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Proposed Rule on Section 111 Penalties: Issues to Consider

CMS’s recent release of its Proposed Rule on Section 111 penalties moves the industry one step closer to CMS imposing penalties for noncompliance with Section 111 reporting obligations. Given the significant potential penalties of up to $1,000.00 per day per claimant for noncompliance, it is crucial for RREs to ensure they are compliance with Section 111 reporting requirements. RREs should keep in mind the issues below regarding the Proposed Rule.

• Penalties will be assessed prospectively. CMS has stated that they “would evaluate compliance based only upon files submitted by the RRE on or after the effective date of any final rule.” This means that RREs should correct any errors and report claims that have not been reported as soon as possible before any regulations go into effect.

• Penalties would be assessed for failure to report TPOC information within one year from the TPOC date. RREs should review their claims and internal processes to ensure that claims are reported in a timely manner.

• Penalties would be assessed if an RRE contradicts its reporting in responding to CMS’s recovery efforts. Because CMS will seek recovery based on information reported under Section 111, not reporting information correctly, particularly diagnosis codes and ORM termination dates, can lead to CMS asserting claims that should not be the RRE’s responsibility. When RREs receive correspondence from CMS asserting conditional payment claims, RREs should ensure that information has been reported correctly under Section 111.

• CMS has proposed a safe harbor for RREs that fail to report because they have been unable to obtain the necessary information to verify a claimant’s Medicare status, provided the RRE has made a good faith effort to obtain this information by meeting the requirements below. We recommend that RREs ensure these processes are implemented as part of their internal compliance guidelines before any final regulations are issued.

1. The RRE has communicated “the need for this information to the individual and his or her attorney or other representative.”

2. The RRE has requested “the information from the individual and his or her attorney or other representative at least twice by mail and at least once by phone or other means of contact.”

3. The RRE “[h]as not received a response or has received a response in writing that the individual refuses to provide his or her MBI or SSN or a truncated form of the MBI or SSN.”

4. The RRE “[h]as documented its efforts to obtain the MBI or SSN (or the last 5 digits of the SSN).”

• The SMART Act provides for a potential penalty for noncompliance of up to $1,000.00 per day per claimant. The Proposed Rule states that the maximum potential penalty of $1,000.00 per day per claimant will be “adjusted annually under 45 CFR part 102.” 45 CFR part 102 provides for the annual adjustment of civil monetary penalties for inflation.

• CMS is soliciting public comments on the Proposed Rule. Any comments must be submitted by April 20, 2020, in order to receive consideration. Comments may be submitted online at

Our February 14 post discussing the Proposed Rule is available at: Please feel free to contact us with any questions about the Proposed Rule and compliance with Section 111 reporting obligations. If you are interested in a compliance audit to assess your reporting process, please let us know and we will be glad to help.


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