CMS Issues Updated Section 111 NGHP User Guide, Addresses Wrongful Death Only Settlements

On October 7, 2024, CMS released an updated Section 111 NGHP User Guide (Version 7.7).  The new User Guide added the guidance below in Chapter III, Section 6.5.1.4 regarding wrongful death only settlements.

Note: Settlements, judgments, awards, or other payments obtained entirely under the wrongful death theory of liability, which do not claim and release medicals, or have the effect of releasing medicals, are not required to be reported because Medicare would have no recovery claim against such a payment.

This guidance is consistent with previous guidance from CMS on reportable claims, though prior versions of the User Guide did not specifically address wrongful death only settlements.  Whether a settlement was “obtained entirely under a wrongful death theory of liability” depends upon the plaintiff’s allegations and the terms of the settlement.  Federal courts have found that settlements were not solely for wrongful death and upheld Medicare’s recovery in cases when plaintiffs asserted survival claims involving medical expenses, reached a settlement agreement intended to resolve all claims, and attempted to avoid reimbursing Medicare by allocating $0.00 to the survival claims.  See, e.g., Hagerty v. Azar, 488 F. Supp. 3d 958 (D. Mont. 2020); Weiss v. Azar, 2018 U.S. Dist. LEXIS 208285 (D. Md. 2018); Paraskevas v. Price, 2017 U.S. Dist. LEXIS 198072 (N.D. Ill. Nov. 27, 2017).

CMS has replaced the term “compliance flag” with the new term “warning flag” in the new User Guide.  The User Guide also indicates that “a new ‘04’ warning flag will be applied to claim response files with open ORM records when the later date of either the CMS Date of Incident on the claim record or the Part A Add Date is greater than 135 calendar days from the Start Date of the RRE's submission period.”  As CMS has indicated previously, a warning flag is not an indication that a penalty will be assessed.

As a reminder, the Final Rule on penalties for noncompliance with Section 111 is applicable beginning October 11, 2024.  CMS has made information concerning the imposition of penalties available here.  The new User Guide is available here.

If you have any questions concerning Section 111 reporting or Civil Monetary Penalties, please do not hesitate to contact us.