OIRA Issues Notice Regarding Civil Money Penalties Rule. Is a Final Rule on the Way?

by B. Smith

The Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) published a notice regarding its review of the Medicare Secondary Payer and Certain Civil Monetary Penalties final rule. OIRA found that the rule was not economically significant and further notes that it was “Consistent with Change.” Based on this notice, it is possible that we may see the release of a final rule for Section 111 Civil Monetary Penalties (CMPs) very shortly.

Extension of Final Rule

The initial time frame for the final rule on CMPs was targeted for release by Centers for Medicare and Medicaid Services (CMS) on or before February 22, 2023. However, on February 18, 2023, the timeline for the publication of the final rule was extended to February 18, 2024. The reason given by CMS for the extension was “due to delays related to the need for additional, time-consuming data analysis resulting from public inquiry.” CMS further noted that it was “preparing additional data analysis and predictive modeling to better understand the economic impact of the proposed rule across different insurer types” and that “[t]his data analysis is designed to review the actual current reporting and model potential penalties that would be imposed were the final rule in place.”

Not Economically Significant

In sum, CMS was reviewing, among other things, the economic significance of the rule based upon public comment. As outlined on the OIRA Reginfo.gov FAQ/Resources webpage, a regulatory action is economically significant if it is “likely to have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.” It further notes that for those rules which are considered economically significant, “the Executive Order directs agencies to provide (among other things) a more detailed assessment of the likely benefits and costs of the regulatory action, including a quantification of those effects, as well as a similar analysis of potentially effective and reasonably feasible alternatives.”

Although OIRA and CMS does not deem the rule as economically significant, If the rule stays in its current form with penalties set at up to $1,000 per day (or more with inflation), per claim for each day of non-compliance, this could be economically devastating for Responsible Reporting Entities.

OIRA is part of the Office of Management and Budget and reviews draft regulations to ensure consistency with certain rulemaking and legal requirements per executive order EO 12866. Although OIRA noted that the rule was not economically significant, it also noted that it was “Consistent with Change” which may signify that there have been changes to the rule initially issued by CMS.

Take Action Now

Join us for a webinar on October 12 at 2:00 pm ET where we will take a deeper dive into Civil Monetary Penalties and share tips on what you can do now to prepare.

IMPAXX will continue to closely monitor developments as they unfold and provide updates. In the meantime, insurers, self-insureds and third-party administrators should review their current Section 111 systems, procedures, and response files for errors and substantive mistakes in the reporting process. IMPAXX can perform a Section 111 Review to assess the current health of your reporting and work with you develop a program to address any issues found. For more information, please contact the IMPAXX Settlement Consulting team at [email protected].