Summary
The Centers for Medicare and Medicaid Services (CMS) issued Final Rules on how and when civil monetary penalties may be imposed when Responsible Reporting Entities (RREs) fail to meet their Medicare Secondary Payer (MSP) reporting obligations.
Under MSP rules, group health plans are required to submit certain information to CMS on plan participants that are dual enrolled in the group health plan and Medicare. By doing so, CMS can better identify when another party should pay primary, thereby avoiding unnecessary claims payment mistakes.
Generally, a group health plan RRE is the insurer for fully insured plans and the third-party administrator (TPA) for self-funded plans. Employers are not likely to be an RRE, or otherwise have direct reporting obligations, unless as plan administrator they both self-fund and self-administer the plan. However, employers will need to provide any required information requested by the RRE (i.e., insurer or TPA) for them to accurately submit the reporting on the employer’s group health plan to CMS.
Penalties for Untimely Reporting
Penalties against an RRE are up to $1,000 (as adjusted) per instance of noncompliance for each calendar day that a record is late, with a maximum annual penalty of $365,000 per instance. Penalties may be waived if RREs can show “good faith efforts” to report any records identified by CMS as being noncompliant. Also, CMS will apply a five-year statute of limitations on assessing civil monetary penalties for violations of mandatory reporting requirements.
Important Dates
- December 11, 2023: Effective date for the Final Rules.
- October 11, 2024: Earliest date the provisions of the Final Rules will be applied.
- October 11, 2025: Start date for compliance review and penalty enforcement.
- April 1, 2026: CMS begins quarterly compliance audit; reviewing a random sample of 250 new records per quarter for a total of 1,000 records per year.
Recommended Employer Action
- Ensure your carrier or TPA is handling this reporting.
- Cooperate with RREs (typically, the insurer or TPA) in compiling any requested information about participants on the group health plan.
Additional Resources
- CMS Final Rule on Medicare Secondary Payer and Certain Civil Money Penalties
- Medicare Secondary Payer and Certain Civil Monetary Penalties Group Health Plan Webinar, January 2024
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
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