CMS Delays Final Regulations Addressing Penalties for MSP Reporting Violations

CMS has extended by one year its deadline for publishing final regulations that would specify how and when it will impose civil money penalties for violations of the Medicare Secondary Payer (MSP) reporting requirements. As background, responsible reporting entities (RREs) for group health plans—typically insurers or third-party administrators (TPAs)—are required to report information to CMS about individuals who are both entitled to Medicare and covered under a group health plan. The reports help CMS determine whether a plan’s coverage is primary or secondary to Medicare. The Medicare statute authorizes penalties of $1,000 per day for noncompliance with the MSP reporting requirements. In February 2020, CMS issued proposed regulations addressing the types of violations that would warrant penalties and how penalties would be calculated (see our Checkpoint article). According to its established timeline, CMS had three years in which to finalize the proposals.

In addition to noting delays resulting from the agency’s focus on the COVID-19 public health emergency, CMS justifies the one-year extension by explaining that public listening sessions about the proposed rule raised additional concerns that need to be researched prior to publishing the final rule. CMS hopes to better understand the economic impact of the proposed rule by conducting additional analysis of current reporting data and engaging in predictive modeling of the penalties that would be imposed were the final rule in place. Under the extension, final regulations are due to be published by February 18, 2024.

EBIA Comment: RREs may also be interested in a recent CMS chart highlighting the top ten reporting errors during the last half of 2022. While relatively few employers are RREs, employers that are group health plan sponsors may be asked to assist RREs, such as their insurers or TPAs, in compiling information about participants in their plans. CMS has emphasized the importance of employer cooperation with their plans’ RREs, and once the regulations are finalized, failing to provide necessary information and assistance could put insurers and TPAs at risk of penalties for noncompliance. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXIV.J (“MSP Mandatory Reporting Requirement”) and XXIV.K (“Enforcement”). See also EBIA’s Self-Insured Health Plans manual at Section XXV.C (“Coordination of Benefits With Medicare, TRICARE, and Medicaid”); EBIA’s Consumer-Driven Health Care manual at Section XXV.F (“HRAs and Medicare Secondary Payer (MSP) Requirements (Including Mandatory Reporting)”); and EBIA’s COBRA manual at Section XXX.D (“Medicare Secondary Payer (MSP) Rules”).

Contributing Editors: EBIA Staff.