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This short overview of Medicare’s proposed rules regarding Sec. 111 Civil Monetary Penalties is the result of many hours of combing through the informational documents that Medicare released. In addition, we have read several commentaries written by attorneys and other experts. 

We have attempted to reduce what we have learned to the items most relevant to an insurance carrier. In addition, we want to share several items that we didn’t see in the other companies’ commentaries which we think you will find interesting and useful. 

We have purposely written this in an easy-to-digest, bullet-point format, so that you can read it by scanning it. 

Our overview of the proposed rules for Civil Monetary Penalties includes three sections: 

  1. Which of the proposed rules are relevant for P&C and workers’ comp carriers (some of the rules only apply to group health carriers)
  2. Interesting and useful things we found in Medicare’s supporting comments 
  3. A self-assessment, consisting of several questions that claims leaders at a carrier can ask themselves to determine how compliance their organization currently is

        All three sections have implications for: 

        • How a carrier’s claim team gathers personal information from claimants; 
        • How carrier’s IT personnel tests and submits its quarterly mandatory reports; and 
        • How a carrier coordinates its reporting and conditional payment reimbursement efforts. 



        CMS would impose a Civil Monetary Penalty (“CMP”) in the following situations: 

        • If a carrier fails to report a BI claim within 1 year of the date of a settlement, judgment, award or other payment. 
          • The penalty would be calculated on a calendar day basis, based on the number of individual beneficiaries’ records that the entity submitted in an untimely manner. 
          • The penalty would be up to $1,000 (adjusted for inflation – see next Section) per calendar day of noncompliance for each individual reported late. 
          • Days are counted from the day after the last day of the carrier’s reporting window where the info should have been submitted through the day CMS receives the info. 
          • Max Penalty: $365,000 per individual per year 
        • If a carrier’s response to recovery efforts contradicts a carrier’s Sec. 111 reporting. 
          • Example: Carrier repeatedly affirms Ongoing Responsibility to Pay (ORM) medicals, but then responds to recovery efforts with the assertion that responsibility was terminated 2 years prior to the issuance of a CMS demand letter. Penalty = $1,000 (adjusted up) for every day the claim was not reported as having been terminated. 
          • See Section 3 for additional examples. 
        • If a carrier’s reporting exceeds the established maximum error threshold in any 4 out of 8 consecutive reporting periods. 
          • The proposed maximum error threshold is 20%. Any reductions to that threshold would be published for notice and comment in advance of implementation. 
          • This threshold represents a percentage of records submitted in any reporting cycle. 
          • The specific errors to be used for the calculation will be identified prior to implementation. They are only considering “significant errors” which prevent a file or individual beneficiary record from processing. 
          • Because carriers report quarterly, rather than daily, a carrier is considered to be out of compliance for an ENTIRE 90-DAY REPORTING PERIOD when a carrier is penalized here. 
          • Penalties for P&C carriers are levied on a tiered basis: 
            • 25% of full penalty for first violation PER CLAIMANT PER DAY; 
            • 50% of full penalty for second violation PER CLAIMANT PER DAY; 
            • 75% of full penalty for third violation PER CLAIMANT PER DAY; and 
            • 100% of full penalty for fourth violation PER CLAIMANT PER DAY. 
          • Penalties go down 25% per quarter thereafter for each quarter of reporting under the error threshold. 

        CMS would NOT impose a CMP in the following situations:

        • If a carrier reports a beneficiary record within 1 year after a TPOC date. 

        • If a carrier complies with TPOC minimum reporting thresholds. 
        • If a carrier does not exceed any error tolerance threshold in any 5 out of 8 reporting periods. 

        • If a carrier fails to report required information because it was unable to obtain required information for reporting AND the carrier has kept records of its good-faith efforts to obtain the information. 
        • First & Last Name, DOB, Gender, MBI or SSN (or last 5 digits of SSN) 

        • Records of good-faith efforts should be kept for 5 years. 


