On April 20, 2020, Tower MSA Partners responded to CMS’s request for comments on its proposed regulation for Section 111 Mandatory Insurer Reporting civil money penalties (CMPs).  Please see Tower’s Feb. 18 post on CMS’s proposal.

Tower’s comments mirrored those submitted by the National Alliance of Medicare Set-Aside Professionals (NAMSAP) of which Tower is a member.  As Co-Chair of NAMSAP’s Policy & Legislative Committee, I had the privilege of working on comments with my committee Co-Chair Annie Davidson, NAMSAP President Ciara Koba, and our fellow NAMSAP board members. Many thanks to Jill Dulich of the National Council of Self-Insurers and Doug Holmes of Strategic Services on Unemployment & Workers’ Compensation for sharing their invaluable Comment drafts.

Tower’s full comments can be found here and are summarized below:

Penalty Threshold for Failure to Report / Delayed Reporting – Part 402.1(c)(22)(i)

Per the proposed rule, subject to the good faith efforts provision, a penalty is imposed for an RRE that “fails to report any beneficiary record within 1 year from the date of settlement, judgment, award, or other payment.”  Recognizing that human and technical error will occur, we recommended CMS implement a 10% threshold for error tolerance per RRE.

The 10% would be based upon the number of Total Payment Obligation to Claimants (TPOCs) reported in a quarter (including off-cycle reporting).

Penalties Imposed for Failure to Report / Delayed Reporting – Part 402.105(b)(3)(i)

The proposal states that failure-to-report penalties will be up to $1,000 per calendar day, adjusted for inflation, for a maximum penalty of $365,000 per calendar year.

The proposal did not indicate whether CMS will use the discretion provided by the SMART Act to impose a penalty of “up to” $1,000/day. If CMS uses this discretion, then what criteria will be used to determine if the penalty should be $1/day, $500/day or $1,000/day? 

We submitted that CMS should incorporate mitigating factors, already found in the code of federal regulations. These would define CMS’s discretion in imposing penalties and provide RREs that face penalties the criteria needed to respond to potential penalties.

Additionally, we recommended that if Medicare made no conditional payment demands that no penalties should be imposed.

Data Contradicts Recovery – Part 402.1(c)(22)(ii)

The proposed rule addresses the possibility that an RRE’s response to CMS’s recovery efforts may contradict the its Section 111 reporting. A penalty would be calculated based on the number of calendar days that the entity failed to accurately report timely updates to beneficiary records. 

This means that an NGHP could face a penalty of up to an adjusted $1,000 per calendar day of “noncompliance” for each individual, for a maximum annual penalty of an adjusted $365,000 for each individual for which required information should have been submitted.

CMS is saying it will potentially penalize RREs millions of dollars for correcting their data after inconsistencies are found despite the fact that such errors cause the agency minimal monetary harm. 

We urged CMS to either withdraw this type of penalty or impose penalties that are proportional to the harm caused to Medicare as a result of the reporting contradictions.

“Safe Harbor” for Data Collection from Beneficiaries – Part 402.1(c)(22)(A)(2)

The proposed rule provides an exemption for those situations where a claimant refuses to provide their Social Security Number or Medicare Beneficiary Identifier. Yet, it mandates three attempts to obtain this information before allowing the exemption.

We requested that CMS eliminate the mandatory minimum number of communications with claimants. Instead, we asked it to simply require that the RRE make good faith efforts to secure needed reporting information.  

Informal Notice – D. Summary of Public Comments #8

CMS stated that its informal notice process will provide the RRE 30 calendar days to respond with any mitigating information prior to the issuance of a penalty notice.

We proposed that the RRE have 120 calendar days post receipt of the informal notice to respond.

Prospective Application – D. Summary of Public Comments #6

CMS advised the application of the final regulation will be prospective. However, after the regulation implementation date, much of the reported Section 111 data will be retrospective to that date.  While this will taper, corrections will occur and there is a potential for conditional payment recovery involving retrospective data.

We requested CMS better define what they mean by prospective application of the rule. 

Five Year Statute of Limitations – D. Summary of Public Comments #7

In its supporting summary, CMS takes care to outline that these penalties would be imposed within the existing CMP five-year statute of limitations. That limitations period, CMS says, is triggered when the agency identifies the non-compliant action.

