Section 111 Civil Money Penalties (CMPs): The New Enforcement Regime

The introduction of Civil Money Penalties (CMPs) under Section 111 marks a significant shift in the enforcement landscape for Medicare Secondary Payer (MSP) compliance. These penalties, part of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007, are designed to hold Responsible Reporting Entities (RREs) accountable for timely and accurate Section 111 reporting.

Timeline and Key Developments

• The CMP framework has its roots in a 2012 requirement for the Centers for Medicare & Medicaid Services (CMS) to establish rules regarding the issuance of CMPs related to Section 111 reporting.

• The final CMP rules were published on October 11, 2023, with enforcement starting on October 11, 2025.

Definition of Noncompliance

CMS will evaluate noncompliance primarily based on the timeliness of submissions. A “record” is classified as any instance of a Total Payment Obligation to Claimant (TPOC) or Ongoing Responsibility for Medicals (ORM) for Medicare beneficiaries that must be reported. Important timelines include:

• Reports must be submitted within 365 days of the latest of the following events:

• Date of settlement, judgment, or award (for TPOC).

• Effective date of ongoing payment for medical care (for ORM).

Audit Procedures and Penalties

Starting January 2026, CMS will conduct quarterly audits, randomly selecting 250 records to assess compliance. The penalties imposed for noncompliance will follow a tiered structure:

• $250 per day for records more than 1 year but less than 2 years late.

• $500 per day for records more than 2 years but less than 3 years late.

• $1,000 per day for records more than 3 years late.

Cumulatively, the maximum penalty per instance of noncompliance can reach $365,000, subject to annual inflation adjustments.

CMP Imposition Process

If CMS identifies noncompliance, the following steps outline the CMP imposition process:

1. Informal Notice: RREs receive a letter about identified noncompliant records, with a 30-day window to respond.

2. CMS Review: If RREs provide mitigating information, CMS will review it. Extensions beyond the 30-day response limit are generally not granted.

3. Notice of Proposed Determination: If CMS finds no sufficient mitigating evidence, a certified letter is sent proposing the CMP.

4. Final Notice of Determination: After any appeals or the expiration of appeal rights, RREs are sent a final determination notice along with payment instructions.

Practical Takeaways

• Stay Informed: RREs should regularly consult the NGHP Sec. 111 User Guide to remain current on compliance obligations.

• Be Proactive: Timely submissions are critical. Integrate systems to ensure records are reported well within the mandated timelines.

• Mitigation Strategies: Utilize the 30-day response period after receiving an informal notice to gather and present any mitigating information effectively.

In summary, these new enforcement measures with CMPs underscore a crucial evolution in compliance enforcement for Medicare Secondary Payers. Entities must prioritize adherence to reporting requirements to avoid substantial penalties, ultimately fostering a more efficient Medicare system.

Do you have questions about your responsibilities for compliance? Please let us know if you would like to discuss your MMSEA Section 111 reporting needs with an experienced team.