CLIENT ADVISORY: Centers for Medicare and Medicaid Services Announces Civil Monetary Penalty Regulations for Untimely Reporting

The Centers for Medicare and Medicaid Services (“CMS”) is permitted to impose a civil monetary penalty of “up to $1,000” per day for a liability insurer’s failure to comply with reporting requirements with respect to settlements of third-party liability claims with Medicare beneficiaries.  In October 2023, CMS adopted regulations specifying when and how it will calculate and impose the aforementioned civil monetary penalties for violations of its reporting requirements.

The only basis for imposing a civil monetary penalty is untimely reporting of required information.  Untimely reporting is a failure to report a beneficiary record within one year from the date of settlement, judgment, award or other payment, or the effective date on which ongoing responsibility for payment of medical care has been assumed by the entity.  Penalties will not be imposed for other causes, such as the quality or accuracy of reporting.  CMS will randomly audit submissions for violations.  It will also implement a 30-day pre-notice process to communicate with alleged violators about a potential violation, affording the violators an opportunity to present mitigating evidence before CMS takes any formal enforcement action.

 CMS adopted a tiered approach to determine penalty amounts.  A $250 per day penalty will be imposed for reports that are 1-2 years late.  A $500 per day penalty will be imposed for reports that are 2-3 years late.  A $1,000 per day penalty will be imposed for reports that are 3 or more years late.  The maximum penalty for any one instance of noncompliance for a given record is $365,000.  CMS has recognized two exceptions where untimely reporting will be forgiven: (1) when the untimely reporting is the result of a technical or system issue outside the control of the liability insurer, or (2) where the beneficiary failed to provide the liability insurer with the information after the liability insurer made three good faith attempts to obtain the information, or if a beneficiary unambiguously declined to furnish the information.

CMS has a five-year statute of limitations to pursue civil monetary penalty claims, and liability insurers are to keep relevant documentation for at least that length of time.  The statute begins to run from the date CMS knew or should have known of the noncompliance.  CMS will only pursue claims prospectively with respect settlements on or after December 11, 2023.

 This advisory is for general information purposes only, and is not intended to constitute legal advice.  Questions about this advisory can be directed to Ben Peoples at (202) 945-9501 or cpeoples@tthlaw.com.