Hamberger & Weiss LLP

$1,000.00 Per Day, Per Claimant - MMSEA Reporting Penalties (Final Rules Expected 2/18/2023)

As Responsible Reporting Entities (RREs), carriers and self-insured employers (SIEs) are responsible to report the existence of any Medicare enrolled claimants to CMS, subject to certain reporting thresholds. CMS ostensibly uses this information to avoid making conditional payments, where a carrier or self-insured employer’s coverage is primary to Medicare. The 2007 Medicare, Medicaid and SCHIP Extension Act (MMSEA) also imposed civil monetary penalties of up to $1,000.00 per day, per claimant, for failure to comply.

The penalties are in addition to any MSP reimbursement obligations, such as conditional payment reimbursement. Carriers and SIEs should consider the cost of these penalties as potential added claim expense, in addition to conditional payment reimbursement, MAP lien reimbursement, and WCMSA funding.

Highlights of the proposed rules include:

Penalties can be imposed if an RRE fails to register and report within one year of the date that a settlement, judgement award or other payment obligation was established. The penalty is up to $1,000.00 for each day of non-compliance for each claimant. The maximum penalty for each claimant is $365,000.00 per year.
If a report is made, but the RRE subsequently provides contradictory information in response to MSP recovery efforts, the RRE is subject to a penalty based on the number of days that the RRE failed to appropriately report updates to the claimant’s records. The penalty is up to $1,000.00 per day of non-compliance, with a maximum of $365,000.00 per claimant.
CMS proposes a 20% error tolerance. If errors exceed the 20% threshold in four of eight consecutive reporting periods, the RRE may be subject to a penalty upon the fourth occurrence. This penalty is tiered, ranging from $250.00 per day, per claimant, for each day of non-compliance to a maximum of $1,000.00 per day. The maximum quarterly penalty is $90,000.00 per claimant.
There is five year statute of limitations for imposition of a penalty, tolled from the date that CMS identified non-compliance.
The proposed rules are prospective, meaning that CMS will impose penalties on a go forward basis following the effective date, rather than retroactively.

CMS will informally communicate with the RRE before imposing a penalty, using the same communication procedures already in place under the MMSEA User Guides. The RRE may respond with mitigating evidence. If a penalty is imposed, the RRE will receive formal written notice from CMS. A dispute process is proposed, involving hearings before a federal Administrative Law Judge, appeals to the Departmental Appeals Board, and petitions for judicial review.

We strongly recommend reviewing Section 111 reporting procedures with those responsible for supplying information to your reporting agent, as well as reviewing your reporting agent’s procedures, to be sure that everyone is in compliance before February 2023.

As industry pioneers in Medicare compliance, we have been preparing MSAs, defending conditional payments and Medicare Advantage Plan liens, and advising on Section 111 reporting for nearly two decades. As our clients prepare for this latest development, we stand ready to train, advise and, if need be, defend MMSEA penalties. Please contact our partner, Nicole Graci, for more information.

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