Adjustment of Civil Monetary Penalties for Inflation and the Annual Civil Monetary Penalties Inflation Adjustment for 2021

AGENCY:

Office of the Assistant Secretary for Financial Resources, Department of Health and Human Services (HHS).

ACTION:

Final rule.

SUMMARY:

This final rule finalizes the provisions of the September 6, 2016 interim final rule that adjusts for inflation the maximum civil monetary penalty (CMP) amounts for all agencies within the Department of Health and Human Services (HHS) and updates certain agency-specific regulations. It also updates our required annual inflation-related increases to the CMP amounts in our regulations, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015; adds references to new penalty authorities; and reflects technical changes to correct errors.

DATES:

Effective date: This final rule is effective November 15, 2021.

Applicability date: The adjusted civil monetary penalty amounts apply to penalties assessed on or after November 15, 2021, if the violation occurred on or after November 2, 2015.

FOR FURTHER INFORMATION CONTACT:

David Dasher, Deputy Assistant Secretary, Office of Acquisitions, Office of the Assistant Secretary for Financial Resources, Room 536-H, Hubert Humphrey Building, 200 Independence Avenue SW, Washington DC 20201; 202-205-0706.

SUPPLEMENTARY INFORMATION:

I. Background

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (section 701 of Pub. L. 114-74) (the “2015 Act”) amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890 (1990)), which is intended to improve the effectiveness of civil monetary penalties (CMPs) and to maintain the deterrent effect of such penalties, requires agencies to adjust the civil monetary penalties for inflation annually.

The Department of Health and Human Services (HHS) lists the CMP authorities and the amounts administered by all of its agencies in tabular form in 45 CFR 102.3, which was issued in an interim final rule published in the September 6, 2016, Federal Register (81 FR 61538). Annual adjustments were subsequently published on February 3, 2017 (82 FR 9175), October 11, 2018 (83 FR 51369), November 5, 2019 (84 FR 59549), and January 17, 2020 (85 FR 2869).

II. Provisions of the Final Rule

A. Finalization of the September 6, 2016 Interim Final Rule

In the September 6, 2016 Federal Register (81 FR 61538), HHS issued a department-wide interim final rule (IFR) titled “Adjustment of Civil Monetary Penalties for Inflation” that established new regulations at 45 CFR part 102 to adjust for inflation the maximum CMP amounts for the various CMP authorities for all agencies within the Department. HHS took this action to comply with the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Inflation Adjustment Act) (28 U.S.C. 2461 note 2(a)), as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (section 701 of the Bipartisan Budget Act of 2015, (Pub. L.114-74), enacted on November 2, 2015). In addition, the September 2016 IFR included updates to certain agency-specific regulations to reflect the new provisions governing the adjustment of civil monetary penalties for inflation in 45 CFR part 102.

One of the purposes of the Inflation Adjustment Act was to create a mechanism to allow for regular inflationary adjustments to federal civil monetary penalties. Section 2(b)(1) of the Inflation Adjustment Act. The 2015 amendments removed an inflation update exclusion that previously applied to the Social Security Act as well as to the Occupational Safety and Health Act. The 2015 amendments also “reset” the inflation calculations by excluding prior inflationary adjustments under the Inflation Adjustment Act and requiring agencies to identify, for each penalty, the year and corresponding amount(s) for which the maximum penalty level or range of minimum and maximum penalties was established (that is, originally enacted by Congress) or last adjusted other than pursuant to the Inflation Adjustment Act. In accordance with section 4 of the Inflation Adjustment Act, agencies were required to: (1) Adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rulemaking to take effect by August 1, 2016; and (2) make subsequent annual adjustments for inflation.

