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CMS has submitted both the FINAL rule regarding civil monetary penalties and a PROPOSED rule regarding post-settlement/judgment medicals (including, purportedly, rules governing future medicals in liability cases – or LMSAs) to the Office of Information and Regulatory Affairs (“OIRA”) for final review. This means that both could be released in as little as a few weeks.\

How the OIRA Process Works

OIRA has up to 90 days to review the final rule and the proposed rules. There is no minimum period for review (meaning that the review process could take as little as one day). OIRA can either approve the draft rules as written or return the draft rules to CMS for reconsideration.

OIRA may only decline to publish the rules and then return them to CMS for specific narrow reasons, such as the draft rule not being compatible with the law or CMS’s analysis that is used to justify the rulemaking is inadequate. If that were to happen to either of the draft rules, CMS would then amend the rule or include additional analysis supporting the rule.

If OIRA approves the draft rule, the rules will be submitted for publication in the Federal Register.

The effective date of the FINAL rule would likely be 30 to 60 days after publication in the Federal Register.

The PROPOSED rule would then be open for review and comment by the public for a specified period.

[Click HERE for a succinct, official explanation of the federal rulemaking process.]

The Final Rule for Civil Monetary Penalties

CMS released PROPOSED rules (see attached) for civil monetary penalties back in February 2020. In those proposed rules, CMS suggested imposing significant penalties for various enumerated infractions. In addition, CMS explained how they would investigate and discover such infractions.

The infractions, in general terms, included the following:

  • Failure to show documented good-faith efforts to obtain information required to determine which injury claimants are Medicare beneficiaries.
  • Failing to report TPOC (i.e. settlement or judgment) details (where the amount is above the reporting thresholds) within 1 year of the TPOC date.
  • Failure to register any Responsible Reporting Entity.
  • Failure to submit a report for a Responsible Reporting Entity.
  • Submitting several reports with an error % above a minimum threshold.
  • Failure to coordinate key information communicated to Medicare during the recovery process with the information reported in the quarterly report.

They stated that most infractions would be “discovered” essentially automatically from what an RRE submits to CMS (or fails to submit to CMS). The proposed rule also suggested that failure to document good faith efforts to obtain information required to determine if claimants are Medicare beneficiaries could be investigated by audit.

The penalties proposed were consistent with statute – $1,000 (adjusted by inflation since the passage of the statute) per claim per day. CMS suggested in the proposed rule that some penalties would be determined on a quarterly basis (i.e. 90 days) because Section 111 reports are submitted only quarterly. The size of these penalties was one of the biggest points of contentions in the public comments to the proposed rule.

We won’t know what the infractions and penalties will be in the final rule until the final rule is released to the public.

What the Release of the Final Rule for Civil Monetary Penalties Means for You

For years, the property and casualty insurance industry has taken Medicare compliance with varying degrees of seriousness. This seemed reasonable, since the original Medicare Secondary Payer law was passed way back in 1980. For decades it seemed that the real enforcement “teeth” were always on the horizon.

In spite of this, some companies decided years ago to strive for “compliance perfection” to avoid potential future penalties. They bit the bullet and accepted the total costs compliance, both in terms of money and time. Many would have considered them to be acting a bit too conservatively.

Other companies took compliance a bit less seriously, stating that they would put the total compliance infrastructure in place when the circumstances dictated.

Wherever your company is on the spectrum of Medicare compliance implementation, the time to take it seriously is NOW. It is entirely possible that the effective date of the final rule will be within the next 90 to 120 days. If there is work to be done, it frankly needs to be done … immediately.

The Proposed Rule Regarding Future Medicals

Another rule that has been promised (threatened?) for years but has never been released is the rule governing future (post-settlement/judgement/etc.) medicals for both workers’ compensation AND liability claims. CMS has, several times, set deadlines for itself to release such rules, but failed to meet its deadline … every … single … time. It became an opportunity for clients, and potential clients, of ours to roll their eyes as we would tell them that “this time it could be happening.”

Well, this time it IS happening. Submitting the draft proposed rules to OIRA is further than they’ve ever come on this issue.

Before now, CMS had only provided detailed guidelines (NOT official rules) for future medicals for workers’ comp claims in its “Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide.” Because this guide only provided guidance on how to address Medicare’s interests for future medicals, we believe the proposed rules address future medicals for ALL claim types – including workers’ comp, liability, and no-fault.

We don’t know exactly what will be in these proposed rules. We do expect them to be interesting and, likely, controversial.

What the Release of the Proposed Rules for Future Medicals Means for You

Assuming that, as expected, the proposed rules address liability and no-fault claims, it will, for the first time, provide guidance on what CMS thinks about future medicals in such cases. Industry experts have wondered how the requirement to consider Medicare’s interests in liability (and no-fault) cases will affect settlement negotiations, settlement allocations, and more. We will finally have a better idea about this.

In addition, such proposed rules would send a clear signal from CMS to the industry that it expects that its interests will be considered in liability and no-fault cases, similar to how they are now considered in workers’ comp cases that are settled. Many insurers, attorneys and claimants in liability cases are already deciding to protect Medicare’s future interests. We think that, even with proposed rules, this trend will continue to grow. At the very least, proposed rules will reinforce the need to inform claimants of the risks associated with NOT considering Medicare’s future interests in a settlement.

How CP Resolutions Can Help

There are many ways the CP Resolutions can help your company address these issues. We can provide training, perform a “friendly” readiness audit, provide more extensive consultative services, if needed. Call CP Resolutions at 303-848-3232 if you’d like to discuss!