CMS corrects minor “technical errors” in the Section 111 penalties

By Mark Popolizio, J.D., Jeremy Farquhar

November 29, 2023 / 8 min read

As many will recall, on October 11, 2023, the Centers for Medicare and Medicaid Services (CMS) released its Section 111 civil money penalties (CMPs) final rule in the Federal Register.^[1] CMS’s final rule constitutes, in part, the agency’s official regulations to enforce Section 111’s “up to a $1,000 per day, per claim” penalty provisions under the Medicare Secondary Payer (MSP) statute regarding non-group health plans.^[2]

In a new development, CMS has issued an update (referred to by CMS as a “correcting document”) which corrects certain “technical errors” in the Section 111 final rule. These new updates are published in the Federal Register at Fed. Reg. Vol. 88, No. 226, p. 82786-82787 (November 27, 2023).

Overall, as outlined more fully below, CMS has made a small number of minor updates to correct certain technical errors in the final rule. Importantly, as noted by CMS in its new correcting document, CMS has not made any substantive changes to the CMPs provisions contained in the final rule. Further, CMS’s corrections will not delay the final rule’s effective date of December 11, 2023. This new release also contains an updated “penalty adjustment and table” (Table 1) reflecting the current maximum daily CMPs amount for NGHPs is $1,428 (up from $1,325).

The below provides a general overview of CMS’s “corrections” to the final rule as follows:

CMS corrects technical errors – no substantive changes are made to the final CMPs provisions

As part of CMS’s corrections, the agency notes that it identified the following errors in the final rule released in October: “On page 70363, we inadvertently omitted a part of the header. On page 70372, we made an error in the Words of Issuance. On page 70373, we made technical errors in the amendatory instructions as well as the headings, entries, and table notes in the civil monetary penalty adjustment table at 45 C.F.R. 102.3.”^[3]

CMS outlines how it “corrected” these errors in Section IV (“Correction of Errors”) of the new update.^[4] As a review of Section IV will show, CMS has made minor and limited technical revisions to the final rule through its correcting document. For example, CMS in the final rule used the phrase “proposes to amend” in introducing noted regulatory provisions related to the final rule.^[5] However, in the new correcting document, CMS revises this phrase to simply read “amends.” By way of another example, CMS as part of its new update references certain technical corrections regarding regulatory references as more specifically outlined in Section IV of the correcting document.^[6]

As noted above, CMS’s corrections do not make any changes to the substantive aspects of the final rule. That is, for example, CMS’s new update does not change when CMPs may (or may not) be issued, CMS’s Section 111 good faith safe harbor, or any other substantive aspects of the final rule as issued in October. On this point, CMS states, in part, that “[t]his document merely corrects typographical and technical errors in the final rule, and it does not make substantive changes to the policies or implementing regulations that were adopted in the final rule,”^[7]and that this “final rule correcting document is intended solely to ensure that the final rule accurately reflects these policies and regulatory changes.”^[8]

CMS’s corrections will not delay the final rule’s effective date

As part of this update, CMS advises that its corrections will not delay the final rule’s effective date (which is December 11, 2023) stating, in pertinent part, as follows: “This correcting document identifies and corrects errors [in the final rule released on October 11, 2023] … the provisions in this correction document are effective as if they had been included in the document published October 11, 2023. Accordingly, the corrections are effective December 11, 2023.”^[9]Further, as part of the correcting document, CMS advises that it has waived formal rulemaking and will not establish a notice/comment period in this instance due to the nature of the corrections as more fully stated by CMS in the endnote to this sentence.^[10]

Updated max daily CMPs amount - $1,428 (annual inflation adjustment)

As noted above, this new release also contains an updated “penalty adjustment and table” (Table 1) reflecting a recent increase in the maximum daily CMP amount for NGHPs to $1,428 (up from $1,325) as adjusted for inflation.^[11]

Questions and other CMPs resources

Of course, please do not hesitate to contact the authors if you have any questions. In the interim, please see Verisk’s prior articles breaking down CMS’s Section 111 CMPs and outlining CMS’s CMPs FAQ resource for further information on Section 111 penalties. Also, please contact the authors to learn more about how Verisk can help you address Section 111 reporting, including our state-of-the art MSP Navigator reporting tool and our Section 111 review service.

