In the latest installment of a blog series on issues related to the Medicare Secondary Payer industry, Rafael Gonzalez, Esq., president, Optum Settlement Solutions, reviews the recent announcement that a Notice of Proposed Rulemaking related to civil money penalties will be published this month.
Ever since the passage of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), mandating that an applicable plan that fails to comply with mandatory insurer reporting requirements may be subject to a $1,000 civil money penalty (CMPs) for each day of noncompliance with respect to each claimant, liability, no-fault, and workers compensation, payers have worried about what specific act or omission would equate or constitute noncompliance which could produce a civil money penalty.
Although the Medicare Secondary Payer statute (MSP) has required proposed specified practices for which such sanctions will and will not be imposed, no such invitation or solicitation have ever been noticed or published by the Department of Health & Human Services/Centers for Medicare & Medicaid Services (HHS/CMS).
As a result, the announcement in December 2018 that HHS/CMS will move forward with a Notice of Proposed Rulemaking (NPRM) on CMPs did not surprise the industry, but it has certainly made payers pay attention to and look deeper into their own mandatory insurer reporting processes and procedures. The recent indication that the NPRM should be published at some point this month means payers may finally learn about the numerous possibilities for potential CMPs throughout the life of the claim, in the administration of the claim, on technical issues affecting the claim, and throughout the reporting process of the claim.
The MSP Act
Pursuant to 42 USC Section 1395y(b)(8), the federal government requires “submission of information by or on behalf of liability insurance (including self-insurance), no fault insurance, and workers’ compensation laws and plans.” This requires an applicable plan to determine whether a claimant is entitled to Medicare and if so entitled, submit information with respect to the claimant to CMS.
The required information is the “identity of the claimant in order to enable CMS to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.” Therefore, this includes claimant’s name, gender, date of birth, Social Security number, or other identifying number, date of accident, description of accident, and resulting injuries, including any such injuries for which the applicable plan has ongoing responsibility for medical care, as well as information pertaining to any settlement, judgment, award, or other payment (regardless of whether there is a determination or admission of liability).
An applicable plan that “fails to comply with these requirements may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant. A civil money penalty under this mandatory insurer reporting requirement law shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim.”
As far as regulations, although the statute indicates that “not later than 60 days after January 10, 2013, HHS/CMS shall publish a notice in the Federal Register soliciting proposals for the specification of practices for which sanctions will and will not be imposed, including not imposing sanctions for good faith efforts to identify a beneficiary,” no such invitation or solicitation for proposal has ever been previously published.
Therefore, HHS/CMS seems to be moving directly to “publishing in the Federal Register proposed specified practices for which such sanctions will and will not be imposed.” Pursuant to the statute, “after considering any public comments received during such period, HHS/CMS shall issue final rules specifying such practices and outlining any such civil money penalties associated with any violation or non-compliance.”
The Strengthening Medicare and Repaying Taxpayers Act
The Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) required CMS to establish criteria and practices to impose CMPs. The SMART Act amended the MSP law by replacing “shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant” with “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.”
The SMART Act also added “not later than 60 days after the date of the enactment of this subparagraph, the Secretary shall publish a notice in the Federal Register soliciting proposals, which will be accepted during a 60-day period, for the specification of practices for which sanctions will and will not be imposed under subparagraph (E), including not imposing sanctions for good faith efforts to identify a beneficiary pursuant to this paragraph under an applicable entity responsible for reporting information. After considering the proposals so submitted, the Secretary, in consultation with the Attorney General, shall publish in the Federal Register, including a 60-day period for comment, proposed specified practices for which such sanctions will and will not be imposed. After considering any public comments received during such period, the Secretary shall issue final rules specifying such practices.”
