MARC Urges CMS to Revise Section 111 Penalties Proposed Rule

​WASHINGTON, DC – In comments to the Centers for Medicare & Medicaid Services (CMS), the Medicare Advocacy Recovery Coalition (MARC) today urged the agency to substantially revise its proposed rule establishing penalties for Medicare Secondary Payer (MSP) late reporting.
 
“We appreciate the opportunity to submit comments to CMS regarding this very important and long overdue proposal that has the potential to affect businesses across the country — from the largest corporations to small businesses on Main Street,” said MARC Chair Re Knack. “However, we believe the current proposed rule contains a number of flaws that unduly penalize entities that make a good faith effort to report MSP claims, rather than those who intentionally refuse to report. Therefore, we urge the agency to withdraw its proposed rule and issue a new proposal that is aligned with existing law to encourage compliance and better serve beneficiaries.”

In its comments, MARC outlined a number of specific concerns it has with the proposed rule, the most significant of which include:

• The proposed rule poses significant legal and Constitutional challenges. The rule, as written, likely violates the Eighth Amendment of the United States Constitution, the Supreme Court’s recent ruling in Allina Health v. Azar, and the MSP statute itself. Additionally, the proposal fails to follow Congressional direction and implement a sliding scale standard for assessing penalties that is consistent with other Civil Monetary Policy regulations.
• The proposed rule’s provision concerning penalties for retroactive termination of Ongoing Responsibilities for Medicals (ORM) reports is flawed and should be withdrawn.
• CMS should amend a provision of the proposed rule that penalizes reporting entities who reach the agency’s 20 percent reporting error threshold. While MARC acknowledges that accuracy in reporting is important, the proposed rule is written in a way that penalizes entities that report only a small number of claims each year.
• The proposed rule’s “safe harbor” provision for non-reporting when a beneficiary refuses to provide necessary information is unduly restrictive and should be modified to ensure it does not create burdens on entities or beneficiaries.
• The statute of limitations for CMS’ penalty collection activities should be lowered from the proposed five years to three years to bring it into alignment with the SMART Act’s provisions for government recovery actions.

 
To view MARC’s complete comment letter and specific recommendations for amending the proposed rule, CLICK HERE.
 
Background on Section 111 Penalties
 
Congress first established Section 111 reporting requirements in 2007, when it mandated that any company or organization in America settling or paying a claim involving a Medicare beneficiary file a report to CMS advising the agency about the settlement, judgement or award.
 
When Congress first enacted the law, it created a “strict liability” failure to report penalty of $1,000 per day per claim regardless of the size of the claim or the reason for the reporting delay. These penalties would have applied even in cases where a failure to report was the result of a clerical or paperwork error as opposed to any ill intent.
 
In 2013, President Obama signed into law the Strengthening Medicare and Repaying Taxpayers (SMART) Act which helped streamline the MSP reporting process to protect entities that make a good-faith effort to comply with Medicare’s complex MSP reporting processes. This important legislation eliminated the strict liability nature of the late reporting penalties and replaced it with a “sliding scale” penalty regime of “up to” $1,000 in penalties per claim.
 
Until the release of this proposed rule, CMS has not developed a means to levy penalties for entities that fail to report – or are simply late in reporting – MSP claims. This proposed rule is an attempt to finally establish this penalty policy – meaning businesses who report and settle claims to CMS may be faced with steep penalties once again.
 
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About MARC
When a beneficiary is injured, and another party is supposed to cover their healthcare expenses – such as in a worker’s compensation or liability claim – Medicare’s legal responsibility to pay is “secondary.” Unfortunately, the current Medicare Secondary Payer (MSP) policy is convoluted and confusing, creating problems and inefficiencies for beneficiaries, settling parties and taxpayers alike. That’s why MARC exists: to support commonsense reforms to fix this broken system. MARC's membership represents virtually every sector of the MSP regulated community including attorneys, brokers, insureds, insurers, trade associations, self-insureds and third-party administrators. For more information on MARC, please visit www.MARCcoalition.com.