[1] CMS’s final rule constitutes the agency’s official regulations to enforce Section 111’s civil money penalty provisions. The final rule applies to both group health plans (GHPs) and non-group health plans (NGHPs), codified at 42 U.S.C. § 1395y(b)(7) and 42 U.S.C. § 1395y(b)(8), respectively. This article, along with the authors’ prior articles on this subject, concentrate on the CMPs only from the NGHP context. Regarding non-group health plans, CMS’s right to impose CMPs stems from 42 U.S.C. § 1395y(b)(8)(E)(i) which states as follows: “An applicable plan that fails to comply with the [Section 111 reporting] requirements … may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant …A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual.” (Emphasis Added) To effectuate this provision, CMS is tasked with "specifying practices for which sanctions will and will not be imposed under subparagraph (E), including not imposing sanctions for good faith efforts to identify a beneficiary pursuant to this paragraph under an applicable entity responsible for reporting information.” 42 U.S.C. § 1395y(b)(8)(I). It is from these provisions upon which CMS’s CMPs are based. Of note, the CMPs monetary amount is adjusted annually for inflation. The current adjusted penalty amount is $1,428. Fed. Reg. Vol. 88, No. 226, at 82787 (November 27, 2023).

[2] As noted in n.1 above, the final rule also applies to group health plans. See, 42 U.S.C. § 1395y(b)(7).

[3] Fed. Reg. Vol. 88, No. 226, at 82786 (November 27, 2023).

[4] Fed. Reg. Vol. 88, No. 226, at 82787 (November 27, 2023).

[5] See, Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023)

[6] Fed. Reg. Vol. 88, No. 226, at 82787 (November 27, 2023).

[7] Fed. Reg. Vol. 88, No. 226, at 82786 (November 27, 2023).

[8] Fed. Reg. Vol. 88, No. 226, at 82787 (November 27, 2023).

[9] Fed. Reg. Vol. 88, No. 226, at 82786 (November 27, 2023).

[10] Fed. Reg. Vol. 88, No. 226, at 82786 (November 27, 2023).

On this point, CMS, as part of Section III (Waiver of Proposed Rulemaking and Delay in Effective Date) in its correcting document, states, in full, as follows:

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule in accordance with 5 U.S.C. 553(b) of the Administrative Procedure Act (APA). The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substances of the proposed rule or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued.

We believe that this final rule correcting document does not constitute a rule that would be subject to the notice and comment or delayed effective date requirements. This document merely corrects typographical and technical errors in the final rule, and it does not make substantive changes to the policies or the implementing regulations that were adopted in the final rule. As a result, this final rule correcting document is intended to ensure that the information in the final rule accurately reflects the policies and regulatory amendments adopted in that document.

In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the minor corrections in this document into the final rule or delaying the effective date would be unnecessary, as we are not altering our policies or regulatory changes, but rather, we are simply correctly implementing the policies and regulatory changes that we previously proposed, requested comment on, and subsequently finalized. This final rule correcting document is intended solely to ensure that the final rule accurately reflects these policies and regulatory changes. Furthermore, additional notice and comment procedures would be contrary to the public interest because it is in the public’s interest to ensure that the final rule accurately reflects our policies and regulatory changes. Therefore, for all of the reasons cited above, we believe we have good cause to waive the notice and comment and effective date requirements. Fed. Reg. Vol. 88, No. 226, at 82786 and 82787 (November 27, 2023).

[11] See, Fed. Reg. Vol. 88, No. 226, at 82787, Table 1 (November 27, 2023); See also, Fed. Reg. Vol. 88, No. 193, 69531-69553 (October 6, 2023).