Notice of Proposed Rulemaking on Civil Money Penalties
As previously published and announced in December 2018 by the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget (OMB), Executive Office of the President (EOP), based on Section 516 of the Medicare Access and CHIP Reauthorization Act of 2015, which amended the Social Security Act by repealing certain duplicative Medicare Secondary Payer reporting requirements, “HHS/CMS anticipates publishing a NPRM that will solicit public comment on proposed criteria and practices for which CMPs would and would not be imposed under the Act, as amended by section 203 of the SMART Act.”
The announcement classified the NPRM as a “significant priority.”
Where previous communications had indicated a proposed publishing date of September 2019, and then October 2019, the latest announcement indicated that the NPRM is expected to be published in December 2019. Thus, if there was any lingering doubt that HHS/CMS was serious about this NPRM on CMPs, this latest announcement certainly seems to signal that they are ready to publish such rules.
Potential failures that could give rise to CMPs
It is anticipated that the NPRM will include safe harbors for Responsible Reporting Entities (RREs), which can evidence good faith efforts to properly and timely report mandatory information. It is also expected that the NPRM will include a range of CMPs associated with a specific act, an omission, a purposeful mistake, a deliberate wrongdoing, a repetitive and wanton disregard for compliance, as well as for accidental acts, errors, omissions, and one-off mistakes.
There are numerous possibilities for potential CMPs throughout the life of the claim, in the administration of the claim, on technical issues affecting the claim, and throughout the reporting process of the claim. Considering our extensive experience with mandatory reporting, which includes reporting millions of claims since the onset of the program, what follows are potential areas in which CMPs may be imposed:
Potential CMPs throughout life of claim:
- Failure to report an otherwise reportable claim
- Failure to report Ongoing Responsibility for Medical (ORM)
- Failure to report termination of ORM
- Failure to report appropriate ICD code(s) related to the claim
- Failure to report Total Payment Obligation to Claimant (TPOC)
Potential CMPs in administration of the claim:
- Failure to register and set up account for each RRE
- Failure to appoint individuals who will be the RRE’s Authorized Representative, Account Manager, and Account Designees
- Failure to identify reporting agent, if one is used
- Failure to indicate how claim files will be submitted
- Failure to communicate which file transmission method will be used
Potential CMPs on technical issues affecting the claim:
- Failure to review file specifications, have correct software to produce Section 111 files, and comply with quarterly submission process
- Failure to confirm information on annual profile report is correct/deactivation of RRE ID
- Failure to monitor file processing status and update passwords every 60 days
Potential CMPs throughout the reporting process of the claim:
- Failure to correct discrepancies discovered in and alerted to in compliance flags
- Failure to correct mistakes discovered in and alerted to in 356 possible error codes dealing with:
- Claim information
- Claimant information
- Injury information
- ORM or TPOC information
- Plan information
- Representative information
This feels like a monumental moment in mandatory insurer reporting and secondary payer compliance. We’ll explore this further at the Medicare Secondary Payer Master Class, Feb. 3-4, 2020, in Jacksonville, Fla.
Editor’s note: This is the fourth of a seven-part blog series. The first post focuses on the accessibility of open debts reports. The second post reviews the calculation of annual recovery thresholds for certain liability insurance, no-fault insurance, and workers’ compensation settlements, judgments, awards, or other payments. The third post reviews the changes in the Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide.
About the author
Rafael Gonzalez, Esq. is president of UnitedHealth Group/Optum’s Workers Compensation and Auto No-Fault Settlement Solutions and based in Tampa, Fla. With 35 years of social insurance experience, he oversees the organization’s mandatory reporting, conditional payments, and set aside allocation process and services. He blogs on liability, no-fault, workers’ compensation, social security, and Medicare/Medicaid issues at www.MedicareInsights.com. He speaks throughout the country on these substantive issues and is engaged in the workers’ compensation, social security, and Medicare/Medicaid legislative process at both the state and federal levels. He is active on social media, including LinkedIn, Twitter, Facebook, Instagram, and YouTube. He can be reached at firstname.lastname@example.org or at 813.967.7598.