Top 5 Medicare Secondary Payer Predictions for 2026

As we look ahead in 2026, one thing is clear: Medicare Secondary Payer (MSP) compliance is no longer a “back office” issue; it is a “front-line” risk management priority. Regulatory pressure continues to mount, the Centers for Medicare and Medicaid Services (CMS) has sharpened its enforcement tools, and private entities, such as MSP Recovery LLC, are becoming increasingly aggressive in recovery efforts. 

Based on what we are seeing across workers’ compensation, liability, and no-fault claims, here are my top five MSP predictions for 2026. 

1. CMS Will Impose Penalties on Noncompliant Insurance Payers for Section 111 Reporting 

Section 111 Mandatory Insurer Reporting has existed for over a decade, but 2026 will mark a turning point in enforcement. CMS has been clear: reporting is not optional, and tolerance for errors or noncompliance is diminishing. 

As CMS begins to audit Responsible Reporting Entities (RREs) as mandated this year, I expect CMS to move from mere warnings to actually levying civil monetary penalties for insurers and self-insureds who fail to report accurately and timely. With CMS’ data analytics becoming more sophisticated, identifying reporting gaps is easier than ever. Payers that have delayed ensuring their Section 111 program is cohesive, compliant, and effective may feel the impact first.  

Takeaway: With the news of a non-group health plan RRE being hit with substantive civil money penalties more likely than ever this year, Section 111 compliance will be treated as a regulatory obligation with real financial consequences, not a best practice. 

The Sanderson Firm Solution: Complete a Section 111 audit to identify potential gaps in reporting and exposure. Our audits do not have to take months to perform and can provide key insight into your reporting program. Training for those responsible for inputting Section 111 data is also key to help prevent errors and penalties. We provide comprehensive training tailored to your unique Section 111 program. Having a partner who can identify potential gaps in reporting through data analysis can be an invaluable second layer of review.  Whether we are your reporting partner, you report internally, or you are using another vendor, our dedicated team of Section 111 experts can help be the second set of eyes your program needs to succeed.   

2. Increased Awareness of the Need to Protect Medicare with MSAs in Below-Threshold Settlements 

For years, many stakeholders assumed Medicare Set-Asides (MSAs) were only necessary in “CMS review threshold” cases. That misconception continues to erode. 

With WCMSA reporting requirements shining a spotlight on post-settlement medical exposure, we are seeing increased awareness that Medicare must be protected, even in settlements that fall below CMS’ workload review thresholds. CMS has always stated their thresholds were never “safe harbors.” In 2026, this trend will accelerate as payers recognize that reporting alone does not equal compliance, and that repeated reporting of zero MSAs for below-threshold settlements may trigger scrutiny from CMS, especially if Ongoing Responsibility for Medical (ORM) has been reported. Also, placing an unsubstantiated number in the settlement documents or putting the onus on the claimant to put aside funds may be insufficient to prevent potential future exposure.  

Takeaway: The industry continues to move toward a risk-based MSA analysis model, not a threshold-driven one. Low dollar settlements that do not exceed CMS’ applicable review thresholds but involve a Medicare beneficiary must include either a substantiated zero allocations or a simple funded allocation to protect Medicare’s interest at a reasonable cost.  

The Sanderson Firm Solution: Sanderson Firm’s Zero iMSAs and cost-effective evidence-based Abbreviated MSAs (aMSAs) are designed to protect Medicare’s interest, preventing future exposure and high claim costs.   

3. Increased Activity from MSP Recovery: More Demand Letters and Double Damages Litigation 

MSP Recovery LLC and similar entities will not go away in 2026; their activity will increase. 

We have already seen, and anticipate continuing to see, a rise in demand letters seeking to collect for alleged conditional payments (many seeking double damages for the mere existence of a possible balance even though no prior notice was provided to the payer), as well as an uptick in litigation asserting double damages under the MSP statute. The actions by these private entities, who have  made a cottage industry out of the MSP Act’s double damages private cause of action, often rely on data mining rather than claim-specific analysis, forcing payers to defend aggressively or risk costly settlements. 

Takeaway: Strong documentation, defensible MSP processes, and proactive compliance strategies, particularly with resolving Medicare Advantage (Part C) and Medicare Prescription Drug (Part D) plans will be critical in mitigating exposure. 

The Sanderson Firm Solution: As a Medicare compliance law firm, we offer legal, cost-saving, and immediate solutions to stop these actors in their tracks by aggressively challenging these demands to prevent unnecessary recovery. If you receive these demands, we have the tools and the experience needed to address them.   

4. Non-Submit MSAs Will Continue to Gain Traction, and CMS Submission Numbers Will Decline Again 

CMS MSA submission statistics have already shown a downward trend and 2026 will continue that trajectory. 

As uncertainty remains around approval outcomes, more payers are embracing non-submit MSAs paired with solid Medicare compliance documentation and indemnification. When prepared properly with utilization of evidence-based medicine standards and guidelines, these MSAs effectively protect Medicare while allowing claims to often settle more quickly and efficiently. 

CMS’ 2026 end-of-year statistics will likely reflect another decrease in submitted MSAs, reinforcing what the industry already knows: MSA submission is no longer viewed as the default/sole approach, even for those settlements exceeding the applicable workload review thresholds. MSA submission to CMS remains a voluntary process, and with good reason.   

Takeaway: Non-submit MSAs are becoming a mainstream compliance strategy, not an exception. 

The Sanderson Firm Solution: We offer both evidence-based and indemnified non-submit MSA options depending on your specific compliance program needs. All of our allocations are completed and reviewed by experienced allocators and legal experts with over 700 years of combined clinical and legal experience, and are based upon compliant, supported, evidence-based standards.   

5. Part C and D Plans Will Increase Conditional Payment Recovery Efforts 

Finally, expect heightened activity from Medicare Advantage (Part C) and Prescription Drug (Part D) plans. CMS’ pressure as evidenced by a recent Part D memo, signals a clear expectation that CMS expects these plans to pursue conditional payment recovery. 

In 2026, we will see more data sharing by CMS with these private plans, which will result in increased conditional payment letters and potentially more aggressive recovery timelines. 

Takeaway: Ignoring Part C and D exposure is no longer an option; compliance programs must address all parts of Medicare.  

The Sanderson Firm Solution: Our Part C and D lien resolution program options help ensure Part C and D plan liens are addressed prior to settlement in a timely, cost-effective manner. With an experienced team dedicated solely to recovery resolution, we work hard to identify lienholders, and at expertly disputing and successfully resolving the balances. 

Final Thoughts 

The MSP landscape in 2026 will be defined by enforcement, accountability, and sophistication. CMS, private recovery entities, and Medicare Advantage and Prescription Drug plans are aligned around one goal: ensuring Medicare is not paying when it shouldn’t. 

Organizations that invest now in proactive MSP compliance, through reporting accuracy, defensible MSA strategies, and strong documentation, will be best positioned to navigate the year ahead. 

At Sanderson Firm, we believe that Medicare Secondary Payer (MSP) compliance doesn’t have to slow settlements, it simply has to be done right. Contact us to learn more about our full-service MSP compliance service offerings: Medicare Set-Aside allocations, conditional payment/lien resolution, Section 111 Mandatory Insurer Reporting and audits, as well as legal consulting services.  

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