American Property Casualty Insurance Association Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule
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I. Introduction
APCIA, which was created in 2019 by the merger of the
APCIA appreciates CMS's efforts to include some rational elements in the Proposed Rule (its prospective nature; the one-year compliance period for individual reports; and the notion of an enforcement moratorium in response to any change in Agency policy). On balance, however, we believe that the proposal fails to take into account many serious problems that continue to plague Section 111 reporting and other aspects of the MSP program. Adopting it without significant changes would needlessly exacerbate these problems, creating perverse incentives for Responsible Reporting Entities (RREs) to weigh the relative costs and benefits of extensive efforts to comply with rigid, overly technical reporting requirements. Coupled with CMS's admission in the Preamble that "the reporting program has not yet reached a level of maturity" to permit enforcement against entities that have failed to register and report as required, it is clear that these counterproductive incentives would threaten the integrity of the entire MSP program.
Accordingly, APCIA recommend that the Proposed Rule be withdrawn and re-proposed in a manner that is more rationally tailored to the realities of Section 111 reporting.
II. The Proposed Rule Would Introduce Unconstitutionally Disproportionate Penalties to a System Still Plagued by Unresolved Problems
APCIA's member companies have spent tens of millions of dollars and countless hours in diligently attempting to meet their obligations as Responsible Reporting Entities (RREs) under Section 111, notwithstanding the fact that many of the reporting requirements have proven to be extremely difficult and costly for the property-casualty insurance industry to implement. The entire MSP program continues to be plagued by significant problems, including CMS's improper identification of MSP-eligible claims; its rejection of reports for technical reasons beyond the control of RREs; the lack of a rational process for terminating Ongoing Responsibility for Medicals (ORM), which is addressed in more detail in Section III of these comments; and erroneous lien referrals to the
APCIA sincerely appreciates CMS's consistent willingness to work with RREs to address these and other underlying problems on both an individual basis and in group settings. However, adoption of the Proposed Rule in its current form notwithstanding these seemingly intractable problems will create chaos by threatening the imposition of civil monetary penalties (CMPs) of hundreds of thousands, or even millions, of dollars per file for mere process errors, regardless of intent and unrelated to any substantive obligation to reimburse the
Since the Proposed Rule only addresses penalties for process errors (i.e., failing to accurately report the myriad data fields related to a settlement, judgment, payment or other award), and not the substantive obligation to reimburse the
For example, the
Unlike other CMP rules administered by CMS, the Proposed Rule inexplicably fails to incorporate the sliding scale penalty factors found in 42 C.F.R. Sec. 402.111 - which take into account the degree of culpability, history of prior offenses, various aggravating and mitigating circumstances, and other matters "as justice may require" - in order to assess penalties for serious misconduct such as false drug pricing reporting, filing false and fraudulent claims, misusing federal grant funds, paying kickbacks, misusing federal emblems and logos, patient dumping, violating self-referral laws, and other false and fraudulent activities. Since even the application of the thoughtful and measured sliding scale penalty factors to such serious misconduct may not "result in imposition of an amount that would exceed limits imposed by the United States Constitution," it is beyond reasonable dispute that the Proposed Rule's "strict liability" approach would result in the imposition of unconstitutionally excessive penalties on RREs that are reporting in good faith.
Accordingly, APCIA urges CMS to amend the Final Rule to establish penalties that are appropriate to the violation, limiting any penalty under Section 111 to the amount of the underlying conditional payment (if any) related to the injury or illness, in order to conform with the limit established in 42 U.S.C. 1395y(b)(3) for the penalties that can be assessed for failure to reimburse the
III. The Proposed Rule Lacks the Required Regulatory Underpinning
APCIA believes that the standards in the Section 111 Reporting Manual cannot be enforced through the Proposed Rule until they are promulgated through notice and comment rulemaking. While CMS was permitted to "implement" the section 111 reporting requirements by "program instruction or otherwise," 42 U.S.C. Sec. 1395y(b)(8)(H), implementation is far different from enforcement. Thus, until the reporting requirements and standards are promulgated by notice and comment rulemaking pursuant to the Medicare statute and the Administrative Procedures Act, any penalties based upon technical violations or reporting requirements in the Section 111 Reporting Manual are in violation of 42 U.S.C.Sec. 1395hh, which provides that "[n]o rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under this subchapter shall take effect unless it is promulgated by the Secretary by regulation under paragraph (1)."
IV. The Proposed Penalties Based Upon Error Rate Thresholds Should Be Revised
The Proposed Rule would impose penalties on RREs that fail to accurately report 80% of their claims in four out of eight quarters. While APCIA appreciates that CMS has set what it believes to be an appropriate erroneous reporting threshold that will capture few reporting entities, applying this threshold to a system triggered by myriad technical errors (many beyond the control of RREs) which merely "prevent a file or individual beneficiary record from processing," without any consideration of intent as discussed in Section I above, will likely result in the thresholds being breached more often than the Proposed Rule contemplates, and will unavoidably result in the disproportionate dedication of RRE resources to satisfying unnecessarily rigid standards applied across far too many non-essential data fields, some of which "error out" at an alarmingly high rate. Furthermore, the proposal may inadvertently capture "low volume" reporters, and may implicate certain ICD-10 codes that are repeatedly rejected by CMS as erroneous even when they are accurate to the best of an RRE's knowledge.
