Rule2023-22282
Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 11, 2023
Effective
December 11, 2023
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule will specify how and when CMS must calculate and impose civil money penalties (CMPs) when group health plan (GHP) and non-group health plan (NGHP) responsible reporting entities (RREs) fail to meet their Medicare Secondary Payer (MSP) reporting obligations by failing to register and report as required by MSP reporting requirements. This final rule will also establish CMP amounts and circumstances under which CMPs will and will not be imposed.
Full Text
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<title>Federal Register, Volume 88 Issue 195 (Wednesday, October 11, 2023)</title>
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[Federal Register Volume 88, Number 195 (Wednesday, October 11, 2023)]
[Rules and Regulations]
[Pages 70363-70373]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22282]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 402
45 CFR Part 102
[CMS-6061-F]
RIN 0938-AT86
Medicare Program; Medicare Secondary Payer and Certain Civil
Money Penalties
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will specify how and when CMS must calculate
and impose civil money penalties (CMPs) when group health plan (GHP)
and non-group health plan (NGHP) responsible reporting entities (RREs)
fail to meet their Medicare Secondary Payer (MSP) reporting obligations
by failing to register and report as required by MSP reporting
requirements. This final rule will also establish CMP amounts and
circumstances under which CMPs will and will not be imposed.
DATES:
Effective date: This final rule is effective on December 11, 2023.
Applicability date: The provisions of this rule are applicable on
or after October 11, 2024.
FOR FURTHER INFORMATION CONTACT: Brian Broznowicz, (410) 786-3349.
SUPPLEMENTARY INFORMATION:
I. Background
A. Imposition of Civil Money Penalties (CMPs)--Legislative Overview
In 1981, the Congress added section 1128A to the Social Security
Act (the Act) (section 2105 of Pub. L. 97-35) to authorize the
Secretary of Health and Human Services (the Secretary) to impose civil
money penalties (CMPs) and assessments on certain health care
facilities, health care practitioners, and other suppliers for
noncompliance with rules of the Medicare and Medicaid programs. CMPs
and assessments provide an enforcement tool for agencies to use to
ensure compliance with statutory and regulatory requirements. These
CMPs and assessments may be imposed in addition to potential criminal
or civil penalties.
Since 1981, the Congress has increased both the number and the
types of circumstances under which the Secretary may impose CMPs. Some
CMP authorities address fraud, misrepresentation, or falsification,
while others address noncompliance with programmatic or regulatory
requirements. The Secretary has delegated the authority for certain
provisions to either the Office of Inspector General (OIG) or Centers
for Medicare & Medicaid Services (CMS). (See the October 20, 1994,
notice, titled ``Office of Inspector General; Health Care Financing
Administration; Statement of Organization, Functions, and Delegations
of Authority'' (58 FR 52967).) A summary of these CMP changes is
discussed in this section of this final rule.
B. Medicare Secondary Payer History
In 1980, the Congress added section 1862(b) of the Act, which
defined when Medicare is the secondary payer to certain primary plans.
These provisions are known as the Medicare Secondary Payer (MSP)
provisions of the Act.
Section 1862(b)(2)(A) of the Act prohibits Medicare from making
payment if payment has been made, or can reasonably be expected to be
made by any of the following primary plans:
<bullet> Group Health Plans (GHPs).
<bullet> Workers' compensation plans.
<bullet> Liability insurance (including self-insurance).
<bullet> No-fault insurance.
Medicare may make conditional payments, subject to Medicare payment
rules, in situations where workers' compensation, liability insurance
(including self-insurance), or no-fault insurance has not made payment
or cannot be expected to make payment promptly. Any conditional
payments that Medicare makes are subject to reimbursement from the
primary plan. See section 1862(b)(2)(B) of the Act.
C. Legislative Provisions Regarding Mandatory Reporting Requirements
To enhance enforcement of the MSP provisions, section 111 of the
Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L.
110-173) added paragraphs (7) and (8) to section 1862(b) of the Act.
These paragraphs established new mandatory reporting requirements
regarding Medicare beneficiaries who have coverage under GHP
arrangements, as well as when liability insurance (including self-
insurance), no-fault insurance, or workers' compensation (collectively
referred to as Non-Group Health Plans, or NGHPs) provide settlements,
judgments, awards, or assume other payment responsibility for Medicare
beneficiaries' care. Sections 1862(b)(7)(A) and (b)(8)(F) of the Act
define those parties responsible for this
[[Page 70364]]
reporting (collectively referred to as responsible reporting entities,
or RREs). Under section 1862(b)(7)(A) of the Act, GHPs or third-party
administrators are obligated to report beneficiary coverage; almost
1,000 entities are registered as GHP RREs, with 62 percent estimating
between 1,000 and 100,000 individual beneficiaries to be reported
annually. Under section 1862(b)(8)(F) of the Act, NGHP applicable plans
are obligated to report settlements or when the entity otherwise
assumes payment responsibility, and over 21,000 entities are registered
as NGHP RREs, with the vast majority (88.29 percent) estimating fewer
than 500 individual beneficiaries to report annually at the time of
registration.
RREs are currently required to submit coverage information for
Medicare beneficiaries including, but not limited to, when coverage
begins or ends, or when a judgment, award, settlement, or other payment
is made, on a quarterly basis through an electronic file submission
process that may vary depending upon the number of beneficiary records
being reported or updated. NGHP RREs who submit 500 or less claim
reports per year are eligible to utilize the Coordination of Benefits
Secure website (COBSW) Direct Data Entry (DDE) reporting option to add,
update, or delete claim information. DDE submitters have the same
responsibility and accountability as any other RRE. This coverage
information primarily consists of enough identifying information to
uniquely identify the Medicare beneficiary and confirm their
beneficiary status, as well as information about the nature of the
coverage (such as GHP or NGHP, coverage effective dates, policy limits,
settlement amounts, and so forth). These section 111 of MMSEA reporting
provisions did not alter any other existing statutory provisions or
regulations. Further, these reporting provisions include authority for
CMS to impose CMPs against entities that fail to comply with the
section 111 of MMSEA reporting requirements under section 1862(b)(7) or
(b)(8) of the Act, as amended by the Medicare IVIG Access and
Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART
Act). These provisions also require that GHPs and NGHPs that fail to
comply with these reporting requirements shall be subject to a CMP of
$1,000 and up to $1,000, respectively, for each calendar day of
noncompliance. Imposition of penalties related to noncompliance with
section 111 of MMSEA are required to be promulgated in regulation,
which is the purpose of this rule.
In 2013, Congress enacted the SMART Act, which amended section
1862(b)(8)(E) of the Act, which includes the section 111 of MMSEA
reporting requirements and describes the enforcement provisions for
NGHPs that fail to comply with the reporting requirements.
Specifically, the SMART Act revised section 1862(b)(8)(E) of the Act to
state that NGHP applicable plans that fail to comply with the reporting
requirements may be subject to a civil money penalty of up to $1,000
for each calendar day of reporting noncompliance required of NGHP
applicable plans under section 1862(b)(8)(E) of the Act. The SMART Act
also added section 1862(b)(8)(I) of the Act, which specifically
required rulemaking actions regarding the enforcement of CMP provisions
under section 1862(b)(8)(E) of the Act.
We note that the SMART Act did not amend any CMP provisions for GHP
arrangements that have reporting obligations under section 1862(b)(7)
of the Act. Such GHP arrangements remain subject to mandatory CMPs of
$1,000 per calendar day of noncompliance and per individual for whom
submission of information was required. In addition, the SMART Act
directed rulemaking for NGHP applicable plans regarding the imposition
and non-imposition of CMPs.
