The Centers for Medicare & Medicaid Services (CMS) recently proposed methods to calculate monetary penalties for group and non-group health plans that fail to comply with Medicare Secondary Payer (MSP) reporting requirements. These civil money penalties, or CMPs, will be imposed on group health plans (GHPs) or non‑group health plans (NGHPs) as a strategy to minimize the risk of inaccurate reporting or claims. The professional malpractice defense attorneys at Eccleston & Wolf provide an overview of the penalties put in place by the CMS and what this means for entities that fail to comply with the MSP’s reporting requirements. 

CMS Imposes Penalties on Entities That Do Not Submit Accurate Reporting 

Both GHPs and NGHPs must report information to CMS regarding their coverage for individuals enrolled in Medicare. This allows CMS to have accurate information on instances where Medicare is not the primary payer for medical care for individuals. The penalties outlined by CMS are included in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) as follows:

Failure to Complete Section 111 Reporting

A group health plan (GHP) that does not complete the required Section 111 reporting within one year of the coverage effective date is subject to a CMP of $1,000 for each day of noncompliance for each individual who is included in the plan. The maximum amount this penalty could reach is $365,000 per individual per year. Similarly, if an NGHP does not submit Section 111 reporting within one year of the date a settlement or other payment obligation was created, it would be subject to a CMP of up to $1,000 for each day of noncompliance for each individual whose information was required to have been reported. The maximum penalty of $365,000 per individual per year also applies.

Completing Section 111 Reporting Inaccurately

Entities that have submitted Section 111 reporting but presented information that opposes information submitted in response to MSP recovery efforts would be charged with a penalty based on the number of days the entity submitted inaccurate reporting. The penalties are $1,000 per day of noncompliance per individual for GHPs and up to $1000 per day of noncompliance, for a maximum penalty of $365,000 per individual per year for NGHPs. 

Submitting Reported Data that is Poor Quality

Even if an entity meets its reporting requirements in a timely and accurate manner, data that is of poor quality can lead to hefty CMPs. The CMS has a 20% threshold for error tolerance and entities that exceed the 20% limit are subject to penalties. The penalty for GHP entities that submit reporting that is deemed poor quality and exceeds the 20% threshold is $1,000 per day of noncompliance for each individual record for each quarterly reporting period. This penalty is standardized to 90 days for a total of $90,000 per individual.

NGHP’s are subject to similar penalties, however, these penalties start at a $250 penalty per day of noncompliance for each individual and increase each subsequent quarter of noncompliance by $250 per day to a maximum of $1,000 per day. It is standardized to 90 days, similar to the penalties for GHPs.  For each quarter of compliance afterward, penalties would be reduced by $250 per day.

Consult with the Professional Malpractice Attorneys at Eccleston & Wolf to Learn More

It is important for both GHPs and NGHPs to properly, accurately and timely submit the required MSP reporting in order to avoid steep penalties that can add up quickly. The attorneys at Eccleston and Wolf have skill and experience in dealing with Medicare issues that may arise in a variety of contexts, including personal injury claims, premises liability matters, medical malpractice and healthcare defense, and legal malpractice claims. If you are involved in such a claim or matter, please contact the team of professional attorneys at Eccleston & Wolf here. 

Information in the article was sourced from CMS.gov.