CMS Increases Civil Money Penalty Amounts, Including for Nursing Homes and MA Plans

Effective September 6, 2016, and as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (§701 of the Bipartisan Budget Act of 2015, Pub. L. 114-74),[1] the Centers for Medicare & Medicaid Services (CMS) published interim final rules updating, to account for inflation, civil money penalties (CMPs) that are imposed for violations of requirements for programs under the Social Security Act.[2]  The new CMP rates reflect “an initial ‘catch-up’ adjustment” and will continue to be updated annually, by no later than “January 15 of every year after publication of the initial adjustment.”[3]  The adjustments apply to CMPs assessed after August 1, 2016 for violations after November 2, 2015 (the date of enactment of the 2015 law).  Prior to the 2015 law, Social Security Act programs were exempt from the Federal Civil Penalties Inflation Adjustment Act of 1990. 

The 45-page announcement in the Federal Register includes a table that sets out, for each category, the pre-inflation CMP, the date of last penalty figure or adjustment, the percentage increase, the amount of the increase, and the revised CMP.  A few selected examples include the following:

• Nursing home CMPs, which have not been increased since the Nursing Home Reform Law was enacted in 1987: The interim final rule increases per day CMP rates of $50 to $103; of $3000 to $6,188; of $3,050 to $6,291; and of $10,000 to $20,628; it increases per instance CMPs from $1000 to $2,063 and from $10,000 to $20,628.[4]
• Penalties for Medicare Advantage organizations that substantially fail to provide medically necessary, required items and services: CMP increased from $25,000 to $37,561.[5] 
• Penalties for Medicare Advantage organizations that engage in practice that would reasonably be expected to have the effect of denying or discouraging enrollment: CMP increased from $100,000 to $147,177.[6] 
• Penalties for prescription drug card sponsors that falsify or misrepresent marketing materials, overcharge program enrollees, or misuse transitional assistance funds: CMP increased from $10,000 to $12,856.[7]