In the September 2016 interim final rule, HHS adopted new regulations at 45 CFR part 102 to govern adjustment of civil monetary penalties for inflation. The regulation at 45 CFR 102.1 provides that part 102 applies to each statutory provision under the laws administered by HHS (including the Centers for Medicare & Medicaid Services (CMS)) concerning CMPs, and that the regulations in part 102 supersede existing HHS regulations setting forth CMP amounts. The CMPs and the adjusted penalty amounts administered by all HHS agencies are listed in tabular form in 45 CFR 102.3. In addition to codifying the adjusted penalty amounts identified in § 102.3, the HHS-wide interim final rule included several technical conforming updates to certain agency-specific regulations, including various CMS regulations, to identify their updated information, and incorporate a cross-reference to the location of HHS-wide regulations.

In the September 12, 2017 Federal Register (82 FR 42748), CMS published a correcting amendment that corrected a limited number of technical and typographical errors identified in the CMS provisions of the September 6, 2016 IFR.

The Medicare provisions included in the September 2016 IFR are subject to requirements of section 1871(a) of the Social Security Act (the Act) which sets forth certain procedures for promulgating regulations necessary to carry out the administration of the insurance programs under Title XVIII of the Act. Section 1871(a)(3)(A) of the Act requires the Secretary, in consultation with the Director of the Office of Management and Budget (OMB), to establish a regular timeline for the publication of final regulations based on the previous publication of a proposed rule or an interim final rule. In accordance with section 1871(a)(3)(B) of the Act, such timeline may vary among different rules, based on the complexity of the rule, the number and scope of the comments received, and other relevant factors. However, the timeline for publishing the final rule cannot exceed 3 years from the date of publication of the proposed or interim final rule, unless there are exceptional circumstances. After consultation with the Director of OMB, the Secretary published a notice, which appeared in the December 30, 2004 Federal Register (69 FR 78442), establishing a general 3-year timeline for publishing Medicare final rules after the publication of a proposed or interim final rule.

Because the conforming changes to the Medicare provisions were part of a larger, omnibus departmental interim final rule, we inadvertently missed setting a target date for the final rule to make permanent the changes to the Medicare regulations in accordance with section 1871(a)(3)(A) of the Act and the procedures outlined in the December 2004 notice. Consistent with section 1871(a)(3)(C) of the Act, we published notices of continuation extending the effectiveness of the technical conforming changes to the Medicare regulations that were implemented through interim final rule and to allow time to publish a final rule (see the January 2, 2020 (85 FR 7) and September 8, 2020 (85 FR 55385) continuation documents). The extended time was needed to allow for coordination between CMS and the Department to issue a final rule and to avoid the potential for confusion between 45 CFR part 102, which established the civil monetary payment amounts, and the Medicare regulations subject to the timing requirements in section 1871(a)(3)(C) of the Act, which would otherwise cause the regulation to revert to the language that was used prior to the Inflation Adjustment Act.

In this final rule, we are finalizing the provisions of the September 6, 2016 IFR without modification. Because the provisions were established via interim final rulemaking, finalizing the provisions is pro forma for all agencies except CMS. Given the statutory requirements specified previously, finalization of the September 2016 IFR permanently establishes the interim final regulatory provisions for the Medicare program.

B. Calculation of Annual Inflation Adjustment

The annual inflation adjustment for each applicable CMP is determined using the percent increase in the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October of the year in which the amount of each CMP was most recently established or modified. In the December 23, 2020, Office of Management and Budget (OMB) Memorandum for the Heads of Executive Agencies and Departments, M-21-10, “Implementation of the Penalty Inflation Adjustments for 2021, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,” OMB published the multiplier for the required annual adjustment. The cost-of-living adjustment multiplier for 2021, based on the CPI-U for the month of October 2020, not seasonally adjusted, is 1.01182. The multiplier is applied to each applicable penalty amount that was updated and published for fiscal year (FY) 2020 and is rounded to the nearest dollar.

C. Other Revisions

In addition to the inflation adjustments for 2021, this final rule updates the table in 45 CFR 102.3 to add references to new, applicable civil money penalty authorities that were established or implemented since the publication of the January 17, 2020 update and that are being updated in this rule. The rule also corrects several technical errors to regulatory references in the table and updates descriptions for clarification and accuracy.