We responded that CMS’s interpretation is incorrect.  The correct interpretation is that the statute of limitations starts with when the non-compliant action occurred, not when CMS identifies the non-compliance action.  In other words, if a TPOC was not reported when required in 2020, the statute of limitations would expire in 2025. 

Further, we asserted that the five-year statute of limitations is inapplicable to Section 111 penalties; instead the three-year statute of limitations found in the Medicare Secondary Payer Act applies. 

ALJ and Departmental Appeals Board Backlog Concerns – D. Summary of Public Comments #5

Under the proposed rule, CMS allows for appeals post the notice of the penalty.  However, as we have seen with appeals for conditional payment demands, it can take several years to have a hearing before an administrative law judge (ALJ). 

Our question to CMS is whether this same appeals process, along with timeframes, will be utilized for penalties appeals.  Further, we inquired as to whether CMS will be using the Treasury offset program to collect penalties.

Implementation of Final Rule

Finally, given the diversion of resources by many RREs to respond to the COVID-19 pandemic, we requested that CMS not implement a final rule until at least 1/1/2021.

If you have any questions about CMS’s proposed rule or these comments, please contact me, Dan Anders, at (888) 331-4941 or daniel.anders@towermsa.com.

I hope you, your family and coworkers are safe and, like all of us, learning to adjust to a new personal and work environment in this worldwide effort to control the spread of coronavirus.  We realize that Medicare Secondary Payer compliance is not the most important matter in life right now, even for Tower which normally lives and breathes MSAs and conditional payments. 

Tower realizes that people continue to work, some remotely for the first time.  This work transition itself presents unique challenges and uncertainties let alone the changes to our personal lives.

We are here to help.  When the need arises, Tower will be there for you, promptly and securely with the care, concern and expertise we apply to every customer matter (Please see below regarding our secure referral process).

Please keep safe.

Sincerely,

Rita Wilson
Chief Executive Officer
Tower MSA Partners

Secure electronic referrals: If you previously mailed referrals or referral documentation to Tower, but cannot do so as you are now working remotely, referrals and the transmittal of documentation can be made through our TowerConnect Portal. Please contact us at (888) 331-4941 or referrals@towermsa.com and we will provide you a username and password to log in to the portal. You can also make referral here and we will send you a username and password.

Once you log in to the TowerConnect Portal, you will be directed to enter a phone number to receive a code via SMS or phone call for verification. Additionally, you can download Duo Mobile to your phone to allow you to receive a “push” notification to easily authenticate. You can register your device to allow for the Duo push. More information is available here: https://guide.duo.com/enrollment. Your device can be remembered for up to 7 days.

The price of the non-steroidal anti-inflammatory (NSAID) Meloxicam took a major nosedive from $2.78 per pill to $0.05 per pill for 7.5 mg and $4.25 to $0.05 for 15 mg.  Meloxicam (Brand name: Mobic) is commonly used to treat osteoarthritic pain and is frequently allocated in WC claims and MSAs.  This is the medication’s first price reduction in more than a decade.

Tower Actions

Tower will contact our clients to report any non-CMS-approved MSAs where we identify an allocation for Meloxicam and qualify for a revision.  You can also contact us immediately to determine whether a particular MSA qualifies for a reduction.  Revisions to the MSA can be done now or prior to MSA submission to CMS, if needed. 

Please contact Dan Anders at Daniel.anders@towermsa.com or (888) 331-4941 with questions.

On February 18, 2020, the Centers for Medicare and Medicaid Services (CMS) issued a proposed regulation which would specify how and when CMS will calculate and impose what are called civil money penalties (CMPs) when group health plan (GHP) and non-group health plan (NGHP) responsible reporting entities (RREs) fail to meet their Section 111 Medicare Mandatory Insurer Reporting responsibilities.  NGHPs include workers’ compensation (including self-insurance) liability and no-fault insurers.

Background

Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 added requirements for GHPs and NHGPs to report Medicare beneficiary enrollees and claimants to Medicare on a quarterly basis.  NGHPs are specifically required to report acceptance and termination of ongoing responsibility for medical (ORM), if any, and total payment obligation to the claimant (TPOC), a settlement, judgment award or other payment. 

