Revisiting Civil Money Penalties (CMPs) for Liability Claims

by M. Heberling

It has officially been one year since CMS implemented the final rule for Civil Money Penalties for Section 111 Reporting. We previously explained that CMS may impose a penalty when a Responsible Reporting Entity (RRE) fails to report Ongoing Responsibility for Medical (ORM) and/or settlement/judgment/award (aka Total Payment Obligation to Claimant or TPOC) in a timely manner. CMS has defined timely reporting as being within one year from the date the RRE assumed ORM, or within one year from the date of the TPOC. Because CMS’ review is prospective, starting from the date of implementation for the final rule, it was not possible for any RRE to have failed to report in a timely manner until October 11, 2025. Since that date has passed, we anticipate that CMS will soon begin auditing for timely reporting and potentially issuing penalties and therefore want to revisit the topic of Civil Money Penalties.

For this blog, we wanted to focus on reporting ORM for liability claims rather than workers’ compensation claims. It is important to remember that RREs are only required to report on claims involving Medicare beneficiaries. It is therefore necessary to know whether a Claimant or Plaintiff is currently receiving Medicare benefits, so you know whether you need to report their claim. In workers’ compensation cases, this is relatively simple and involves querying the Medicare database to obtain this information.

But for liability cases, ascertaining the injured party’s Medicare status is not as easy, as details of the accident and injury may require investigation and/or the plaintiff may be uncooperative and unwilling to provide the necessary information. CMS therefore provided an exception to the CMP rule for late reporting if an RRE attempted to acquire the necessary information from the beneficiary and appropriately documented these efforts.

The RRE must make a “good faith effort” to obtain the information necessary for identifying the individual’s Medicare status (last name, first name, DOB, gender, MBI, SSN). CMS has essentially defined a “good faith effort” as the following:

1. 1. 1. The RRE has communicated the need for this information to the individual and/or their attorney or other representative, if applicable and
      2. The RRE has requested this information from the individual and/or their attorney or other representative AT LEAST 3 times in the following manner:
         1. 1. Two requests must be in writing (can be via electronic mail once) and at least once by mail
            2. One request can be made by phone or other means of contact in the absence of a response to the mailing.

If the individual does not respond, or if they respond clearly and unambiguously refusing to provide the needed information, then a penalty would not be issued by CMS. The RRE must also thoroughly document all these efforts, including any written rejection, and retain any documentation for a minimum of five years.

Please note there may be other technical or system related issues that could cause late reporting, which could also be considered a potential safe harbor for the issuance of CMPs. Prior to issuing a formal notice regarding a CMP, CMS will provide a “pre-notice” which gives an RRE the opportunity to present “mitigating evidence” prior to the imposition of penalties. CMS has indicated that they will consider any “mitigating evidence” that may be relevant during their audits. Therefore, it will be important to document and retain any information that may provide justification for late reporting.

If you have any questions about CMPs, or would like information on our comprehensive approach to reporting services, or to learn more our Section 111 auditing services, please contact IMPAXX’s Settlement Consulting team at [email protected].