CMS Publishes Final Rule on Section 111 Civil Monetary Penalties

On October 11, 2023, the Federal Register published the long-awaited Final Rule regarding Section 111 Civil Monetary Penalties.  This rule has an effective date of December 11, 2023, and an applicability date on or after October 11, 2024.

The Rule’s salient points can be summarized as follows, with key differences between the requirements for group health plans (GHP) and non-group health plans (NGHP).

Method of Penalty Assessment:  CMS will audit a possible 1000 records per calendar year across all RRE submissions (250 beneficiary records per quarter) and will evaluate a proportionate number of GHP and NGHP records.  At the end of each calendar quarter, CMS will randomly select the indicated number of records and analyze each to determine if it is in compliance with reporting requirements.

Grounds for Penalty:  The final rule removes any basis other than timeliness from the penalties considered in the proposed rule.  All references to “contradictory reporting” and “exceeding error tolerance” have been removed; timeliness is the sole basis for CMP per the Final Rule.

What is timeliness?  Timely is defined as reporting to CMS within one year of

  • the date GHP coverage became effective;
  • the date a settlement, judgment, award, or other payment determination was made (or the funding of a settlement, judgment, award, or other payment, if delayed); OR
  • the date when an entity’s ORM (ongoing responsibility for medicals) became effective

Penalties for GHP: 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

Penalties for NGHP:  For any audited record where the NGHP RRE submitted the information more than one year after the date of settlement, judgment/award, or other payment (including the effective date of the assumption of ORM), the penalty will be:

  • $250  as adjusted annually under 45 CFR part 102 for each calendar day of noncompliance where the record was reported on year or more but less than two years after the required reporting date
  • $500 for each calendar day of noncompliance where the record was reported two years or more but less than three years after the required reporting date
  • $1,000 for each calendar day of noncompliance where the record was reported three years or more after the required reporting date

Penalty Calculation Method:  CMS will multiply the number of audited records found to be noncompliant by the number of days that each record was late (in excess of 365 days).  That product will be multiplied by the appropriate penalty amount.

Penalty Cap: Total penalty for any one instance of noncompliance for a given record will be no greater than $365

Inflation: Penalties may be adjusted for inflation.

Penalty exceptions for GHP: Penalties will not be assessed for GHP in the following instances

  • Where noncompliance is associated with a specific reporting policy or procedural change on the part of CMS that has been in effect for less than 6 months following the implementation of the policy change (or for a year, should CMS be unable to provide a minimum of 6 months’ notice prior to implementing change)
  • The entity complies with any reporting thresholds or other reporting exclusions

Penalty exceptions for NGHP: The GHP exceptions are applicable for NGHP with the following addition

  • Where an NGHP fails to report required information as a result of the plan’s inability to obtain the individual’s first or last name, date of birth, gender, Medicare beneficiary number (MBI), SSN, or last five digits of the SSN and the plan has made good faith effort to obtain this info as follows:
  • The plan has communicated the need for the info to the individual and his or her attorney or other representative, if applicable, or both
  • The plan has requested the info from the individual and his/her attorney/other representative at least 3 times (once in writing, including email; at least once more by mail; at least once more by phone or other means)
  • The plan has not received a response or has received a response clearly indicating the individual refuses to provide the needed info
  • The plan has documented its efforts to obtain the info.  This documentation, including written rejection correspondence, must be retained for a minimum of 5 years

Relief:   CMPs imposed in accordance with the final rule are subject to a formal appeals process.  Parties subject to CMPs will receive formal written notice at the time the penalty is proposed and may request a hearing with an ALJ within sixty (60) calendar days of receipt.  An ALJ decision may be appealed to the Departmental Appeals Board (DAB) within 30 days, with DAB decision binding sixty (60) days thereafter absent petition for judicial review.

Given the audit structure, the rule specifies that smaller entities are much less likely to have their records audited.  The rule also confirms that it imposes no new information collection requirements—e.g. reporting, record-keeping or third-party disclosure requirements.  We anticipate that CMS will host webinars and town halls in the future to discuss the new rule and will keep abreast of same.

Disclaimer: Please note, this article is intended to be a high-level summary of the proposed regulation and is not intended to be an exhaustive review of every detail and requirement contained within the text of the proposed regulation. We will be providing updates as the program unrolls from CMS.

Given the timeframes of the rule, RREs have time to ensure that their reporting is compliant.  Let us know if you want to schedule a meeting to discuss how your program can ensure compliance with the formal rule.

Please feel free to reach out to one of our team members:

Travis Smith –

Kimberly Young –

Melanie Schafer –

Rachel Maldonado –

Heather Eversole –

Are Liability and No-Fault MSAs finally here?