The statute originally called for a mandatory penalty of $1,000 per day per claimant for noncompliance with reporting.  Subsequently, the SMART Act of 2012 made CMPs discretionary for NGHPs, modifying the language to indicate that penalties of up to $1,000 per day per claimant may be imposed. The SMART Act also required CMS to issue regulations prior to imposing CMPs.

CMS’s CMP Regulation Proposal

Situations where CMS may impose penalties:

• when RREs fail to register and report as required by MSP reporting requirements;

• when RREs report as required, but report in a manner that exceeds error tolerances established by the Secretary of the Department of Health and Human Services (the Secretary);

• when RREs contradict the information, the RREs have reported when CMS attempts to recover its payments from these RREs.

CMS further states,

This proposed rule would also establish CMP amounts and circumstances under which CMPs would and would not be imposed.

Failure to report at all

Should it fail to perform the required Section 111 reporting at all within one year of the date a settlement or other payment obligation was established, an NGHP would be subject to a CMP of up to $1,000 for each day of noncompliance for each individual whose information should have been reported. A maximum penalty of $365,000 per individual per year applies. 

RREs responses to conditional payment contradict the information the RREs previously reported

Entities that have performed Section 111 reporting as required, but subsequently provide information that contradicts reported information in response to MSP recovery efforts, would be subject to a CMP based on the number of days that the entity failed to appropriately report updates to beneficiary records. For NGHP entities, the penalty would be up to $1,000 per day of noncompliance, for a maximum penalty of $365,000 (365 days) per individual.

Data reported by RRE in error

If a GHP or NGHP entity has reported, and exceeds any error tolerance(s) threshold established by the Secretary in any 4 out of 8 consecutive reporting periods we propose that the initial and maximum error tolerance threshold would be 20 percent (representing errors that prevent 20

percent or more of the beneficiary records from being processed), with any reduction in that tolerance to be published for notice and comment in advance of implementation. We intend for this tolerance to be applied as an absolute percentage of the records submitted in a given reporting cycle.

CMS goes on to note that it is not just any error, but significant errors, as defined in the Section 111 User Guide, which prevent a file from being accepted. Examples include failure to provide an individual’s last name or valid date of birth, or failure to provide a matching Tax Identification Number.

For NGHPs, penalties would be similar, but on a tiered approach with an initial $250 penalty per day of noncompliance for each individual; it increases each subsequent quarter of noncompliance by $250 per day to a maximum of $1,000 per day (it is standardized to 90 days for a total of up to $90,000 per individual per reporting period).  Penalties reduce by $250 per day for each subsequent quarter of compliance.

Safe harbors from reporting penalties

Penalties will not be imposed if any of the following are true:

• An NGHP entity reports information within one year of the date of settlement;
• A reporting entity’s submission complies with the reporting error thresholds; or
• If an NGHP entity is unable to obtain required reporting information from Medicare beneficiaries document their good faith efforts to obtain the information.

In regard to documenting good faith efforts, all of the following are required:

• The NGHP has communicated the need for this information to the individual and his or her attorney or other representative and requested the information from the individual and his or her attorney or other representative at least twice by mail and at least once by phone or other means of contact such as electronic mail in the absence of a response to the mailings.

• The NGHP certifies that it has not received a response in writing, or has received a response in writing that the individual will not provide his or her MBI or SSN (or last 5 digits of his or her SSN).

• The NGHP has documented its records to reflect its efforts to obtain the MBI or SSN (or the last 5 digits of the SSN) and the reason for the failure to collect this information.

• The NGHP entity should maintain records of these good faith efforts (such as dates and types of communications with the individual) in order to be produced as mitigating evidence should CMS contemplate the imposition of a CMP. Such records must be maintained for a period of 5 years.

Penalties will be prospective

CMS advised that  it “would evaluate compliance based only upon files submitted by the RRE on or after the effective date of any final rule.”

Statute of limitations

CMS “will apply the 5-year statute of limitations as required by 28 U.S.C. 2462. Under 28 U.S.C. 2462, we may only impose a CMP within 5 years from the date when the noncompliance was identified by CMS.”

Informal notice

CMS advised that it expects to communicate with the RRE on an informal basis through a “pre-notice” process that would allow the RRE the opportunity to present mitigating evidence within 30 calendar days before the imposition of the CMP.