We further note that the statutory language speaks to
``individuals,'' though there are situations described that are
specifically applicable to Medicare beneficiaries; we have attempted to
be consistent with the usage of this statutory terminology but use the
term ``beneficiary'' where it is more appropriate.
D. Summary of Public Comments Received on the December 11, 2013,
Advance Notice of Proposed Rulemaking (ANPRM)
As the mandatory insurer reporting requirements themselves are
self-implementing, we were able to gradually implement the reporting
process from 2009 through 2011. The implemented reporting process
included informal communications to RREs regarding their compliance
with reporting requirements, including ``compliance flags'' in response
to records that fail to meet specified criteria and even direct
outreach to RREs. However, the implementation of civil money penalties
for noncompliance requires formal rulemaking. In accordance with the
rulemaking directed by the SMART Act, on December 11, 2013 (78 FR
75304), we published an advance notice of proposed rulemaking (ANPRM)
titled ``Medicare Secondary Payer and Certain Civil Money Penalties.''
The December 2013 ANPRM solicited public comment on specific practices
for which CMPs may or may not be imposed for failure to comply with MSP
reporting requirements for certain GHP and NGHP arrangements.
We received 34 timely pieces of correspondence in response to the
December 2013 ANPRM. In section I.D. of the February 18, 2020, proposed
rule, we provided an analysis of the public comments received by
subject area, with a focus on the most common issues raised, and
briefly discuss how we proposed to address the issues raised by
commenters in response to the 2013 ANPRM. Commenters expressed many of
the same concerns and raised most of the same points that were raised
in response to the proposed rule, published on February 18, 2020. While
the proposed rule addressed these comments, alterations to the rule, as
well as an evolving stakeholder landscape, resulted in many comments to
the proposed rule being resubmitted in substantially similar form and
content. Specifically, many commenters requested clarity around how a
CMP would be calculated, the possibility of a sliding scale or tiered
approach to levying CMPs, establishing a statute of limitations, and
confirming that enforcement of the rule would be prospective only. For
more detailed information on our analysis of the public comments on the
ANPRM, please see the February 18, 2020, proposed rule (85 FR 8795
through 8797).
II. Provisions of the Proposed Rule and the Analysis of and Responses
to Public Comments
In the February 18, 2020, Federal Register (85 FR 8793), we
published the proposed rule titled ``Medicare Secondary Payer and
Certain Civil Money Penalties.'' In drafting the February 2020 proposed
rule, we reviewed the public comments in response to our December 11,
2013, ANPRM (78 FR 75304), and other policy considerations.
Accordingly, we proposed specific criteria for when CMPs would be
imposed and proposed specific criteria for when CMPs would not be
imposed, in circumstances when a GHP or an NGHP entity fails to comply
(either on its own or through a reporting agent) with MSP reporting
requirements specified under section 1862(b)(7) and (b)(8) of the Act.
Further, we proposed to amend the amount of these CMPs, as set forth
under 45 CFR 102.3 (Penalty adjustment and table).
[[Page 70365]]
We received 47 timely pieces of public correspondence on the
February 18, 2020, proposed rule. Commenters included various group
health plans and private insurance companies (non-group health plan
insurers) as well as their representatives, special interest groups,
and other interested individuals. Some comments addressed issues or
expressed concerns that were outside the scope of this rule and were
thus inappropriate to address in this venue. Of the remaining comments,
there were many that expressed concern with various aspects of the
proposed rule including the possible amount of CMPs, the process by
which noncompliance would be discovered, and the proportionality of the
possible penalties when compared to the severity of the noncompliance
as well as the relative size of the entity against which a penalty was
contemplated. In direct response to public comment, as well as
substantial internal data analysis, CMS has revised the final rule to
be responsive to the concerns of those entities that may be impacted by
the rule.
A. CMP Basis and Scope in the Proposed Rule
The existing regulation at 42 CFR 402.1 describes the basis for
imposition of CMPs against parties who violate the provisions of the
Act. We proposed to add regulatory language under Sec. 402.1(c), which
would identify situations in which GHP and NGHP RREs would be subject
to CMPs under sections 1862(b)(7) and (b)(8) of the Act. To accomplish
this regulatory addition, we proposed the following regulatory
revisions in Sec. 402.1:
<bullet> Removing paragraph (c)(20), which currently refers to a
provision that is no longer applicable regarding the imposition of CMPs
for employers that fail to timely, and accurately report an employee's
group health insurance coverage.
<bullet> Redesignating paragraph (c)(21) as paragraph (c)(20).
<bullet> Redesignating paragraphs (c)(22) through (34) as
paragraphs (c)(23) through (35).
<bullet> Adding new paragraphs (c)(21) and (22), which will
incorporate the new text finalized in this rule and all applicable
provisions.
The existing regulation at 42 CFR 402.105(b) establishes the
amounts of penalties assessed against parties who violate the
provisions of the Act. We proposed to amend Sec. 402.105(b) by
revising paragraph (b)(2) and adding a new paragraph (b)(3). The
proposed regulation at Sec. 402.105(b)(2) would codify the amounts of
penalties imposed against GHPs, and the proposed regulation at Sec.
402.105(b)(3) would establish the amounts of penalties imposed against
NGHPs.
In addition, we proposed to revise the regulations at 45 CFR 102.3
to establish the updated amounts for all CMPs at issue in these
regulations.
Comment: Some commenters expressed concerns about the potential
size of the CMPs that would be imposed and recommended developing a
``sliding scale'' or ``tiered'' CMP approach. These suggestions
included scaling the amount of the CMP to be imposed based upon the
intentions of the noncompliant entity, or upon whether an excess
proportion of individual beneficiary records failed to be reported as
required (in essence creating a safe harbor for a certain portion of
records to not be reported as required), and other similar
recommendations to limit the size of the CMP. Some commenters also
noted the statutory discrepancy between the penalty amounts for GHP,
which are $1,000 per day of noncompliance, and NGHP entities, which are
up to $1,000 per day of noncompliance.
Response: We begin by noting that CMS does not have the authority
to alter penalties for GHPs, as penalty amounts are stated in section
1862(b)(7) of the Act. In the proposed rule, we proposed that penalties
for NGHP entities would parallel those for GHP entities. However,
because CMS has the authority to adjust CMPs for NGHP entities, we are
instead finalizing a tiered approach with respect to such entities,
under which we will adjust penalty amounts based on the length of time
that a report has been untimely. The full explanation of this approach
appears in the next section of this document.
While ultimately the responsibility of the RRE, CMS is not
unsympathetic to RREs in regard to those situations where a particular
late submission was the result of a rare situation, system glitch,
defect, or other problem that was unanticipated or out of the immediate
control of the RRE. For this reason, an informal notice process will be
implemented so that any RRE that receives notice that a CMP is pending
against them will have an opportunity to examine their records and
alert CMS to any discrepancies or mistakes that could mitigate or
eliminate the potential penalty. This process is described in full
detail later in this document.
Comment: Some commenters alleged that the amount of CMPs, in
certain circumstances, are too high, excessive, disproportionate to the
harm to the program, or unconstitutional.
Response: The amounts of the GHP CMPs are set by statute, in
accordance with section 1862(b)(7)(B) of the Act, and CMS must enforce
the amount as set by statute. While CMS has discretion to adjust CMPs
for NGHPs under section 1862(b)(8)(E) of the Act, the statute does not
authorize such discretion with respect to GHPs. In the proposed rule,
we proposed that CMPs imposed against NGHPs would be aligned with those
for GHP entities. However pursuant to this final rule, penalties for
NGHP entities will instead be tiered based on the amount of time that a
record has been late, or gone unreported, in accordance with the
language of the statute which provides that penalties for NGHPs are up
to $1,000 per day of noncompliance.