First, a CMS final rule, “Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals to Make Standard Charges Public” (84 FR 65524, November 27, 2019), effective January 1, 2021, finalized a new provision, codified at 45 CFR 180.90. That section establishes CMPs associated with a hospital's noncompliance with price transparency disclosure and display requirements, and the table has been modified to reflect this requirement.

Second, section 3202(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) added a requirement that each provider of a diagnostic test for COVID-19 make public the cash price for such test on the provider's public internet site, and authorized the Secretary to impose a CMP on a provider that fails to comply. Rulemaking entitled “Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency” (85 FR 71142, November 6, 2020) implemented this statutory requirement by establishing a provision at 45 CFR 182.70, allowing for imposition of a CMP, and the table has been modified to reflect this requirement.

Third, in a CMS interim final rule with comment period entitled “Medicare and Medicaid Programs, Clinical Laboratory Improvement Amendments (CLIA), and Patient Protection and Affordable Care Act; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency” (85 FR 54873 through 54874, September 2, 2020), CMS established requirements for all CLIA laboratories to report COVID-19 test results to the Secretary in such form and manner, and at such timing and frequency, as the Secretary may prescribe during the COVID-19 Public Health Emergency. Failure to report test results as required results in condition level deficiencies for which CMPs or other penalties may apply. The table has been modified to reflect this requirement. Also in this interim final rule, CMS codified new enforcement requirements at 42 CFR 488.447 establishing CMP amounts that may be imposed against long term care facilities that fail to report COVID-19 related data as required in 42 CFR 483.80(g)(1) and (2). The table has been modified to reflect these requirements.

Finally, the following technical errors were identified and are corrected in the table at 45 CFR 102.3:

• The regulatory reference of 42 CFR. 1003.210(a)(5) implementing 42 U.S.C. 1395cc(g) which was inadvertently omitted from the regulation and is added.
• The two descriptions of 42 U.S.C. 1395dd(d)(1) are revised for more accuracy because penalties for a responsible physician, unlike penalties for a hospital, are not tied to the number of beds in the hospital (see 42 U.S.C. 1395dd(d)(1)(B)).
• The first description tied to 42 U.S.C. 1395mm(i)(6)(B)(i) is revised from “is such plan” to “if such plan”.
• The regulatory references tied to 42 U.S.C. 1395ss(a)(2), (p)(8), (p)(9)(C), (q)(5)(C), (r)(6)(A), (s)(4), (t)(2) incorrectly referred to 42 CFR part 405 and are corrected to refer to 42 CFR part 402.
• The first set of regulatory references tied to 42 U.S.C. 1395ss(p)(8) are expanded to also include 42 CFR 402.105(f)(2), which was inadvertently omitted, and the corresponding description is revised to replace “any person” with “someone other than issuer” for greater accuracy and clarification.
• The description for the second set of regulatory references tied to 42 U.S.C. 1395ss(p)(8) is revised to replace “any person” with “an issuer” for greater accuracy and clarification.
• The first set of regulatory references tied to 42 U.S.C. 1395ss(p)(9)(C) are expanded to also include 42 CFR 402.105(f)(3) and (4), which were inadvertently omitted, and the corresponding description is revised to replace “any person” with “someone other than issuer” for greater accuracy and clarification.
• The description for the second set of regulatory references tied to 42 U.S.C. 1395ss(p)(9)(C) is revised to replace “any person” with “an issuer” for greater accuracy and clarification.
• The description for 42 U.S.C. 18081(c)(2) is being revised to “Failure to comply with ACA requirements related to risk adjustment, reinsurance, risk corridors, Exchanges (including QHP standards) and other ACA Subtitle D standards; Penalty for violations of rules or standards of behavior associated with issuer compliance with risk adjustment, reinsurance, risk corridors, Exchanges (including QHP standards) and other ACA Subtitle D standards. (42 U.S.C. 300gg-22(b)(2)(C))” for greater accuracy and clarification.
• Reference to the existing CMPs authorized under 42 U.S.C. 1395m-1(a) and 42 CFR 414.504(e) for a reporting entity that has failed to report or made a misrepresentation or omission in reporting applicable information was inadvertently omitted from the prior annual updates and the regulation is modified to include this authority and the 2021 adjusted amount. CMS, in separate rulemaking, made the initial catch-up adjustment for this amount in accordance with the 2015 Act on June 23, 2016 (81 FR 41036, 41069) which was $10,017, and noted that subsequent inflationary adjustments would be made to this amount annually.

