2) Audit Methodology and Tiered Penalties

CMS will audit a total of 1,000 records per calendar year across all RRE submissions, divided evenly among each calendar quarter (250 individual beneficiary records per quarter). At the end of each calendar quarter, CMS will randomly select the indicated number of records and analyze each selected record to determine if it is in compliance with the statutory reporting requirements.

Noncompliance is defined as any time CMS identifies a new beneficiary record that was not reported to CMS timely. Timeliness is defined as reporting to CMS within 1 year of the date GHP coverage became effective, the date a settlement, judgment, award, or other payment determination was made, or the date when an entity’s Ongoing Responsibility for Medicals (ORM) became effective.

For GHP entities, for any selected record that is more than 1 year (365 calendar days) late, a penalty of $1,000 per day (as adjusted) of noncompliance will be imposed.

For NGHP entities, where the RRE submitted the information more than 1 year after the date of settlement, judgment, award, or other payment (including the effective date of the assumption of ongoing payment responsibility for medical care); the daily penalty will be:

- $250, as adjusted annually under 45 CFR part 102, for each calendar day of noncompliance, where the record was reported 1 year or more, but less than 2 years after, the required reporting date;

- $500, as adjusted annually under 45 CFR part 102, for each calendar day of noncompliance, where the record was reported 2 years or more, but less than 3 years after, the required reporting date; or

- $1,000, as adjusted annually under 45 CFR part 102, for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date.

- The total penalty for any one instance of noncompliance by an NGHP RRE for a given record identified by CMS will be no greater than $1,000 per day per file, or $365,000 annually (as adjusted annually under 45 CFR part 102).

3) Informal Dispute Process, Formal Notice, and Right to a Hearing

RREs will be able to avail themselves of the informal notice and dispute process to alert CMS to their “good faith efforts” to report any records that CMS has identified as being out of compliance. The RRE will have 30 calendar days to respond with mitigating information before the issuance of a formal written notice in accordance with 42 CFR 402.7.

If after the informal process, CMS determines that a CMP will be imposed, CMS will provide formal notice to the entity in writing. CMPs will be subject to the formal appeals process as prescribed by 42 CFR 402.19 and set forth under 42 CFR part 1005, including the right to request a hearing with an Administrative Law Judge (ALJ) within 60 calendar days and to the Departmental Appeals Board (DAB) within 30 calendar days. The DAB’s decision becomes binding 60 calendar days following service of the DAB’s decision, absent a petition for judicial review.

4) 5 Year Statute of Limitations Applicable to CMPs

Although CMS has a 3-year statute of limitations to recoup conditional payments, CMS will apply a 5-year statute of limitations on assessing civil money penalties for violation of mandatory reporting requirements pursuant to 28 USC 2464.

5) Civil Money Penalties Safe Harbors

Any untimely reporting that is the result of a technical or system issue outside of the control of the RRE, or that is the result of an error caused by CMS or one of its contractors would not be considered noncompliance for purposes of this CMP final rule. In addition, any untimely reporting by an NGHP that is the result of a failure to acquire all necessary reporting information due to a lack of cooperation by the beneficiary will not lead to a CMP provided that certain standards are met.

In other words, there is no CMP for late reporting or no reporting if an NGHP entity fails to report timely because the NGHP entity was unable to obtain information necessary for reporting from the reportable individual, including an individual’s last name, first name, date of birth, gender, MBI, or SSN (or the last 5 digits of the SSN), and the responsible applicable plan has made and maintained records of its good faith effort to obtain this information. Such records must be maintained for a period of 5 years.

Our Mandatory Insurer Reporting Audits

Cattie & Gonzalez is a national law firm focusing its entire legal practice on Medicare and Medicaid secondary payer compliance. We are lawyers providing legal counsel and legal solutions on secondary payer issues. In addition to conditional payments dispute, appeals, and resolution, and future set aside medically based allocations and legally based opinions, our firm also offers a comprehensive suite of mandatory insurer reporting (MIR) services. Our most popular MIR service is our “MIR Audit,” in which we look at our client’s raw reporting data, its sharing of such data with any outside entity such as a reporting agent, and ultimately the reporting of such data to Medicare and its timeliness and accuracy in order to provide a comprehensive report detailing MIR status, findings, and recommendations on each audited file.

With MIR civil money penalty applicability starting October 11, 2004, and enforcement in October 2025, employers, corporate defendants, insurers, carriers, and third-party administrators in liability, no-fault, and workers compensation claims have begun to wonder whether their current MIR processes and systems are adequate, accurate, timely, and ultimately penalty proof. Our MIR Audits have been proven to be a great mechanism to grade, evaluate, test, and conclude whether your current MIR process and system is in fact compliant or non-compliant, and therefore open to potential liability for civil money penalties.

About Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez. He has over 40 years of experience in the legal and insurance industries. His national practice is focused on secondary payer law and compliance in liability, no-fault, and work comp claims and litigated cases. He is active on all major social media platforms, and regularly blogs, speaks, and podcasts on workers compensation, social security, medicare, and medicaid. To learn more about our firm, our services, and our MIR Audits, please visit us at www.cattielaw.com , email us at [email protected] , or call us at 844.546.3500. In addition, you may follow us on LinkedIn, Twitter, and YouTube.

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