We originally proposed that CMPs may be levied in addition to any
MSP reimbursement obligations identified using the reported
information, but that CMS would not impose duplicative penalties. For
example, failure to timely report the termination of coverage and then
submitting the late termination in a manner that exceeds the error
tolerance threshold for the fourth time in eight consecutive reporting
periods, may meet the criteria for two potential CMPs with the
submission of one record. However, we proposed that CMS would only
impose a CMP once, and for the lesser of the two potential CMPs. This
proposed limitation has been eliminated in the final rule as a result
of being rendered unnecessary by the new audit methodology that will be
employed.
B. CMP Imposition and Amounts in the Proposed Rule
The proposed regulations at Sec. 402.1(c) identified circumstances
where GHP and NGHP entities would be subject to CMPs for violation of
sections 1862(b)(7) and (b)(8) of the Act. Following publication of the
final rule, we intended to enhance monitoring of recovery process
disputes and appeals that contradict reported data, as well as
monitoring the reported data and performance over time to identify
reporting that exceeded error tolerances. The proposed regulations at
Sec. 402.105(b) explained how we would calculate CMP amounts for GHP
and NGHP entities that have reporting obligations under sections
1862(b)(7) and (b)(8) of the Act. Furthermore, proposed Sec. 402.1(c)
identified situations where GHP and NGHP RREs would not be subject to
CMPs for violation of sections 1862(b)(7) and (b)(8) of the Act. The
final rule will limit CMPs to only instances of noncompliance based on
timely reporting, so as to greatly simplify the process by which CMPs
are
[[Page 70366]]
levied. The changes to the final rule are largely in response to
stakeholder concerns raised in response to the ANPRM and proposed rule
that alleged that the proposed process was confusing, punitive, and
failed to serve the intended purpose of encouraging compliance and
fostering collaboration with CMS. More information on this will be in
the following section.
Under section 1862(b)(7) of the Act, a GHP RRE shall be subject to
a CMP of $1,000 as adjusted annually under 45 CFR part 102 (currently
$1,325 as of June 8, 2023; see 87 FR 15101)) for each calendar day of
noncompliance for each individual for which the required information
should have been submitted. Under section 1862(b)(8) of the Act, an
NGHP RRE may be subject to a CMP of up to $1,000 as adjusted annually
under 45 CFR part 102 (currently $1,325 as of June 8, 2023; see 87 FR
15101) for each calendar day of noncompliance with respect to each
claimant. These CMPs would be in addition to any other penalties
prescribed by law, and in addition to any MSP claim under section
1862(b) of the Act with respect to an individual.
1. Imposition of a CMP
In the proposed rule, CMS indicated that a penalty would be imposed
if an RRE fails to report or update any GHP beneficiary record within
the required timeframe (no more than 1 calendar year after GHP coverage
effective date or the Medicare beneficiary's entitlement date,
whichever is later). In the proposed rule, CMS proposed that the
penalty be calculated on a daily basis, based on the actual number of
individual beneficiaries' records that the entity submitted untimely
(that is, beyond the required timeframe after the GHP MSP effective
date). CMS proposed that the penalty be $1,000 (as adjusted annually
under 45 CFR part 102) for each calendar day of noncompliance for each
individual for which the required information should have been
submitted, as counted from the day after the last day of the RRE's
assigned reporting window where the information should have been
submitted through the day that CMS received the information, up to a
maximum penalty of $365,000 (as adjusted annually under 45 CFR part
102) per individual per year.
In the proposed rule, CMS also proposed a penalty if an RRE failed
to report any NGHP beneficiary record within the required timeframe of
no more than 1 year after the date of the settlement, judgment, award,
or other payment (also referred to as the Total Payment Obligation to
Claimant (TPOC)). CMS proposed that the penalty be calculated on a
daily basis, based on the actual number of individual beneficiaries'
records that the entity submitted untimely (that is, in excess of the
required timeframe after the TPOC date). In the proposed rule, CMS
proposed that the penalty be up to $1,000 (as adjusted annually under
45 CFR part 102) for each calendar day of noncompliance for each
individual for which the required information should have been
submitted, as counted from the day after the last day of the RRE's
assigned reporting window where the information should have been
submitted through the day that CMS received the information, up to a
maximum penalty of $365,000 (as adjusted annually under 45 CFR part
102) per individual per year.
In the proposed rule, CMS also proposed that a CMP be assessed if a
GHP's or NGHP's response to CMS recovery efforts contradicted the
entity's section 111 of MMSEA reporting. For example, if an RRE
reported and repeatedly affirmed ongoing primary payment responsibility
for a given beneficiary, then responded to recovery efforts with the
assertion that coverage for that beneficiary actually terminated 2
years prior to the issuance of the recovery demand letter. The penalty
as proposed would have been calculated based on the number of calendar
days that the entity failed to appropriately report updates to
beneficiary records, as required for accurate and timely reporting
under section 111 of MMSEA. In the proposed rule, for a GHP, CMS
proposed that the penalty be $1,000 (as adjusted annually under 45 CFR
part 102) for each calendar day of noncompliance for each individual
for which the required information should have been submitted. For an
NGHP, CMS proposed that the penalty be up to $1,000 (as adjusted
annually under 45 CFR part 102) per calendar day of noncompliance for
each individual, for a maximum annual penalty of $365,000 (as adjusted
annually under 45 CFR part 102) for each individual for which the
required information should have been submitted.
In the proposed rule, CMS also proposed that a penalty be assessed
if a GHP or NGHP entity had reported and exceeded any error
tolerance(s) threshold established by the Secretary in any 4 out of 8
consecutive reporting periods (as defined later in this section). We
proposed that the initial and maximum error tolerance threshold would
be 20 percent (representing errors that prevent 20 percent or more of
the beneficiary records from being processed), with any reduction in
that tolerance to be published for notice and comment in advance of
implementation. We proposed that this tolerance would be applied as an
absolute percentage of the records submitted in a given reporting
cycle.
In this final rule, all other proposed avenues for receiving a CMP
have been eliminated and the only method of noncompliance that would be
ripe for a CMP would be untimely reporting, as fully explained in the
following section.
Comment: Many commenters emphasized that this rule should not be
aimed at those exhibiting ``good faith efforts'' or those who make an
earnest attempt at reporting but may do so occasionally with error but
instead be aimed at those who fail to report at all.
Response: It is not our intent to penalize RREs for honest,
infrequent mistakes, but instead to only resort to penalty when an RRE
fails to report or submits reports in an untimely manner. We
acknowledge that the overwhelming majority of RREs report correctly and
timely a majority of the time and commend those entities for working
with CMS to provide accurate data. It is, therefore, CMS's shared
opinion with commenters that the focus shall not be to punish and
impose consequences but instead to motivate proper reporting and
maintain compliance with existing statute and regulation. To that end,
CMS is adopting an audit approach in this final rule whereby we will
audit a randomized sample of new beneficiary records received each
quarter, rather than undertaking an automated review of all records
submitted, as proposed. By using this random auditing approach, CMS
will be better able to monitor trends in reporting, via manual review
of said records, rather than a mass, computer-based algorithm, which
will allow us to discover areas that appear to be more of a challenge
for RREs without resorting to penalties that may be disproportionate to
the level of noncompliance exhibited or have the effect of penalizing
an entity for an honest mistake or system error. RREs will also be able
to avail themselves of the informal notice and dispute process to alert
CMS to their ``good faith efforts'' to report any records that CMS has
identified as being out of compliance.