++ The adjusted amounts applying the multiplier for each year beginning in 2017 through 2020 are as follows:

—The 2017 adjusted amount is $10,181 ($10,017 × 1.01636).

—The 2018 adjusted amount is $10,389 ($10,181 × 1.02041).

—The 2019 adjusted amount is $10,651 ($10,389 × 1.02522).

—The 2020 adjusted amount is $10,839 ($10,651 × 1.01764).

++ The 2021 adjusted amount is calculated by applying the 2021 multiplier to $10,839 and this adjusted amount is reflected in the table of the regulation at 45 CFR 102.3.

III. Statutory and Executive Order Reviews and Waiver of Proposed Rulemaking

The 2015 Act requires Federal agencies to publish annual penalty inflation adjustments notwithstanding section 553 of the Administrative Procedure Act (APA).

Section 4(a) of the 2015 Act directs Federal agencies to publish annual adjustments no later than January 15th of each year thereafter. In accordance with section 553 of the APA, most rules are subject to notice and comment and are effective no earlier than 30 days after publication in the Federal Register . However, section 4(b)(2) of the 2015 Act provides that each agency shall make the annual inflation adjustments “notwithstanding section 553” of the APA. According to OMB's Memorandum M-21-10, the phrase “notwithstanding section 553” in section 4(b)(2) of the 2015 Act means that “the public procedure the APA generally requires (that is, notice, an opportunity for comment, and a delay in effective date) is not required for agencies to issue regulations implementing the annual adjustment.”

Consistent with the language of the 2015 Act and OMB's implementation guidance, the inflation adjustments set out in this rule is not subject to notice and an opportunity for public comment and will be effective immediately upon publication. Additionally, HHS finds that notice and comment procedures would be impracticable and unnecessary under the APA for making the statutorily required inflation updates to newly established penalty amounts and for the ministerial and technical changes in this rule. In addition, HHS is waiving notice and comment for the non-substantive technical corrections set out in this final rule. HHS finds good cause for issuing these changes as a final rule without prior notice and comment because these changes only update the regulation to add the new CMP authorities that will be adjusted in accordance with the 2015 Act which were implemented since the last update and to add additional technical clarifying edits to descriptions and correcting inadvertent omissions and typographical errors. For these same reasons HHS also finds good cause to make the final rule effective upon publication.

Pursuant to OMB Memorandum M-21-10, HHS has determined that the annual inflation adjustment to the civil monetary penalties in its regulations does not trigger any requirements under procedural statutes and Executive Orders that govern rulemaking procedures.

IV. Effective and Applicability Dates

This rule is effective on the date specified in the DATES section of this final rule. The adjusted civil monetary penalty amounts apply to penalties assessed on or after date specified in the DATES section of this final rule, if the violation occurred on or after November 2, 2015. If the violation occurred before November 2, 2015, or a penalty was assessed before September 6, 2016, the pre-adjustment civil penalty amounts in effect before September 6, 2016, will apply.

List of Subjects in 45 CFR Part 102

• Administrative practice and procedure
• Penalties

For reasons discussed in the preamble, the Department of Health and Human Services adopts the interim final rule published September 6, 2016, at 81 FR 61537, as final with the following changes to 45 CFR part 102:

PART 102—ADJUSTMENT OF CIVIL MONETARY PENALTIES FOR INFLATION

1. The authority citation for part 102 continues to read as follows:

Authority: Public Law 101-410, Sec. 701 of Public Law 114-74, 31 U.S.C. 3801-3812.

2. Amend § 102.3 by revising table 1 to read as follows: