When Are RREs Subject To Mandatory Reporting Penalties?

Rafael Gonzalez, Esq.

We now know that there will be no retroactive Medicare secondary payer (MSP) civil money penalties (CMP) allowed. Such CMPs will only be levied prospectively, as CMS will not begin the CMP process until after October 2024, a year after the effective date of the October 2023 CMP final rule. If however, CMPs were in effect today, and Responsible Reporting Entities (RRE) were currently subject to CMPs, it would look something like this:

An RRE’s record was randomly selected by CMS for audit. The file chosen shows a TPOC was reached more than a year ago. The RRE should have reported TPOC within 365 days of settlement. However, the RRE reported TPOC 410 days after settlement. Therefore, the TPOC was reported 45 days late (410 - 365 = 45).

?As a result, the potential civil money penalty could be $11,250 (45 days late X $250 per day). However, the $250 rate adjusted for inflation in 2024 is $357 per day. Therefore, if civil money penalties were possible in 2024, fully knowing they are not, the potential civil money penalty in 2024 could be $16,065 (45 days late X $357 per day)

That however is not the end of the exercise. The RRE, after receiving an Informal Notice identifying the noncompliant (untimely) record with a potential CMP amount of $16,065, has 30 days within which to dispute the proposed CMP by providing mitigating evidence that such CMP is unwarranted. If CMS rejects the RRE's request, then CMS will send the RRE a Formal Notice seeking $16,065 in CMPs. The RRE will be able to appeal by seeking a hearing before an Administrative Law Judge.

As CMS begins to come up with a process and explain the procedures for Medicare secondary payer non-group health plans civil money penalties, it is important for Medicare beneficiaries and their lawyers, as well responsible reporting entities (liability, no-fault, and workers compensation payers) and their lawyers to fully understand the details and ramifications of this new program. So, the question now is under what circumstances will CMS go after RREs and levy a civil money penalty for MSP mandatory reporting non-compliance?

5 Examples of When RREs Will Not be Subject to MSP Civil Money Penalty

1.??? A Medicare beneficiary settles her medical malpractice liability litigation on 2/1/2025. The RRE reports the TPOC on 5/15/2025.

Because the RRE reported TPOC within 365 days of the date of settlement, the RRE is compliant and not subject to a penalty with respect to this TPOC.

2.??? A Medicare beneficiary has an auto accident on 2/1/2025 and reports the claim to the carrier on 5/1/2025. The No-Fault RRE assumes ORM from the date of the accident, 2/1/2025. The RRE reports the ORM on 10/15/2025.

Because the RRE reported ORM within 365 days of the date when it assumed ORM, the RRE is compliant and not subject to a penalty with respect to this ORM.

3.??? A Medicare beneficiary’s product liability claim is settled on 2/1/2025, but the settlement amount and funding are not finalized until 12/1/2025. The RRE reports the TPOC date as 2/1/2025 and Funding Delayed Beyond TPOC Date as 12/1/2025, and the record is successfully reported to CMS on 7/1/2026.

Because the RRE reported TPOC within 365 days of the later funding delayed date, the RRE is compliant and not subject to a penalty with respect to this TPOC.

4.??? An individual not yet a Medicare beneficiary has a serious accident at work on 2/1/2025, and the RRE assumed payment responsibility from the date of the accident, 2/1/2025. The individual becomes a Medicare beneficiary effective 5/1/2025. The RRE reports ORM on 4/15/2026.

Because the RRE reported ORM within 365 days of the beneficiary's entitlement date, the RRE is compliant and not subject to a penalty with respect to this ORM.

5.??? A Medicare beneficiary settles his slip and fall liability litigation on 10/1/2023. The RRE reports TPOC on 12/1/2024.

Although the record exceeds 365 days from the date it should have been reported, the Final Rule does not consider retroactive reporting. Therefore, the RRE is not subject to a penalty related to this TPOC. CMS will begin its review period on 10/11/2024; one (1) year after the Final Rule’s effective date.

