Viewpoint: CMS Releases FAQs on Section 111 Penalties

The Centers for Medicare and Medicaid Services (CMS) has published a Frequently Asked Questions (FAQ) document to supplement its recently released Section 111 penalties rule. There were a few crucial clarifications that we highlight below.

Start Date for Reporting Data Subject to Penalties

Given the multiple dates provided in the final rule’s release, there was some confusion about the exact date that reported data would be subject to penalties. According to CMS’s FAQs, this date is Oct. 11, 2024, the rule’s applicability date. This means that only Total Payment Obligation to the Claimant (TPOC) and Ongoing Responsibility for Medicals (ORM) data reported on or after Oct. 11, 2024 will be subject to penalties. In addition, the earliest that a Civil Monetary Penalty (CMP) can be imposed is Oct. 11, 2025. As such, the Dec. 11, 2023 rule effective date has little relevance other than being the effective date of the rule.

Both TPOC and ORM on the Same Claim May be Subject to a Penalty

In CMS’s comments to the rule, it stated that “CMS has chosen to focus its definition of noncompliance solely on those situations where an entity has failed to provide its initial report of primary payment responsibility in a timely manner.” This was interpreted as perhaps meaning that if ORM acceptance was reported timely, then a subsequent untimely TPOC report would not be subject to penalties. This is not the case. As CMS explains in the FAQs:

As a reminder, CMS considers ORM and TPOCs to be separate reporting obligations, and CMS will evaluate the timeliness of the ORM and TPOC reporting separately for the purposes of determining compliance.

Medicare Entitlement After ORM Acceptance

Another important question addressed in the FAQs is how CMS determines penalties when the claimant becomes a Medicare beneficiary after the date of injury. CMS advised “the timeliness of reporting is based on the individual’s eligibility for or entitlement to Medicare.” In short, if the claimant is a Medicare beneficiary on the date of injury, then that date is used to determine timely reporting. If not, and the claimant later becomes a Medicare beneficiary, then the Medicare entitlement date determines timely reporting.

To exemplify both of these rules, consider the following scenarios:

Scenario 1

A Medicare beneficiary claimant sustains an accepted work injury on March 1, 2024. The Responsible Reporting Entity (RRE) fails to report ORM acceptance until October 2027. Even though reported more than a year after the date of injury, the claim is not subject to penalties as both the date of injury and the claimant’s entitlement to Medicare occurred prior to Oct. 11, 2024.

Scenario 2

A claimant who is not a Medicare beneficiary sustains an accepted work injury on March 1, 2024. The claim remains open, and the claimant becomes a Medicare beneficiary on Nov. 1, 2024. The RRE fails to report ORM until October 2027. The claim is subject to penalties (if chosen through the CMS random audit process) as while the date of injury is March 1, 2024, the Medicare entitlement date of Nov. 1, 2024 occurred post-Oct. 11, 2024.

To avoid penalties like this, always query claims to identify Medicare-eligible claimants and, when they are identified, timely report ORM or TPOC when all criteria are met for such reporting.