Comment: Some commenters raised concerns about the imposition of
CMPs related to the reporting of Ongoing Responsibility for Medicals,
(ORM). Specifically, these commenters cited difficulty with proper and
timely reporting and understanding how to report ORM termination
correctly.
Response: In the proposed rule, CMS proposed imposing penalties for
failing to accurately and timely report ORM
[[Page 70367]]
acceptance or termination. In the final rule, based on stakeholder
concerns and submitted comments, CMS has chosen to focus its definition
of noncompliance solely on those situations where an entity has failed
to provide its initial report of primary payment responsibility in a
timely manner. That means that untimely termination of ORM coverage
records would not be considered eligible for a civil money penalty
under this rule. While not a part of this final rule, we also note that
CMS strives to engage with stakeholders, including RREs, about the
reporting process and continuous process improvement efforts
particularly as they relate to ORM, and will continue to do so in the
future. We invite any RREs with concerns about ORM or any other aspect
of reporting to proactively use the available outreach and education
tools to address their questions.
We also wish to convey that time delays caused by CMS or its
contractors in the reporting process will not trigger penalties related
to timeliness. RREs must adhere to all applicable timelines, but any
delay encountered when following CMS's policies and procedures will not
be held against the RRE (for example, time delays related to processing
by CMS contractors will not trigger any penalty).
Comment: A number of commenters suggested that CMS should develop a
formal appeal process to provide entities with reporting obligations a
formal structure in which to appeal any notice of a pending or imposed
CMP.
Response: We note that CMPs imposed in accordance with this final
rule will be subject to the formal appeals process as prescribed by 42
CFR 402.19 and set forth under 42 CFR part 1005. In broad terms,
parties subject to CMPs will receive formal written notice at the time
penalty is proposed. The recipient will have the right to request a
hearing with an Administrative Law Judge (ALJ) within 60 calendar days
of receipt. Any party may appeal the initial decision of the ALJ to the
Departmental Appeals Board (DAB) within 30 calendar days. The DAB's
decision becomes binding 60 calendar days following service of the
DAB's decision, absent petition for judicial review.
Comment: Some commenters stressed the possibility of delays and
uncertainty regarding their appeals due to backlogs at various stages
of the administrative appeals process, and some suggested that CMS
utilize a different appeals process.
Response: We affirm that CMS is bound by the appeal process as
prescribed in 42 CFR 402.19 and set forth under 42 CFR part 1005.
Comment: Many commenters requested that CMS explain how it will
provide notice to entities regarding pending or imposed CMPs and how
much information will be included.
Response: We intend to communicate with the entity informally
before issuing formal notice regarding a CMP. The informal (that is,
prior to formal enforcement actions) written ``pre-notice'' process
will allow the RRE the opportunity to present mitigating evidence for
CMS review prior to the imposition of a CMP. The RRE will have 30
calendar days to respond with mitigating information before the
issuance of a formal written notice in accordance with 42 CFR 402.7.
Common to all such instances where informal notice will be given is
the intention to give the RRE an opportunity to clarify, mitigate, or
explain any errors that were the result of a technical issue or due to
an error or system issue caused by CMS or its contractors. It would be
impractical and counter to the spirit of the informal notice process to
regulate or enumerate all circumstances in which mitigating information
could be provided or what that information should convey. As such, any
mitigating factors or circumstances are welcomed, and a dialogue is
encouraged in an attempt to find solutions that are short of imposing a
CMP. We believe it is in the best interests of all RREs to leave the
informal notice process open to any reasonable submission of mitigating
factors so that we are free to entertain all such documentation without
strict limits on what is, or is not, acceptable.
Once we determine that a CMP will be imposed (after the informal
notice period) we will provide formal notice to the entity in writing
in accordance with 42 CFR 402.7, which will contain information on the
event that has triggered the proposed imposition of a CMP, the amount
of the proposed CMP, and next steps for the entity, including a right
to a hearing in accordance with 42 CFR 402.19 and part 1005.
Comment: Commenters suggested that CMS should not impose CMPs in
situations where required information has already been reported to
another agency or entity, such as the Department of Labor, or in
situations where multiple entities have obligations to report the same
information to CMS and one entity has already reported.
Response: Sections 1862(b)(7) and (b)(8) of the Act imposed certain
unique requirements on specific entities to report data to CMS for the
purposes of identifying those situations where another party has
primary payment responsibility. These reporting requirements were
imposed under the Act, regardless of whether another agency or entity
requires the same or similar data (and such data must also be reported
to CMS in the manner and form specified by the Secretary). The current
Office of Management and Budget (OMB) control number assigned to this
information collection effort, as required under the Paperwork
Reduction Act, is 0938-1074.
Commenters provided examples of data submitted to other agencies
that they believe are similar, but the data are not used for a
comparable purpose to the data that is reported to CMS. Consequently,
this data is neither in the same format that CMS systems require, nor
is it the complete set of data that CMS needs for the proper
coordination of benefits. Therefore, any attempt to create a data-
sharing agreement that would render reporting to CMS truly duplicative
would require that other agencies update their data collection efforts
to align with CMS, despite the fact that those agencies may have no
need for that data. Not only would that impose additional costs to the
federal government to accommodate a relatively small number of
entities, it would also undermine efforts under this rule to verify the
accuracy or timeliness of the reporting. Therefore, it is impractical
to attempt to promulgate such data sharing agreements and all RREs must
continue to perform reporting as required by the Act.
Comment: Commenters suggested that CMS not impose CMPs when CMS has
been able to coordinate benefits correctly or CMS has otherwise been
able to recover any conditional payments made due to untimely or
inaccurate reporting.
Response: The obligations to report under sections 1862(b)(7) and
(b)(8) of the Act are separate and distinct from any other obligation
with respect to MSP, including reimbursement. Providing accurate
information in response to recovery efforts does not satisfy those
obligations and the fact that we may be able to eventually correctly
coordinate benefits and retain the right to pursue recovery does not
negate the reporting obligations established under sections 1862(b)(7)
and (b)(8) of the Act.
Comment: Most commenters requested a statute of limitations on the
imposition of CMPs.
Response: We agree and will apply the 5-year statute of limitations
as required by 28 U.S.C. 2462. Under 28 U.S.C. 2462, we may only impose
a CMP within 5 years from the date when the noncompliance occurred.
[[Page 70368]]
Comment: Many commenters suggested that the statute of limitations
should be 3 years.
Response: Under 28 U.S.C. 2462, the applicable statute of
limitations is 5 years. Although section 1862(b)(2)(B)(iii) of the Act
establishes a 3-year statute of limitations for certain actions, that
provision applies only to legal actions CMS may utilize for the
recovery of MSP debts. While recovery of conditional payments
(overpayments) and the imposition of CMPs may appear, on their face, to
be similar actions, they are unique and serve separate, distinct
purposes and the statute of limitations applicable to the former does
not also apply to the latter. An explanation and example of how this 5-
year statute of limitations will apply is as follows: For failure to
initially report the date of settlement or effective date of coverage
timely (where applicable), noncompliance occurs on every day of non-
reporting after the required timeframe for reporting has elapsed. For
example, if the date of settlement is January 1, 2025, then the RRE
will have 1 year from that date to report the coverage before being
potentially subject to a CMP (that is, January 1, 2026). If the
settlement date was January 1, 2025, but the RRE did not report it to
CMS until October 15, 2026, the RRE will be considered noncompliant for
the period of January 2, 2026, through October 15, 2026. If CMS does
not act until after October 15, 2031, then the statute of limitations
has elapsed and no CMP may be imposed.