Appeals process

Per CMS:

In broad terms, parties subject to CMP would receive formal written notice at the time penalty is proposed.  The recipient would have the right to request a hearing with an Administrative Law Judge (ALJ) within 60 calendar days of receipt. Any party may appeal the initial decision of the ALJ to the Departmental Appeals Board (DAB) within 30 calendar days. The DAB’s decision becomes binding 60 calendar days following service of the DAB’s decision, absent petition for judicial review.

Comment period

CMS has provided for a 60-day comment period to the proposed regulations with comments due by April 20, 2020.  It is expected that following CMS’s review of the comments a final rule will be issued before the end of the year.

Practical Implications

These proposed regulations make it clear that NGHPs, which have a responsibility to report under the Section 111 Mandatory Insurer Reporting provisions, must do so promptly and accurately.  Failure to meet this obligation will result in significant penalties. 

Where RREs do report and later contradict the reported information in response to a recovery demand, the penalty seems much worse than the offense.  For example, thousands of dollars in penalties could be assessed for what amounts to a conditional payment demand of $2,000.  It was thought the SMART Act changes allowing for more discretion would reduce the $1,000-per-day-per-claimant penalty under these scenarios. However, this proposal leaves little room for forgiveness of the inevitable errors which occur with reporting large amounts of data

When it comes to the data that is actually reported, CMS does allow for some forgiveness.  Penalties will only be imposed for submitting data in error over a certain threshold, currently proposed at 20%, and over a certain time, namely 4 out of 8 reporting periods. 

Significantly, CMS states that it will apply the rule prospectively meaning that it will rely upon data reported post final implementation of the rule to determine whether CMPs will be issued.  In other words, CMS is giving RREs one last chance to register and report data if they have not previously done so and for those RREs who have been reporting, to ensure the accuracy of all past ORM and TPOC reporting.

Through client education and regular communication, Tower makes certain reporting is not only timely, but is also an accurate depiction of current status, both from the standpoint of accepted and denied ICD10 codes, as well as termination of ORM through the ORM Term Date when TPOCs are submitted.  With that being said, we can report only what we receive.  As such, it is critical that claims systems provide an accurate representation and communication of the current status of each claim. 

Tower will continue to consider the implications of the proposed rules and comments in response to these rules.  You are encouraged to submit your own comments to CMS or provide comments to Tower who will in turn provide to CMS.  Please contact Dan Anders at Daniel.anders@towermsa.com or (888) 331-4941 with comments or questions.

After needling from the medical community, in a sharply written January 21, 2020 decision memo, the Centers for Medicare and Medicaid Services (CMS) got right to the point in announcing Medicare will now cover acupuncture for chronic low back pain.  The coverage rule provides up to 12 visits in 90 days under the following circumstances:

• For the purpose of this decision, chronic low back pain (cLBP) is defined as:
  • lasting 12 weeks or longer;
  • nonspecific, in that, it has no identifiable systemic cause (i.e., not associated with metastatic, inflammatory, infectious, etc. disease);
  • not associated with surgery; and
  • not associated with pregnancy.
• An additional eight sessions will be covered for those patients demonstrating an improvement.  No more than 20 acupuncture treatments may be administered annually.
• Treatment must be discontinued if the patient is not improving or is regressing.

Acupuncture remains non-Medicare covered for any other condition besides chronic low back pain.

Practical Implications

Acupuncture treatment is fairly low cost, similar or lower than PT, and at a limit of no more than 20 acupuncture treatments annually, its inclusion in an MSA would only result in a moderate increase to the allocation. 

It may have a larger impact on reducing MSA dollars as part of an alternative treatment option to opioid or non-opioid medication use.  As CMS states:

Therefore, we believe that in light of the relative safety of the procedure and the grave consequences of the opioid crisis in the United States,  there is sufficient rationale to provide this nonpharmacologic treatment to appropriate beneficiaries with chronic low back pain. 

Acupuncture is not, on its own, the entire answer to reducing opioid use. However, as part of a comprehensive treatment plan that addresses both the physical and mental effects of chronic low back pain, acupuncture can be a key component.  As such, Medicare coverage of this treatment is certainly welcomed.

Please contact Dan Anders at daniel.anders@towermsa.com or (888) 331-4941 with any questions.