Accordingly, APCIA recommends that CMS amend the Proposed Rule to apply only to RREs reporting a minimum of 1,000 reports each quarter, and to explicitly limit the error threshold to misreporting of the 20 most significant data fields required by CMS to identify a conditional payment situation and which are currently not subject to high error rates.
V. The Proposed Rule Fails to Account for Underlying Problems with ORM Termination The RRE community has consistently pointed out in recent years that the current process for terminating ORM is unworkable for property-casualty insurers, since it directly conflicts with the industry practice of "administratively closing" claims files when medical care has ended. In another example of how imposing the contemplated penalties on top of problematic underlying protocols, the Proposed Rule would result in penalties for each day an ORM report is kept open if CMS seeks a conditional payment recovery and an RRE discovers that the ORM report should have been terminated earlier. This is extremely unfair and runs the risk of creating massively disproportionate penalties for claims involving small amounts of money. For example, a single retroactive ORM termination going back two years would result in penalties exceeding
As with other problematic aspects of Section 111 reporting, RREs will need to weigh the stark reality that good-faith efforts to correct innocent errors will be held against them in penalty calculations. Accordingly, APCIA urges CMS to withdraw the ORM penalty proposal until it reforms its ORM Termination policies, in order to avoid the imposition of excessive and unfair penalties.
VI. The Proposed "Safe Harbor" for Data Collection from Beneficiaries Who Refuse to Provide Information Should Be Modified
The Proposed Rule includes an exemption from penalties for situations in which a beneficiary refuses to provide required information to an RRE for reporting. An RRE would be required to seek the information twice in writing and a third time by telephonic or other means. While we support the general concept of a safe harbor, we recommend more flexibility as to the specific number, type and documentation of contacts an RRE must make.
Consumers are understandably sensitive about supplying their health and other private information to commercial entities - particularly those, like property-casualty insurers in many instances, with whom they are not in privity of contract. As a result, they will become frustrated and angry when repeatedly asked for the same information if they have already refused to provide it. This could, and indeed already does, trigger consumer complaints against property-casualty insurers for violations of privacy and insurance laws and other consumer protection statutes. Many insurers are consciously reducing the number of such contacts with claimants in order to comply with these requirements, and any contrary mandates will frustrate these efforts and unduly interfere with the state-based nature of insurance regulation.
Accordingly, APCIA requests that CMS eliminate the mandatory minimum number of communications with beneficiaries, and instead simply require that an RRE make good faith efforts under the circumstances to try to secure needed reporting information.
VII. Statute of Limitations and Other Issues
CMS proposes to apply a five year statute of limitations to its penalty collection activities, based upon 28 U.S.C. Sec. 2462. The applicable statute of limitations, however, should be three years, as memorialized by
As noted earlier in these comments, APCIA agrees that the proposed penalties should only be applied prospectively from the date of the Final Rule, and that all proposed penalties should apply only after a one-year compliance period from the date a report was first due. We also support the notion of an enforcement moratorium in response to any change in CMS policy, in order to give RREs sufficient time to implement those changes, and we urge CMS to consider extending this implementation period to one year or more, based on the technological challenges frequently posed by reporting changes. Furthermore, we appreciate CMS's commitment to "informal communication" and a "pre-notice process" prior to actually assessing penalties, as articulated in the Preamble. Accommodations should be made for, among other things, voluntary self-reporting of contradictory information and working with
Chapter 6.1.7 (Multiple Defendants) of the Section 111 NGHP User Guide provides a good example of an already problematic reporting requirement that will be exacerbated by the imposition of penalties. Requiring separate reporting from all insurers involved in an arrangement where the risk is underwritten and shared by many insurers, instead of simply requiring the "lead" insurer to report the entire settlement, could lead to the even more absurd and constitutionally suspect result of penalties being imposed against multiple RREs for reporting errors even if CMS has been fully reimbursed for any conditional payments. Because the lead insurer assumes the responsibility of carrying out the terms of the insurance contract, following coinsurers often do not have access to the detailed information necessary to complete a Section 111 report. Such redundant reporting would also be confusing and of limited benefit to CMS, while imposing unnecessary compliance burdens on insurers.
Finally, APCIA recommends amending the Preamble to include a statement clarifying that Medicare Advantage Organizations (MAOs) do not have any rights, whether direct or implied, with regard to Section 111 reporting. While that may seems obvious based on the underlying laws, ongoing controversy over the rights of MAOs, downstream entities and alleged assignees of rights under the MSP Act have created understandable concern on this point.
VIII. Conclusion
Once again, APCIA appreciates the opportunity to offer comments on the Proposed Rule, and we look forward to continuing to work with CMS in a collaborative manner to ensure the fair and effective implementation of the MSP program mandate for all stakeholders. Please do not hesitate to contact me if you wish to discuss these comments.
Sincerely,
Senior Director, Workers Compensation & Amicus Counsel
(202) 828-7167
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The proposed rule can be viewed at: https://www.regulations.gov/document?D=CMS-2013-0266-0037
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