Comment: Many commenters suggested that the rule should be enforced
prospectively only.
Response: We concur and will evaluate compliance based only upon
files submitted by the RRE on or after the effective date of the final
rule. CMPs will only be imposed on instances of noncompliance based on
those settlement dates, coverage effective dates, or other operative
dates that occur after the effective date of this regulation and as
such, there will be no instances of inadvertent or de facto
retroactivity of CMPs. The 1-year period to report the required
information before CMPs would potentially be imposed would begin on the
latter of the rule effective date or the settlement or coverage
effective dates which an RRE is required to report in accordance with
sections 1862(b)(7) and (b)(8) of the Act.
Comment: Commenters suggested that CMS refrain from imposing CMPs
where NGHPs with reporting obligations under section 1862(b)(8) of the
Act make ``good faith efforts'' to obtain required information from
individuals who are unwilling or unable to provide it. Some ``good
faith efforts'' suggested included the following: (1) CMS could accept
documentation signed by the individual stating that he or she is either
not a Medicare beneficiary, or will not provide the NGHP entity with
his or her Social Security Number (SSN) (full SSN or last 5 digits);
and (2) CMS could accept a judicial order establishing that the
individual is not required to provide his or her Medicare Beneficiary
Identifier (MBI) or SSN to the NGHP entity.
Response: We note that concerns about ``good faith efforts'' were
received from the NGHP industry and not the GHP industry during both
rounds of comments, which we believe is reflective of the fundamental
differences between the two industries and the relationships between
those plans and the individuals in question. Our understanding is that
NGHP applicable plans may at times be in an adversarial relationship
with the reportable individual, whereas the reportable individual is
typically the client of a GHP. To this end we understand the concern
regarding privacy law or consumer protection statute violations, as
were mentioned by some commenters.
In response to these comments, we stress that CMPs will not be
imposed against NGHP entities where those entities have made good faith
efforts, as outlined in this final rule, to obtain necessary reporting
information. NGHP entities must document their efforts to obtain this
reporting information and retain this documentation, as we retain the
right to audit such documentation. In response to comments, we are
finalizing a revised version of our proposal regarding how NGHPs may
avoid being subject to CMPs where they have made sufficient efforts to
obtain the necessary information. The revisions we are finalizing
address commenter concerns regarding the type and number of
communication attempts an RRE must perform, as well as documentation of
express refusal by an individual or their attorney or representative to
provide the requested information as a way to satisfy the obligation to
attempt to collect that information.
Comment: Many commenters continued to suggest that CMS should
specify a series of ``safe harbors'' that would preclude the assessment
of a CMP.
Response: In this section, we outline two such safe harbors but
acknowledge that other situations may exist where it is inappropriate
to penalize an entity for noncompliance. We welcome RREs to use the
informal or formal appeal process if there are other situations that
the RRE believes makes it inappropriate to receive a CMP.
First, any untimely reporting that is the result of a technical or
system issue outside of the control of the RRE, or that is the result
of an error caused by CMS or one of its contractors would not be
considered noncompliance for purposes of this rule. See a more thorough
explanation in ``Amount of CMPs''.
Second, any untimely reporting by an NGHP that is the result of a
failure to acquire all necessary reporting information due to a lack of
cooperation by the beneficiary will not lead to a CMP provided that
certain standards are met. This situation is addressed in greater
detail in section III.D. of this final rule and Sec.
402.1(c)(22)(ii)(A) as finalized.
Comment: Commenters suggested that CMS consider suspending the
imposition of CMPs where changes to mandatory reporting procedures
require RREs to make significant revisions to the systems used to
prepare the data for reporting.
Response: We will continue to provide a minimum of 6 months' (180
calendar days) notice prior to any changes in procedure, including
systems alterations or changes to the required data elements,
associated with section 111 of MMSEA required reporting to allow
reporting entities adequate time to react. We will not assess any CMPs
associated with a specific change for a minimum of 2 reporting periods
following the implementation (effective date) of that policy or
procedural change. As provided in Sec. 402.1(c)(21)(ii)(A) and
(c)(22)(ii)(C) as finalized, in the event we are unable to provide a
minimum of 6 months' notice prior to implementing any reporting process
changes (such as the addition of a new required data element), we will
not impose any CMPs associated with that specific reporting process
change for a minimum of 1 year after that change becomes effective.
CMPs associated with any unchanged aspects of reporting may still be
imposed during this time.
2. Overall Response to Comments
We solicited comments on our proposed approaches to imposing and
not imposing CMPs, including our proposed methods of calculating CMP
amounts. Our proposed approach to imposing CMPs was developed with the
intention of giving entities meaningful opportunities to resolve most
reporting issues, without the immediate risk that a CMP would be
imposed. After consideration of the public comments we received, we
have made a number of important revisions in this final rule.
[[Page 70369]]
As described in the proposed rule and earlier in this final rule,
the amount of CMPs for GHPs is established in section 1862(b)(7)(B) of
the Act, and, except for those situations and criteria described in
this final rule, CMS does not have the authority to adjust the amount
of the CMP levied on a GHP entity. In the case of NGHPs, where CMS is
permitted discretion in the amount of the CMP, we are finalizing a
tiered approach based upon the length of time for which a submission
was untimely to better align the penalty to the severity of the
noncompliance. In the case of GHPs, the statutory language at section
1862(b)(7)(B) of the Act does not allow this level of discretion, and
CMS is therefore unable to adjust the amount of GHP-related CMPs.
The submission of information or documentation that serves to
mitigate the noncompliance, or explain a technical error, will be
considered on a case-by-case basis in an effort to prevent the
imposition of a CMP at all.
Based on the comments we received, we have determined that we will
only impose penalties where the initial report was not received in a
timely manner. Penalties will not be imposed on any other basis, such
as in relation to the quality of reporting. Timeliness is determined by
comparing the date a record is submitted and accepted against the date
CMS should have received the record. The date CMS should receive a
record is determined by the effective date of coverage or the date of
settlement (or settlement funding date if the funding of the settlement
is delayed) plus 1 year (365 days). For every day a record is submitted
that is past the date that CMS should have received the information, a
penalty of up to $1,000 per day for NGHP RREs or $1,000 per day, in the
case of GHP RREs, will be imposed.
No CMP will be imposed until at least 1 year (365 days) after the
later of: (1) the applicability date of this final rule; or (2) the
coverage effective date, or settlement date, an RRE is required to
report. This is a minor change from the proposed rule which seeks to
clarify that RREs will have at least 1 year from the rule applicability
date before any CMP is contemplated. The date that information was
submitted by the RRE will determine timeliness. Any delay that is the
result of technical or administrative issues on the part of CMS or its
contractors will not be held against the RRE for purposes of
calculating whether reporting was timely.
In the proposed rule, we proposed that we would not impose a CMP in
the following situations, where all of the applicable conditions are
met:
<bullet> If an RRE reports any GHP beneficiary record that is
reported on a quarterly submission timeframe within the required
timeframe (not to exceed 1 year after the GHP effective date), or any
NGHP beneficiary record that is submitted within the required timeframe
(not to exceed 1 year after the settlement date or ORM effective date).
