Beginning October 11, 2025, failure to comply with the statutory obligation that most insurers of medical claims (including self-insured entities) have to report claims under Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA 111) may result in the imposition of civil monetary penalties (CMPs). While this development does not change the existing federal False Claims Act liability risk for causing Medicare to overpay claims because of MMSEA 111 reporting errors, the addition of CMPs for MMSEA 111 noncompliance marks a significant shift in the MMSEA 111 risk profile for insurers, self-insured entities, and third-party administrators that are required to report under MMSEA 111. Stakeholders in the liability, no-fault, workers’ compensation, and group health plan spaces should take immediate steps to ensure compliance with reporting obligations to avoid substantial penalties.
In Depth
Background
MMSEA 111 requires certain entities, referred to as responsible reporting entities (RREs), to report information to the Centers for Medicare & Medicaid Services (CMS) about Medicare beneficiaries who are covered under their plans or who receive settlements, judgments, awards, or other payments. The purpose of this reporting is to provide CMS with the information necessary to properly coordinate benefits and avoid making payments on Medicare claims when another entity is responsible.
The MMSEA 111 framework differs depending on whether an RRE is a non-group health plan (NGHP) or a group health plan (GHP). NGHPs include liability insurers (including self-insurers), no-fault insurers, and workers’ compensation laws or plans. GHPs include insurers and third-party administrators for GHPs, as well as plan administrators or fiduciaries of self-insured and self-administered plans.
While reporting obligations are not changing, CMS published a final rule in 2023 that authorizes the agency to impose CMPs for noncompliance. Enforcement via random quarterly claim audits will begin on October 11, 2025, appliable to reporting failures related to events occurring on or after October 11, 2024.
Reporting requirements for NGHPs
NGHPs must register with CMS’s Benefits Coordination & Recovery Center (BCRC) and are expected to timely report claim information on a quarterly basis. NGHPs are required to report when they assume ongoing responsibility for medicals (ORM) or make a total payment obligation to a claimant (TPOC), such as a settlement or judgment involving a Medicare beneficiary. ORM reporting is triggered when the RRE assumes responsibility to pay, on an ongoing basis, for the injured party’s medicals associated with a claim. This often applies to no-fault and workers’ compensation claims but may occur in some circumstances with liability insurance. TPOC reporting is required when a one-time or lump-sum payment is made to resolve a claim. CMS has established a $750 threshold for TPOC reporting, although certain exceptions apply. To be considered in compliance with the timeliness requirement, NGHPs must report events within one year of the event triggering the reporting obligation, such as the date of incident for which an ORM is assumed or the date of a TPOC settlement.
Among the entities classified as NGHPs are healthcare providers that “self-insure” for risk management purposes. Such “self-insurance” occurs when an NGHP writes off some or all of a Medicare beneficiary’s medical bill (including patient out-of-pocket costs) in order to reduce the risk of a future liability claim or provides a Medicare beneficiary (or another party) with something of value to reduce the risk of a future liability claim.
Enforcement and penalties for NGHPs
For NGHPs, CMS may impose inflation-adjusted penalties of $250 per day per record if a record is between one and two years late, $500 per day per record if a record is between two and three years late, and $1,000 per day per record if a record is three or more years late. There is a maximum inflation-adjusted penalty of $365,000 per record. Because of the annual inflation adjustments, these CMP amounts, including the CMP cap, are currently in excess of the base amounts and will likely continue to increase annually.
There are two safe harbors where the CMP would not apply to NGHPs:
- Any untimely reporting that is the result of a technical or system issue outside of the RRE’s control or that is a result of an error caused by CMS or one of its contractors
- Any untimely reporting by an NGHP that has made a good faith effort to obtain the necessary reporting information because of a lack of cooperation by the beneficiary
RREs must retain documentation of these good faith efforts for five years because of CMS’s right to audit.
How this affects GHPs
GHPs are subject to MMSEA 111 reporting requirements and, like NGHPs, will be subject to CMPs for noncompliance. GHPs must also register with the BCRC and quarterly report coverage information for Medicare beneficiaries enrolled in their plans. GHP reporting must reflect any changes in coverage, including new enrollees, terminations, and corrections to previously submitted records. GHPs may choose between a basic reporting option, which includes hospital, medical, and primary prescription drug coverage, and an expanded reporting option, which also includes supplemental or secondary prescription drug coverage.
CMS will begin imposing CMPs for GHPs in the same timeframe as NGHPs, with penalties assessed for untimely reporting of coverage records. A GHP record is considered timely if the record is reported within one year of the latter of the coverage effective date or the date the individual became a Medicare beneficiary.
GHPs are subject to inflation-adjusted CMPs of $1,000 per day per record of noncompliance, with a maximum inflation-adjusted CMP of $365,000 per record. As with the NGHP CMP amounts, the current amounts are already higher than these base amounts because of the inflation adjustment and will likely continue to increase on an annual basis. As with NGHPs, enforcement will be prospective only. Although there is a safe harbor for technical or system issues outside of the RRE’s control, there is no good faith safe harbor for GHPs.
RRE audits
CMS will begin MMSEA 111 audits in January 2026. These audits will cover new claims that were reported during the prior calendar quarter (with the initial reporting period looking back to October 15, 2025). CMS will select a random sample of 250 new Medicare secondary payer occurrences each quarter to assess compliance. Audits will include occurrences of both MMSEA 111 submissions and records from sources outside of the MMSEA 111 reporting process to ensure that CMS does not miss situations where an RRE has entirely failed to report the occurrence. RREs found to be noncompliant will receive a notice of proposed penalty and will have the opportunity to appeal through CMS’s administrative process.
Conclusion
With the reporting enforcement date of October 11, 2025, quickly approaching, RREs should take immediate steps to assess their compliance with MMSEA 111 reporting requirements. This includes ensuring timely and accurate submission of required records and reviewing internal compliance procedures. Any records out of compliance should be updated as soon as possible. NGHPs should also document any good faith efforts to obtain necessary information from beneficiaries, and RREs should be prepared to respond to MMSEA 111 audits beginning in 2026.
While these audits might appear to represent a very small portion of the new claims that are likely to be reported each quarter, they nonetheless present a risk of enforcement that did not previously exist and the potential for material financial penalties. Identification of improperly reported claims through the new audits may lead to more widespread enforcement of MMSEA 111 reporting requirements under the False Claims Act in circumstances where reporting failures or deficiencies resulted in Medicare paying a claim that was the responsibility of a previously undisclosed primary payor. All RREs should use the CMP reporting deadline as an opportunity to review MMSEA 111 reporting compliance and, if necessary, take corrective actions before October 15, 2025.
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