Medicare Secondary Payer alert: CMS issues proposed rule on civil money penalties

Ilene MacDonald, Editorial Director | February 18, 2020

The Centers for Medicare & Medicaid Services published a long-awaited proposed rule in the Federal Register on Tuesday that outlines when it may impose civil money penalties when a group health plan or non-group health plan entity fails to comply with Medicare Secondary Payer (MSP) reporting requirements.

Group health plans and non-ground health plan entities must report information to CMS about coverage they provide to individuals enrolled in Medicare so that the agency can accurately identify situations where Medicare is not the primary payer for medical care.

Proposed penalties

The proposed rule indicates that group health plans that do not meet their reporting obligations within one year of the coverage effective date, could face a civil money penalty of $1,000 for each day of noncompliance for each individual whose coverage information should have been reported. A maximum penalty of $365,000 per individual per year would apply. Non-group health plans would face similar penalties for failure to report within one year of the date a settlement or other payment obligation was established.

Penalties could also be imposed if the entities followed reporting requirements but provided information that contradicts reported information in response to MSP recovery efforts. Group health plan entities would be subject to penalties of $1,000 per day of noncompliance per individuals. Non-group health plan entities could face a penalty of up to $1,000 per day of noncompliance for a maximum penalty of $365,000 (365 days) per individual.

CMS also proposes that an error tolerance would not exceed a 20 percent threshold but is asking for feedback on the threshold value for entities that meet the reporting requirements and Medicare identifies data errors. Reported information that exceeds any of the established error tolerance threshold and exceeds those tolerances for any four out of eight consecutive reporting periods would be subject to a civil money penalty with the fourth occurrence above the tolerance submission.

Group health plan entities would face a penalty of $1,000 per day of noncompliance for each individual record for each quarterly reporting period and is standardized to 90 days for a total of $90,000 per individual, according to the proposed rule. Penalties are similar for non-group health plan entities, but on a tiered approach with an initial $250 penalty per day of noncompliance for each individual. It increases each subsequent quarter of noncompliance by $250 per day to a maximum of $1,000 per day (it is standardized to 90 days for a total of up to $90,000 per individual per reporting period). Penalties would be reduced by $250 per day for each subsequent quarter of compliance.

In response to feedback it received after it issued a Notice of Proposed Rulemaking, CMS said it would not impose civil money penalties under the following circumstances:

·         A group health plan entity reports coverage within one year of the coverage effective data

·         A non-group health plan entity reports information within one year of the date of settlement

·         A reporting entity’s submission complies with the reporting error thresholds or if a non-group health plan entity is unable to obtain reporting information from Medicare beneficiaries document good faith efforts to obtain the information.

Comments about the proposed rule must be submitted by 5 p.m. April 20. To submit comments, visit http://www.regulations.gov and follow the “submit a comment instructions.”

Learn more at RISE's Medicare Secondary Payer Conditional Payment Forum, July 23-24, in Alexandria, Va. 

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