<bullet> If an RRE complies with any settlement reporting
thresholds or any other reporting exclusions published in CMS's MMSEA
Section 111 User Guides or otherwise established by CMS. Note that
these thresholds are not defined in the regulatory text as they include
operational thresholds that are currently subject to change on an
annual basis per section 1862(b)(9)(B) of the Act as well as other
operational thresholds for reporting that CMS elects to impose, such as
the current $5,000 threshold for Health Reimbursement Arrangements,
which are communicated to RREs through the MMSEA Section 111 User
Guides. Our ability to implement such thresholds and operational
exclusions, whether as statutorily mandated or to be responsive to
stakeholder or litigation needs, is not altered by this regulation.
<bullet> If an NGHP entity fails to report timely because the NGHP
entity was unable to obtain information necessary for reporting from
the reportable individual, including an individual's last name, first
name, date of birth, gender, MBI, or SSN (or the last 5 digits of the
SSN), and the responsible applicable plan has made and maintained
records of its good faith effort to obtain this information by taking
all of the following steps:
++ The NGHP has communicated the need for this information to the
individual and his or her attorney or other representative (if
applicable) and requested the information from the individual and his
or her attorney or other representative at least twice by mail and at
least once by phone or other means of contact such as electronic mail
in the absence of a response to the mailings.
++ The NGHP certifies that it has not received a response, or has
received a response in writing that the individual will not provide his
or her MBI or SSN (or last 5 digits of his or her SSN).
++ The NGHP has documented its efforts to obtain the missing
information, such as the MBI or SSN (or the last 5 digits of the SSN)
and the reason for the failure to collect this information.
The NGHP entity should maintain records of these good faith efforts
(such as dates and types of communications with the individual) in
order to be produced as mitigating evidence should CMS contemplate the
imposition of a CMP. Such records must be maintained for a period of 5
years. The current OMB control number assigned to this information
collection effort, as required under the Paperwork Reduction Act, is
0938-1074.
III. Provisions of the Final Regulations
The final rule incorporates some of the provisions of the proposed
rule and also revises some of the provisions as proposed. Additionally,
the final rule clarifies how the identification of noncompliance will
occur, which was not discussed in the proposed rule. Those provisions
of this final rule that differ from the proposed rule are as follows:
A. Removal of Any Basis Other Than Timeliness as a Reason for Imposing
a CMP
The only basis for the imposition of a CMP will be untimely
reporting of required information. The final rule removes all
references in the proposed rule to ``contradictory reporting'' or
``exceeding error tolerance'' as a reason to impose a CMP.
Specifically, any references to an applicable plan providing
contradictory reporting, and any CMPs imposed as a result, that were
proposed in 42 CFR 402.1(c)(21) and (c)(22), 402.105(b)(2) and (b)(3),
or elsewhere, are removed and are not being finalized. As such, the
following sections of the proposed regulations text have been removed
and are not being finalized:
<bullet> Sections 402.1(c)(21)(ii) and (iii).
<bullet> Sections 402.1 (c)(22)(ii) and (iii).
<bullet> Sections 402.105(b)(2)(ii) and (iii).
<bullet> Sections 402.105(b)(3)(ii) and (iii).
B. Audit Methodology for Analyzing Records
To identify potential instances of noncompliance, rather than
imposing CMPs based upon automated monitoring of all RRE submissions as
contemplated in the proposed rule, we will utilize the following
process to audit a randomized sample of recently added beneficiary
records:
<bullet> CMS has determined that, given the time and resources
necessary to accurately and thoroughly evaluate the accuracy of any
submitted record, it would be possible to audit a total of 1,000
records per calendar year across all RRE submissions, divided evenly
among each calendar quarter (250 individual beneficiary records per
quarter).
<bullet> CMS will evaluate a proportionate number of GHP and NGHP
records
[[Page 70370]]
based on the pro-rata count of recently added records for both types of
coverage over the calendar quarter under evaluation. For example, if
over the calendar quarter being evaluated, CMS received 600,000 GHP
records and 400,000 NGHP records for a total of 1,000,000 recently
added beneficiary records, then 60 percent of the 250 records audited
for that quarter would be GHP records, and 40 percent would be NGHP
records.
<bullet> At the end of each calendar quarter, CMS will randomly
select the indicated number of records and analyze each selected record
to determine if it is in compliance with the reporting requirements as
required by statute and defined herein.
<bullet> Noncompliance is defined as any time CMS identifies a new
beneficiary record that was not reported to CMS timely. Timeliness is
defined as reporting to CMS within 1 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 Ongoing Responsibility for Medicals (ORM) became effective.
Failure to report timely prevents CMS from promptly and accurately
determining the proper primary payer and taking the appropriate
actions.
<bullet> For GHP entities, 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 as indicated herein.
<bullet> For NGHP entities, for any selected record determined to
be noncompliant, a tiered approach to penalties will be implemented as
described in detail in section III.C. of this final rule.
<bullet> To calculate the penalty imposed against an RRE, 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). The
product will then be multiplied by the appropriate penalty amount, as
described previously and below.
C. Tiered Approach for NGHP RREs
Because we have the statutory authority to adjust the amounts of
penalties imposed on NGHP RREs, a tiered approach and cap on the total
amount of penalties applicable to such RREs are being finalized in this
rule. As explained previously, the statute does not permit us to extend
this approach to GHP RREs. For any record selected via the random audit
process described above where the NGHP RRE submitted the information
more than 1 year after the date of settlement, judgment, award, or
other payment (including the effective date of the assumption of
ongoing payment responsibility for medical care); the daily penalty
will be--
<bullet> $250, as adjusted annually under 45 CFR part 102, for each
calendar day of noncompliance, where the record was reported 1 year or
more, but less than 2 years after, the required reporting date;
<bullet> $500, as adjusted annually under 45 CFR part 102, for each
calendar day of noncompliance, where the record was reported 2 years or
more, but less than 3 years after, the required reporting date; or
<bullet> $1,000, as adjusted annually under 45 CFR part 102, for
each calendar day of noncompliance, where the record was reported 3
years or more after the required reporting date.
Additionally, the total penalty for any one instance of
noncompliance by an NGHP RRE for a given record identified by CMS will
be no greater than $365,000 (as adjusted annually under 45 CFR part
102).
While we emphasize that all RREs are obligated to comply with their
reporting obligations, CMS's approach to enforcement, where a
randomized sample of records will be reviewed closely (as opposed to an
automated review of all records), means that smaller entities are
inherently much less likely to have their records audited for
compliance. We also encourage entities that are smaller and less
experienced with Medicare's coordination of benefits processes to take
advantage of the resources and support available to ensure compliance.
D. Clarification of Good Faith Efforts To Obtain Identifying
Information
A key change for the final rule is the expansion of the
circumstances under which an NGHP entity may avoid CMPs for
noncompliance caused by failure to obtain identifying information from
an individual despite a good faith effort to do so.
In the proposed rule, we proposed providing NGHPs with the ability
to document ``good faith'' efforts to obtain identifying information of
reportable individuals. In the final rule, we are expanding this
exemption. Specifically, as proposed in the proposed rule, NGHPs must
make a total of three attempts to obtain the required information. At
least two attempts to obtain the required information from the
individual and his or her attorney must be by mail or electronic mail,
but the final rule permits that the third attempt may be via telephone,
electronic mail, or some other reasonable method.
Further, the final rule permits that, should an individual or their
attorney or representative clearly and unambiguously decline to provide
the information requested, no further attempts by the RRE to obtain the
required information would be required. This documented refusal to
provide the required information must be maintained for a minimum of 5
years, in accordance with the other requirements of this section of the
rule.
