On October 11, 2023, the Centers for Medicare and Medicaid Services (CMS) published the long-awaited final rule stating how and when the agency will impose penalties when responsible reporting entities (RREs) fail to comply with Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA). The final rule will be applicable on October 11, 2024, and the earliest CMS will impose a civil monetary penalty (CMP) is October 2025. CMS will not impose these penalties retroactively.
The main takeaway from the CMS provisions is it will conduct random audits to identify untimely reports. In the final rule, CMS does not mention penalizing organizations for exceeding error tolerance thresholds or providing contradictory information, contrary to what was initially proposed.
Still, Section 111 compliance is not something to take lightly. CMS will apply a specific CMP amount to each day of noncompliance — which could potentially have a significant financial impact on an organization. We will cover aspects of the final rule that are important to know as a self-insured organization so you can take action now to avoid penalties later.
What Are Section 111 Reporting Requirements for NGHPs?
If you are a self-insured organization that provides workers’ compensation, liability or no-fault coverage, and your company covers the medical expenses of a Medicare beneficiary, you likely fall under the non-group health plan (NGHP) RRE category. As an NGHP RRE, you are required to comply with NGHP-specific Section 111 reporting mandates. CMS provides a user guide to help NGHPs navigate reporting requirements.
The point of Section 111 reporting is to improve the enforcement of the Medicare Secondary Payer provisions of the Social Security Act. These provisions prohibit Medicare from making claims-related payments if a primary plan has already paid for costs or plans to cover expenses. Section 111 reporting helps CMS ensure it pays for covered items and services only after the primary insurer, such as a self-insured organization, has made payments.
Who Must NGHPs Report To?
In general, NGHPs must transmit claims information to CMS electronically through the Benefits Coordination and Recovery Center (BCRC). The BCRC plays a role in managing CMS databases and collecting claims data on behalf of CMS. However, before submitting data, you must first register as an RRE on the Section 111 COB Secure Website.
When Must NGHPs Report?
NGHPs must report claim data for Medicare beneficiaries after either of the following has occurred:
- They have assumed ongoing responsibility for medicals (ORM).
- They have paid the total payment obligation to claimant (TPOC).
You must report claim information quarterly unless there is nothing to report.
What Must NGHPs Report?
As an NGHP, you will need to submit details about the claimant, the services provided and the payments made. This includes the following:
- Claimant’s Medicare ID or social security number, date of birth, and gender
- ICD diagnosis codes
- Your organization’s taxpayer identification number
- Total amounts paid to the claimant and when they were paid
When Would CMS Impose Section 111 Civil Monetary Penalties?
CMS states in the final rule that it will only impose CMPs if it identifies an occasion where a TPOC or ORM has not been reported timely.
Generally, NGHPs have a year to submit a claims record after making a settlement. If the NGHP provides a record a year after the settlement date, and CMS randomly selects the untimely record during an audit, the NGHP could face CMPs.
How Are CMPs Calculated for Section 111 Noncompliance?
CMS considers whether your organization is a group health plan (GHP) RRE or an NGHP RRE. Unlike GHP entities, which face a penalty of $1,000 for each day of noncompliance, NGHPs are penalized under a tiered system and face a cap on the amount of CMPs that can be imposed. Penalties are adjusted annually to account for inflation.
The tiered method is as follows:
- If a record was submitted over a year but under two years of the required reporting date, CMS will impose a penalty of $250 for each day of noncompliance.
- If a record was submitted two years past the reporting deadline but under three years, CMS will impose a penalty of $500 for each day of noncompliance.
- If a record was reported three or more years after the deadline, CMS will impose a penalty of $1,000 for each day of noncompliance.
The current penalty cap for a single occurrence of noncompliance is $365,000 in a year, adjusted annually. Therefore, if there are multiple instances of noncompliance, CMS can impose up to $365,000 per year, or more when adjusted for inflation, for each instance.
How Will CMS Identify Instances of Noncompliance?
Rather than use an automated process to monitor all RRE submissions, as considered in the proposed rule, CMS plans to assess a random sample of 1,000 records annually or 250 randomly selected reports quarterly. The number of GHP and NGHP records audited is proportional to the volume received.
For example, if CMS receives 300,000 NGHP records and 700,000 GHP records in a quarter, 70 percent of the 250 audited records will consist of GHG submissions, and 30 percent will be NGHP submissions.
Are There Exceptions to Section 111 Mandatory Reporting?
CMS finalized a few safe harbors to protect RREs from penalties under certain circumstances. RREs will not be penalized if the following safe harbors apply:
- Untimely reporting resulted from a technical issue outside of the RRE’s control.
- Reports were submitted late due to an error caused by CMS.
- Claimants did not cooperate in providing the required information, leading to untimely reporting.
Additionally, CMS acknowledges that other situations may make it inappropriate to impose a penalty and encourages RREs to file an appeal if they feel a penalty was unwarranted.
Since CMS has more authority over NGHPs than GHPs, it can also consider “good faith efforts” if an NGHP does not submit a claims record in a timely manner. Good faith effort refers to the NGHP’s documented attempts to obtain claimant details, like social security number, without success. NGHPs must attempt to acquire the necessary information three times to be exempt from Section 111 reporting requirements based on good faith effort.
How Can a Self-Insured Organization Mitigate the Risk of CMPs?
Complying with Section 111 can be challenging. It may be difficult to determine whether a claimant is a Medicare beneficiary, for example, or to obtain the necessary information. Keeping up with reporting timelines may also be tricky without a well-defined process.
To stay on schedule with Section 111 reporting and avoid CMPs, follow these tips:
Simplify Timeliness
The key to saving your organization from Section 111 noncompliance is to submit records on time — but that can be easier said than done. Using a tool like MIR Express™ ensures you do not miss quarterly submission deadlines.
MIR Express™ is a cloud-based Section 111 reporting solution designed specifically to meet the needs of NGHP RREs. It automates monthly and quarterly submissions so you can provide timely records with less effort.
Streamline Data Collection
Collecting the required claim details does not have to be a time-consuming process. Consider integrating your claims management system with a reporting solution to populate claims data into your reports and reduce the need for manual data entry.
For example, MIR Express™ fully integrates with most other claims management systems, including APP Tech Cloud Claims, providing a complete, streamlined solution.
Ensure Accuracy
Even though CMS does not explicitly state that it will penalize organizations for submitting incorrect claimant data, accuracy still matters. Errors can lead to reporting delays and impact timeliness.
With MIR Express™, you can rest assured record submissions are accurate. MIR Express™ provides data pre-validation with a 99.9 percent acceptance rate.
Achieve Section 111 Reporting Compliance With MIR Express™
Although MMSEA’s Section 111 can be complex to navigate, simplified reporting is possible with MIR Express™. Our one-of-a-kind solution will help your organization comply with Section 111 reporting requirements with less hassle and more peace of mind. When you combine this tool with Cloud Claims, you can enhance your entire claims management and risk mitigation workflow.
We would love to discuss your organization’s needs and how we can help as your software solutions partner. Contact us today to begin the conversation.