Skip to content

Proposed Regulations Address Penalties for MSP Reporting Violations


· 5 minute read


· 5 minute read

HHS Proposed Regulations: Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties, 42 CFR Part 402, 45 CFR Part 102, 85 Fed Reg. 8793 (Feb. 18, 2020)

Proposed Regulations

HHS Fact Sheet

CMS has issued proposed regulations that would specify how and when it will calculate and impose civil money penalties when Medicare Secondary Payer (MSP) reporting obligations for group health plans (and certain non-group health plan arrangements) are not met. As background for group health plans, responsible reporting entities (RREs)—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 is primary to Medicare (that is, whether the plan pays first, while Medicare is the secondary payer). The Medicare statute authorizes penalties of $1,000 per day for noncompliance with the MSP reporting requirements.

The proposed regulations address the types of violations that would warrant penalties (such as failure to report, inaccurate reporting, and reporting of poor-quality data) and how the penalty amounts would be calculated. RREs that fail to report within one year of the coverage effective date would face penalties of $1,000 per day (as adjusted annually—see our Checkpoint article) up to a maximum penalty of $365,000 for each individual whose coverage information should have been reported. RREs that report as required but later provide contradictory information in response to MSP recovery efforts would be subject to the same penalties. CMS is requesting comments on an error tolerance system under which an RRE’s performance over time, relative to permitted tolerances, could result in reduced or waived penalties.

EBIA Comment: Interested parties should study the proposed regulations carefully and submit comments to CMS by April 20, 2020. While relatively few employers are RREs, employers that are group health plan sponsors may be asked to assist their insurers or TPAs in compiling information about participants in their plans. CMS has emphasized the importance of employer cooperation with their plans’ RREs. With enforcement activity on the rise, failing to provide necessary information and assistance will 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.

More answers