We understand that NGHP RREs are concerned that attempts to obtain
beneficiary information, particularly when in an adversarial
relationship with the beneficiary, may be construed as running afoul of
certain state and local privacy and anti-harassment laws. If the intent
and purpose of the RRE's communications with beneficiaries was solely
to comply with federal requirements, we believe any privacy or anti-
harassment law would be preempted by the reporting requirements set
forth in the Act.
All other parameters related to obtaining identifying information,
including records retention requirements, are being finalized as
proposed.
IV. Collection of Information Requirements
This document does not impose any new information collection
requirements, that is, reporting, recordkeeping, or third-party
disclosure requirements. The associated information collection
requirements imposed under mandatory insurer reporting are already
approved under OMB control number 0938-1074. Consequently, there is no
need for review by the Office of Management and Budget under the
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). We did not receive comments on the previous statement and
therefore are finalizing the language without modification.
V. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993) and
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011) as amended by the Executive Order on Modernizing
Regulatory Review on April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-
[[Page 70371]]
4), Executive Order 13132 on Federalism (August 4, 1999), and the
Congressional Review Act (CRA) (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563, as amended by the Executive Order
on Modernizing Regulatory Review on April 6, 2023, direct agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity). A
Regulatory Impact Analysis (RIA) must be prepared for major rules with
economically significant effects ($200 million or more in any 1 year).
Modelling of potential penalties likely to be imposed under this rule
demonstrates that this rule does not reach the economic threshold and
thus is not considered a major rule.
Based on CMS workload and resource availability, the sampling
methodology explained herein would result in a fixed number of
submitted records to be audited each calendar quarter to determine
compliance and potential penalty. At present, and absent a notice-and-
comment period to alter such limit, CMS will audit up to 1,000 records
each year, or up to 250 each calendar quarter. CMS has utilized the
methodology as described in previous sections, in conjunction with
utilizing data from the preceding calendar year regarding RRE reporting
habits and volume, to determine the anticipated penalties that would be
levied if no other changes in behavior were observed. Although we note
that CMS believes that publication of the rule will have the intended
effect of incentivizing increased compliance with reporting
requirements in an effort to avoid a CMP, we have analyzed the existing
data with no adjustments for subjective analysis. Assuming the rule had
been in effect and CMPs could have been imposed based upon reporting
behavior for calendar year 2022, the maximum penalties imposed would
have been $86.4 million for GHP entities and $42.4 million for NGHP
entities, for a total annual CMP amount of $128.8 million, which is
below the $200 million threshold to be considered an economically
significant rule. We also note that reporting behavior in this period
may be skewed towards more untimely reporting, potentially reflecting
efforts to come into compliance in advance of this rule becoming
effective. Consequently, we believe this is a worst-case scenario and
do not expect to collect CMPs totaling $200 million or more in any
given year, nor do we expect this rule to have any other economic
effects that meet or exceed that threshold.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$7.0 million to $35.5 million in any 1 year. Individuals and States are
not included in the definition of a small entity. We consider a rule to
have a significant impact on a substantial number of small entities if
it has at least a 3 percent impact of revenue on at least 5 percent of
small entities. Affected entities with reporting responsibilities have
been required to comply with sections 1862(b)(7) and (b)(8) of the Act
since these provisions were added to the Act in 2007. This rule is
intended to define how CMPs would be imposed as a consequence of
noncompliance with these statutory obligations, and thus does not
present any additional burden beyond the review of the rule. As
discussed later in this section, the total cost impact of reviewing
this rule by all 20,855 actively reporting RREs, regardless of size, is
estimated to be $7,699,249, or $369.18 per entity. As the provisions
and regulations, the violation of which will result in a CMP under this
regulation, are already in place, no additional costs to comply with
this regulation should be realized by any RRE. This regulation merely
enumerates when and how CMPs will be levied but does not impose any
additional rules or requirements on any RRE that does not already, at
present, exist. This falls below the standard definition of
``significance'' of 3 or more of small entity revenue. As a result, we
have determined, and the Secretary certifies, that this rule would not
have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 for the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary certifies, that this rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2023, the
threshold is approximately $177 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector. Executive Order 13132 establishes certain requirements
that an agency must meet when it promulgates a proposed rule (and
subsequent final rule) that imposes substantial direct requirement
costs on state and local governments, preempts state law, or otherwise
has Federalism implications. Since this final rule does not impose any
costs on state or local governments, the requirements of Executive
Order 13132 are not applicable.
We used the current number of actively reporting GHP RREs (1,039)
and NGHP RREs (19,816) to determine the total number of impacted
entities (20,855). We recognize that this is a slight overestimate, as
a single corporate parent may have multiple associated RREs. We welcome
any comments on the approach in estimating the number of entities which
will review this rule.
Using the May 2022 wage information from the U.S. Department of
Labor Bureau of Labor Statistics for medical and health service
managers (Code 11-9111), we estimate that the cost of reviewing this
rule is $123.06 per hour, based on doubling the mean hourly wage of
$61.53 to include overhead and fringe benefits (see <a href="https://www.bls.gov/oes/current/oes119111.htm">https://www.bls.gov/oes/current/oes119111.htm</a>). We assume that one individual
associated with each of the 20,855 impacted entities will read the
rule. Assuming an average reading speed, we estimate that it would take
approximately 3 hours for the staff to review this rule. For each
entity that reviews the rule, the estimated cost is $369.18 (3 hours x
$123.06). Therefore, we estimate that the total cost of reviewing this
rule is $7,699,249 ($369.18 x 20,855).
We did not receive additional comments on the regulatory impact
statement section through the public comment period.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on September 28, 2023.
[[Page 70372]]
List of Subjects
42 CFR Part 402
Assessments, Civil money penalties, Exclusions.
45 CFR Part 102
Administrative practice and procedure, Penalties.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 402--CIVIL MONEY PENALTIES, ASSESSMENTS, AND EXCLUSIONS
0
1. The authority citation for part 402 is revised to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 402.1 is amended--
0
a. In paragraph (c) introductory text by removing the reference
``(c)(34) of this section'' and adding in its place the reference
``(c)(35) of this section'';
0
b. By removing paragraph (c)(20);
0
c. By redesignating paragraph (c)(21) as paragraph (c)(20);
0
d. By redesignating paragraphs (c)(22) through (34) as paragraphs
(c)(23) through (35); and
0
e. Adding new paragraphs (c)(21) and (22).
The additions read as follows:
Sec. 402.1 Basis and scope.
* * * * *
(c) * * *
(21) Section 1862(b)(7)(B)--Except for the situation described in
paragraphs (c)(21)(ii)(A) and (B) of this section, any entity that has
a reporting obligation under section 1862(b)(7) of the Act (``reporting
entity'') that--
(i) Fails to report any beneficiary record within 1 year of the
last acceptable reporting date, defined as 365 days from the GHP
coverage effective date or the Medicare beneficiary's entitlement date,
whichever is later.
(ii) A civil money penalty (CMP) is not imposed if--
(A) The incident of noncompliance is associated with a specific
reporting policy or procedural change on the part of CMS that has been
effective for less than 6 months following the implementation of that
policy or procedural change (or for 1 year, should CMS be unable to
provide a minimum of 6 months' notice prior to implementing such
changes).
(B) The entity complies with any reporting thresholds or any other
reporting exclusions.