3 Examples of When RREs Will Be Subject to MSP Civil Money Penalty?

Medicare secondary payer mandatory insurer reporting violations civil money penalties apply to liability, no-fault, and workers compensation payers for untimely reporting of ongoing responsibility for medical (ORM) and total payment obligation to claimant (TPOC). Are you keeping with all of the changes in this area? Are you aware of what will and will not open you up to $250, $500, or $1,000 per day per file late reporting penalty?

1.??? A Medicare beneficiary settles his product liability litigation on 2/1/2025. The RRE reports the TPOC on 4/1/2026.

Because the RRE reported TPOC more than 365 days after date of settlement, the RRE is subject to a CMP for the period between 2/2/2026 – 4/1/2026.

2.??? A Medicare beneficiary has a car accident on 2/1/2025 and reports the incident to her no-fault carrier on 5/1/2025. The RRE reports ORM on 3/15/2026.

Because the RRE reported ORM more than 365 days from the date it should have accepted responsibility (the date of accident), the RRE is subject to a CMP for the period between 2/2/2026 – 3/15/2026.

3.??? A beneficiary has an auto accident on 2/1/2025 and reports the claim to the no-fault carrier on 5/1/2025. The RRE assumes ORM immediately for the alleged injuries from the date of the accident (2/1/2025). A settlement is subsequently reached on 10/15/2025 and the RRE reports ORM termination and TPOC on 5/15/2026.

Because the RRE reported ORM more than 365 days after it learned of the accident, the RRE is subject to a CMP for the period between 5/2/2026 – 5/15/2026. Because the RRE reported TPOC within 365 days of the settlement, the RRE is compliant and not subject to a CMP with respect to TPOC.

Conclusion?

Medicare secondary payer mandatory insurer reporting violations civil money penalties apply to liability, no-fault, and workers compensation payers for untimely reporting of ongoing responsibility for medical (ORM) and total payment obligation to claimant (TPOC). Are you keeping up with all of the changes in this area? Are you aware of what will and will not open you up to $250, $500, or $1,000 per day per file late reporting penalty?

As CMS begins to come up with a process and explain the procedures for Medicare secondary payer non-group health plans civil money penalties, it is important for Medicare beneficiaries and their lawyers, as well responsible reporting entities (liability, no-fault, and workers compensation payers) and their lawyers to fully understand the details and ramifications of this new program.

Imposition of civil money penalties will change the landscape of Medicare secondary payer compliance. These CMS money penalties will transform compliance from an exercise in reporting without any consequences or ramifications into potentially the most expensive, costly, burdening, and consequential compliance program confronting group health plans, as well as liability, no-fault, and workers compensation non-group health plans.

These rules will force RREs to comply with the MSP Act and timely report the date of group health coverage, the date of acceptance of ongoing responsibility for medical, and the date of a settlement, judgment, award, or payment, so that CMS can then figure out whether Medicare is a primary or secondary payer, and if a secondary payer, whether it is owed reimbursement of any conditional payments from the primary payer.

About Rafael Gonzalez

Rafael earned his Bachelor of Science degree from the University of Florida, and his Jurisprudence Doctorate degree from the Florida State University. He has over 35 years experience in the legal and insurance industries. He is currently a partner in Cattie & Gonzalez, PLLC, a national law firm serving clients in all 50 states, focused on Medicare and Medicaid secondary payer law and compliance in auto, bodily injury, liability, mass tort, medical malpractice, nursing home, no-fault, products, workers compensation, and wrongful death claims and litigated cases.

Rafael writes and speaks about workers compensation, social security, medicare, medicaid, marketplace, mandatory insurer reporting, conditional payments resolution, set aside allocations, msa and snt administration, social determinants of health, and diversity, equity, and inclusion throughout the country. He can be reached at 844.546.3500 or at [email protected]. With over 100,000 followers, you may also reach out to him on social media, as he is active on linkedin, twitter, facebook, instagram, and youtube.