Understand CMS’ Sanction and Penalty Rules


Leading, building and growing a Medicare Advantage plan is not easy. The constant oversight, ever-changing guidance, and audit after audit can be overwhelming to keep your plan moving forward. Then, you find out your plan has been sanctioned by CMS. What next? How do teams survive? There are still members who require the highest quality of care and now you must remediate Centers for Medicare & Medicaid (CMS) findings at the same time. With the right focus and support across the organization, you can survive and come out better and stronger.

CMS has the authority to take action when it determines that a Medicare Plan Sponsor either:

  • Substantially fails to comply with program and/or contract requirements.
  • Is carrying out its contract with CMS in a manner that is inconsistent with the efficient and effective administration of the Medicare Part C and Part D program requirements.
  • No longer substantially meets the applicable conditions of the Medicare Part C and D program.

Enforcement and contract actions include:

  • Civil money penalties (CMP)
  • Intermediate sanctions, such as suspension of marketing, enrollment or payment
  • Terminations

Types of Sanctions

Federal regulations say that intermediate sanctions could be imposed and remain in place until CMS can verify deficiencies have been corrected. The sanctions include:

  • Suspension of the MA organization's enrollment of Medicare beneficiaries.
  • Suspension of payment to the MA organization for Medicare beneficiaries enrolled after the date CMS notifies the organization of the intermediate sanction.
  • Suspension of communication activities to Medicare beneficiaries by an MA organization, as defined by CMS.

The code also specifies that CMS may impose civil money penalties.

CMS has taken the following actions since 2020:

CMS Action Chart

CMS removed the moratorium on terminating plans for Star Ratings performance. As of February 2023, a plan was informed of the decision by CMS to terminate the plan at the end of 2023. CMS determined that the plan was unable to carry out its contract with CMS by having three years of Part D summary ratings below three Stars. The plan was notified annually of their poor performance with the release of the previous three years of Star Ratings.

What to Do If You're Sanctioned

Once a plan is sanctioned the hard work to remediate the findings by CMS begins. However, the situation is not necessarily bad. As with any type of punishment, the sanction gives the plan the ability to correct their course and do business compliantly. It will require a team focused on assessing people, processes and technology, then making the changes needed and long hours of work to have the sanction lifted. Plans who most successfully weather a sanction come out the other side with staff who have become compliance experts in their areas and hold each other and the plan accountable.

It is vastly important to understand your internal compliance team is a partner who is there to ensure you never get to this point. A health plan must embrace compliance and see them as their friend and colleague. The guidance they provide should not be viewed as lip service, but as the right thing to do all the time. Compliance is everyone’s job and entails keeping the member’s best interests in mind while aligning with what CMS requires of the plan.

Whether CMS imposes intermediate sanctions or Civil Money Penalties, the goal is to ensure our most vulnerable population receives the right care, at the right time, in the right place. Just as it takes time to regain an individual’s trust, it will take time for the plan to regain CMS’s trust. Expect to live under a regulatory microscope for many years after sanction release.

Healthmine’s consultants can help you expertly navigate sanctions and prevent them in the future. Reach out to or to find out how we can put strategies in place that deliver the care your members want, need and that CMS expects.

Cherié has more than 18 years of experience in health plan operations, quality improvement, regulatory compliance, system implementations, process improvement and strategic solutions. Cherié has led organizations through major transitions such as sanction remediation, reorganization, and mergers and acquisitions resulting in sustainable, compliant processes and procedures. She has a strong background in Medicare Advantage with an emphasis on enrollment, reconciliation, premium billing, fulfillment, appeals, grievances, Star Ratings and compliance.
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John Willis is a quality improvement expert with over 20 years of experience guiding managed care plans to success. Having worked in Stars since its inception, he has a proven track record of building out turn-key strategies that enable Medicare Advantage plans to boost Star Ratings. He has significant experience working with Medicare Advantage, Dual-Eligible Special Needs Plans, Individual Special Needs Plans to improve member experiences and quality scores.
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