(22) Section 1862(b)(8)(E)--Except for the situations described in
paragraph (c)(22)(ii)(A), (B) and (C) of this section, any applicable
plan that has a reporting obligation under section 1862(b)(8) of the
Act (``applicable plan''), that--
(i) Fails to report any beneficiary record within 1 year from the
date of the settlement, judgment, award, or other payment, or the
effective date where ongoing payment responsibility for medical care
has been assumed by the entity.
(ii) A CMP is not imposed in the following situations:
(A) An NGHP applicable plan fails to report required information as
a result of the applicable plan's inability to obtain an individual's
last name, first name, date of birth, gender, Medicare Beneficiary
Identifier (MBI), Social Security Number (SSN), or the last 5 digits of
the SSN, and the applicable plan has made a good faith effort to obtain
this information by meeting the following:
(1) Has communicated the need for this information to the
individual and his or her attorney, or other representative, if
applicable, or both.
(2) Has requested the information from the individual and his or
her attorney, or other representative (if applicable), at least three
times--
(i) Once in writing (including electronic mail);
(ii) Then at least once more by mail; and
(iii) At least once more by phone or other means of contact in the
absence of a response to the mailings.
(3) Has not received a response or has received a written response
clearly indicating that the individual refuses to provide the needed
information. Should the applicable plan receive a written response from
the individual or their attorney or representative that clearly and
unambiguously declines or refuses to provide any portion of the
information specified herein, no additional communications with the
individual or their attorney or other representative are required.
(4) Has documented its efforts to obtain the MBI or SSN (or the
last 5 digits of the SSN). This documentation, including any written
rejection correspondence, must be retained for a minimum of 5 years.
(B) An NGHP applicable plan complies with any reporting thresholds
or any other reporting exclusions.
(C) The incident of noncompliance is associated with a specific
reporting policy or procedural change on the part of CMS that has been
effective for less than 6 months following the implementation of that
policy or procedural change (or for 12 months, should CMS be unable to
provide a minimum of 6 months' notice prior to implementing such
changes).
* * * * *
0
3. Section 402.105 is amended by revising paragraph (b)(2) and adding
paragraph (b)(3) to read as follows:
Sec. 402.105 Amount of penalty.
* * * * *
(b) * * * *
(2) For entities with reporting obligations under section
1862(b)(7) of the Act (``reporting entity''), if a reporting entity
fails to report any beneficiary record within the specified period from
the latter of the GHP coverage effective date or the Medicare
beneficiary's entitlement date. The penalty is--
(i) Calculated on a daily basis, based on the number of recently
added beneficiary records reviewed where CMS identifies that the entity
submitted the required information more than 1 year after the GHP
coverage effective date for the individual; and
(ii) $1,000 as adjusted annually under 45 CFR part 102 for each
calendar day starting the day after 1 year (365 days) from the first
instance of noncompliance, as defined in paragraph (b)(2)(i) of this
section.
(3) For entities with reporting obligations under section
1862(b)(8) of the Act (``applicable plan'') as follows:
(i) If an applicable plan fails to report any NGHP beneficiary
record within the specified period from the date of the settlement,
judgment, award, or other payment (including the effective date of the
assumption of ongoing payment responsibility for medical care). The
penalty is--
(A) Calculated on a daily basis, based on the number of recently
added beneficiary records reviewed where CMS identifies that the entity
submitted the required information more than 1 year after the date of
settlement, judgment, award, or other payment (including the effective
date of the assumption of ongoing payment responsibility for medical
care);
(B) $250 (as adjusted annually under 45 CFR part 102) for each
calendar day of noncompliance as defined in paragraph (b)(3)(i)(A) of
this section for each individual for which the required information
should have been submitted, but was reported more than 1 year but less
than 2 years after the required reporting date;
(C) $500 (as adjusted annually under 45 CFR part 102) for each
calendar day of noncompliance as defined in paragraph (b)(3)(i)(A) of
this section for each individual for which the required information
should have been
[[Page 70373]]
submitted, but was reported 2 years or more, but less than 3 years,
after the required reporting date; and
(D) $1,000 (as adjusted annually under 45 CFR part 102), for each
calendar day of noncompliance as defined in paragraph (b)(3)(i)(A) of
this section for each individual for which the required information
should have been submitted, but was reported 3 years or more after the
required reporting date.
(ii) The maximum penalty that may be imposed for noncompliance
associated with any one individual for which the required information
should have been submitted is $365,000 (as adjusted annually under 45
CFR part 102).
* * * * *
For the reasons specified in the preamble, the Department of Health
and Human Services amends 45 CFR part 102 as specified below:
PART 102--ADJUSTMENT OF CIVIL MONETARY PENALTIES FOR INFLATION
0
4. The authority for part 102 continues to read as follows:
Authority: Pub. L. 101-410, Sec. 701 of Pub. L. 114-74, 31
U.S.C. 3801-3812.
0
5. Section 102.3 is amended in table 1 by adding references for U.S.C.
1395y(b)(6)(B), 1395y(b)(7)(B)(i), and 1395y(b)(8)(E)(i) in numerical
order to read as follows:
Sec. 102.3 Penalty adjustment and table.
* * * * *
Table 1 to Sec. 102.3--Civil Monetary Penalty Authorities Administered by HHS Agencies and Penalty Amounts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Date of last
statutorily 2021 maximum 2022 maximum
U.S.C. sections CFR \1\ HHS agency Description \2\ established adjusted adjusted
penalty figure penalty ($) penalty \4\
\3\ ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
42 U.S.C.:
* * * * * * *
1395y(b)(6)(B)..................... 42 CFR 402.1(c)(20), CMS Penalty for any entity 2021 3,484 3,701
402.105(a). that knowingly,
willfully, and repeatedly
fails to complete a claim
form relating to the
availability of other
health benefits in
accordance with statute
or provides inaccurate
information relating to
such on the claim form.
1395y(b)(7)(B)(i).................. 42 CFR 402.1(c)(21), CMS Penalty for any entity 2021 1,247 1,325
402.105(a). serving as insurer, third
party administrator, or
fiduciary for a group
health plan that fails to
provide information that
identifies situations
where the group health
plan is or was a primary
plan to Medicare to the
HHS Secretary.
* * * * * * *
1395y(b)(8)(E)(i).................. 42 CFR 402.1(c)(22), CMS Penalty for any entity 2021 1,247 1,325
402.105(a)(E). serving as insurer, third
party administrator, or
fiduciary for a non-group
health plan that fails to
provide information that
identifies situations
where the group health
plan is or was a primary
plan to Medicare to the
HHS Secretary.
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Some HHS components have not promulgated regulations regarding their civil monetary penalty-specific statutory authorities.
\2\ The description is not intended to be a comprehensive explanation of the underlying violation; the statute and corresponding regulation, if
applicable, should be consulted.
\3\ Statutory or Inflation Act Adjustment.
\4\ The cost of living multiplier for 2018, based on the CPI-U for the month of October 2017, not seasonally adjusted, is 1.02041, as indicated in OMB
Memorandum M-18-03, ``Implementation of Penalty Inflation Adjustments for 2018, Pursuant to the Federal Civil Penalties Adjustment Act Improvements
Act of 2015'' (December 15, 2017).
\5\ The cost of living multiplier for 2020, based on the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October 2019, not
seasonally adjusted, is 1.01764, as indicated in OMB Memorandum M-20-05, ``Implementation of Penalty Inflation Adjustments for 2019, Pursuant to the
Federal Civil Penalties Adjustment Act Improvements Act of 2015'' (December 16, 2019).
Dated: October 3, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-22282 Filed 10-10-23; 8:45 am]
BILLING CODE 4120-01-P
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</html>Indexed from Federal Register on October 11, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.