CMS recently published a proposed rule regarding liability insurance and the future medicals associated with such cases.  Per the proposed rule:

This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.

This proposed rule will also give “Economically Significant” Priority which, per the Office of Information and Regulatory Affairs means:

These regulatory actions are a subset of those designated by OIRA as significant. A regulatory action is determined to be “economically significant” if OIRA determines that it is likely to have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

What this information means for those who work in the world of liability and compliance is that the government is potentially making way for submission of liability and no-fault MSAs in the upcoming year. However, how this program will be implemented and address several legal and practical issues is unclear. This has been a recurring question when liability and no fault MSAs are discussed as many of these claims are governed by state laws which dictate future medical awards and coverage.

The Gordon and Rees Medicare Group will continue to follow this issue closely and will update you as soon as additional information is available.

Workers’ Compensation Medicare Set-Aside Reference Guide Issued for Spring

Today CMS issued an announcement that they have released Version 3.3 of the Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide (Reference Guide), which can be found here.  Per the new version, the changes included in this version of the guide are as follows:

  • The CDC Life Table link was updated (Section 10.3).
  • Language around surgeries to be covered by seed money in a structured settlement was clarified, and a disclaimer was added to the proposal review reference tools list in Appendix 4, along with the Conduent Strataware® tool (Sections 5.2 and 9.4.4,
  • Appendix 4).
  • Miscellaneous clarifications were added as follows (Sections 9.4.5, 10.2, 16.2, and 19.4):
    • On pricing: include refills when pricing intrathecal pumps.
    • On documentation: clarification was added on Consent to Release signatures.
    • On WCMSA Portal case access: clarification was added on case access for Professional Administrators who are not the original submitter.
  • The Major Medical Centers table was updated for a Missouri entry (Appendix 7).

The most noteworthy changes are those in regards to the seed money in a structured settlement, pricing regarding intrathecal pain pumps, allowance of an electric signature for consent to releases, and access to the portal for non-original submitters.

In regards to the seed money, CMS specifically included in this version that “In a structured WCMSA, an initial deposit is required to cover the first surgery or procedure for each body part, and/or replacement and the first two years of annual payments.” Furthermore, CMS goes on to note that “The seed includes the cost of the first surgery/procedure for each body part, including all costs such as prescription drugs, physician fees, anesthesia fees, and facility fees. If the surgery is preceded by an associated trial, i.e., trial SCS or trial intrathecal (IT) pump, the cost of the trial is also included since it is considered part of the same procedure. If there are no surgeries, the first procedure (if any, such as injections) is included. Series of spinal injections are not included, but series of knee viscosupplementation are included if three are anticipated to be accomplished as a series of three weekly injections.”

This differs from the current standards as in the past the most expensive procedure is what is utilized for the seed money. However, this seems to differ in that if there are procedures for several different body parts, all of those must be included in the seed amount and if said procedures include atrial and/or are administered in a series (i.e. specifically viscosupplementation injections which are traditionally given in a series of three) are to be included in the seed as well. This is interesting as annuities are commonly utilized to reduce the cost of MSAs will be less effective if larger seed amounts are required.

Additionally, CMS has expressly indicated that “Pricing includes necessary pump refills over the claimant’s life expectancy.”

In a change to enable easier submission of Consent to Releases, CMS has announced that they will now accept electronic signatures. As many may recall, the difficulty in getting a hand signature from Claimants with inadequate technology was a struggle, especially during the past year. However, in a loosening of requirements, CMS will now allow for individuals to sign via computer/electronic signature.

Finally, in regards to vendors that have taken over a submission and are not the original submitter of record, CMS has indicated “If there is a change in submitters, CMS requires a written release from services by the original submitter and a new signed Consent to Release form authorizing the new submitter. Both must be provided in order to continue the WCMSA review process. Professional Administrators whose EIN does not match the EIN of the original submitter, contact BCRC to gain access to the case via the WCMSA Portal; otherwise you must submit by mail. Submitter changes will not be accepted after settlement, and does not constitute a reason for a re-review (See Section 16.0 for re-review requirements). CMS will not provide copies of existing documentation to the new submitter. Any documentation must be obtained from the incumbent submitter or insurer.

CMS has previously required a signed withdrawal/release from the previous vendor and new authorization for the new submitter to go forward. However, CMS has interestingly now expressly stated that a change of submitter post settlement is not allowable and will not be a reason for re-review. Additionally, CMS has also indicated that it will not provide any copies of existing documentation to the new submitter. While this has been CMS’s historical practice, CMS has now expressly warned new submitters with this updated language.

The Gordon and Rees Medicare group will continue to follow this issue closely and will update you as soon as additional information is available.