In October 2023 the Center for Medicare Services (CMS) issued a final rule on civil monetary penalties that can be assessed against employers, group health plans or “non-group health plans” (NGHPs) (i.e., workers’ compensation, liability, and no-fault insurance or self-insurance plans) for failure to register and report the existence of group insurance coverage provided to Medicare beneficiaries or claims involving payment of medical expenses for which Medicare is secondary to the NGHP’s liability. The new regulation centers on Section 111 which is part of legislation passed in 2007 (the MMSEA) and later revised in the Medicare SMART Act of 2013. Under the SMART Act, noncompliant NGHPs may be subject to penalties of up to $1,000 per day per individual claim for whom reporting was required.
The new rule took effect on October 11, 2024, and we expect to see the first enforcement in early 2025. It provides that CMS will impose a penalty on: 1) employers who fail to report group medical insurance coverage for employees who are Medicare beneficiaries within one year of the beneficiary’s Medicare entitlement date or the date of group insurance coverage; and 2) NGHPs who fail to report within one year of the date of settlement, judgment, award, or other payment, or the effective date where liability for medical care is assumed by the NGHP. It provides a tiered approach to the assessment of penalties, from $250 per day up to $1,000 if the noncompliance lasts two years or more, with a cap of $365,000 for a single individual.
While most insurers and third-party administrators have Section 111 reporting plans in place it is critical that they have protocols to safeguard against noncompliance. They must also make sure that employers are properly reporting employees who participate in a group health insurance plan and who are either new Medicare beneficiaries, or who are known Medicare beneficiaries who have started or changed their enrollment in group health plans.