CMS Proposes Rules Imposing Medicare Reporting Penalties

On February 18, 2020, CMS issued proposed regulations that clarify how and when the agency will calculate and impose civil monetary penalties upon responsible reporting entities (RREs) that fail to report information concerning participants in group health plans who are also entitled to Medicare. RREs are usually insurers or TPAs, and CMS uses this data in order to determine when a group health plan must pay claims before Medicare is required to pay.

The proposed regulations describe what violations will be subject to civil monetary penalties and how CMS will calculate them. Under statute, the penalty for noncompliance with this reporting requirement is $1,000 per day, as adjusted annually. Violations subject to the penalties include the failure to report, inaccurate reporting, and the submission of poor quality data. The proposed regulations would have CMS assess this penalty for every RRE that fails to report required information within one year of the effective coverage date. RREs that report timely, but inaccurate reports will be assessed the penalty for every day the RRE fails to correct the errors. Penalties for these violations will be capped at $365,000. Data that exceeds an error tolerance threshold of 20% will face penalties that will be assessed depending upon the type of reporting entity.

The deadline for submitting comments is April 20, 2020. Although these proposed regulations will not directly affect most employers, employers may be asked to help insurers and TPAs gather the information needed to complete required reporting. Any sponsor of a self-funded, self-administered plan would also need to complete this reporting. Accordingly, employers should be aware of these proposed rules and the potential penalties for failing to report.

Proposed Rules »
CMS Fact Sheet »