        This section includes some key takeaways from Medicare’s official commentaries about the proposed rules. For the most part, the items on this page are things that we didn’t see in other industry commentaries about the proposed rules. 

        • NOTE: Medicare CMPs would be levied in addition to any MSP reimbursement obligations. 
        • NOTE: In Medicare’s documentation, Medicare states that they expect to “become aware” of violations using the following methods: 
          • AUDIT of a carrier’s good faith efforts to obtain required info to determine if claimant is a Medicare beneficiary; 
          • MONITORING to determine if a carrier has registered as an RRE; 
          • MONITORING to determine if a carrier is submitting its reports in a timely manner and if the reports exceed error tolerances; and 
          • MONITORING to determine whether recovery process disputes contradict reported data. 
        • NOTE: Sec. 1862(b)(7) of the MSP Act allows for a CMP of $1,000 as adjusted annually under 45 CFR part 102. 
          • This amount was $1,569 as of January 17, 2020. Thus, CMPs would be adjusted up to this amount. 



          These proposed rules have implications both for how a carrier manages its Sec. 111 reporting and how a carrier manages its Medicare conditional payment reimbursement activities. 

          The questions below are intended to serve as a quick and simple “self-audit” for carriers to assess if how well they would be able to avoid civil monetary penalties once Medicare implements its rules: 

          Questions Regarding Quarterly Sec. 111 Reporting 

          • Do you submit your quarterly report every quarter within your reporting window? 
          • Does your report include all Medicare matches from your Medicare database queries? 
          • Do you report all bodily injury or workers’ comp settlements, judgments, awards or payments within 1 year? 
          • Do all of the quarterly reports that you submit have an error rate of less than 20%? 

          Questions Regarding the COORDINATION of Your Quarterly Reporting and Conditional Payment Reimbursement Activities 


          Under these proposed rules, it becomes vital that carriers ensure that the information they report in their quarterly reports matches what their adjusters (or vendors) communicate to Medicare in the conditional payment reimbursement process. 

          Questions Regarding Medicare Database QuerieS

          • Do your adjusters ask claimants at first notice of loss for all the information required to perform Medicare database queries? 
          • How effective are your front-end adjusters at eliciting all of these data elements?
          • Do your adjusters document their good-faith attempts to obtain a claimant’s social security number, including the use of Safe Harbor Letters or other similar documentation?


            These questions capture the key areas of coordination required by these proposed rules: 

            • Are the ICD injury codes used in the quarterly report identical to the ones used in the reimbursement process? 
            • How do you ensure that CHANGES in ICD codes that inevitably occur during the settlement process are captured both in your quarterly reports and in the reimbursement process? 
            • Do you completely understand what Medicare considers a “TPOC” that needs to be reported (i.e. settlement, judgment, award or payment)? 
            • Additionally, do the TPOC dates that you report in your quarterly reports match up with the TPOC dates reported by your adjusters (or vendor) in the reimbursement process? 
            • Do you completely understand what Medicare considers to be an “ORM Termination Date” (for workers’ comp and MedPay/PIP claims)? 
            • Similarly, do the ORM termination dates that you report in your quarterly reports match up with the ORM termination dates reported by your adjusters (or vendor) in the reimbursement process? 




            We believe that, no matter what Medicare’s final rules look like for Civil Monetary Penalties, the key points included in the proposed rules provide an outline of what Medicare compliance will need to look in the long run. Because of that, we think it’s important that carriers make it a priority to ensure that they get these things right … that they have good answers to all the questions listed in the previous section. 

            Our experience is that “getting these things right” takes time. It requires adjustments to Standard Operating Procedure, internal audit lists, training, communication, etc. Total compliance does not – cannot – happen overnight. 

            We don’t know when Medicare will release and implement their final rules. It is, however, important for carriers to be ready when they do release them. 

            CP Resolutions is there for you to help get these things right. 

            It you would be interested in learning about and discussing these things in more depth, just reach out to CP Resolutions at 303-848-3232.