CMS’ Delayed Enforcement of Civil Monetary Penalties Provides More Time for Medicare Compliance 

By Jeff Stinson 

In the last several years, the Centers for Medicare & Medicaid Services has instituted a number of changes in its processes and procedures. These changes have affected both the submission and review of Medicare Set-Asides (MSAs) but most notably the reporting requirements for carriers under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. CMS recently delayed the penalty provisions associated with failure to adequately prepare Section 111 reporting in workers’ compensation claims, but time is ticking, and those who handle workers’ compensation claims on the carrier or defense side have limited time to get their compliance up to speed, or they risk significant penalties. 

As a quick refresher, on October 11, 2024, CMS started enforcing failure to report ongoing responsibility for medical treatment (ORM) and total paid on claim or settlement (TPOC) for Medicare beneficiaries. While the reporting requirements have been in place since 2010, there was no enforcement mechanism or penalty associated with the failure to report. CMS put the public, as well as workers’ compensation stakeholders, on notice that if responsible reporting entities (RREs) – including insurance carriers, self-insured employers and third-party administrators – failed to report any triggering event, such as ORM or TPOC, within one year of the event, they would be subject to a daily civil monetary penalty per violation. The penalties were set to be due starting on October 11, 2025, which was one year after the notice for RREs to comply was issued. CMS notified RREs that the daily penalties would start at $250 per day, per violation for reporting that was more than a year late but would go up as high as $1,000 per day, per violation if the reporting was more than three years late. (The penalties are also adjusted annually for inflation, and thus the actual penalty would be even higher than the published amount.) 

While RREs were already scrambling to ensure that their Section 111 reporting was in order, CMS threw a new wrinkle into the process as of April 4, 2025. In addition to the requirements that ORM and TPOC be reported within one year of the triggering event, CMS requested that RREs provide additional information on any settlement (TPOC) involving a Medicare beneficiary that closes out the medical portion of a claim and exceeds $750, regardless of whether the claim was accepted or denied. Specifically, CMS requested RREs provide to them seven pieces of data:  

• the MSA amount 

• the MSA period 

• whether the MSA was funded with a lump sum or through a structure 

• the initial or “seed” money paid 

• the annual amounts paid (if an annuity is being used) 

• the case control number 

• the name of the person (including the injured worker) who is administering the MSA.  

CMS has publicly stated that these additional seven pieces of data are required for a TPOC to be considered complete, which means that failure to provide it could lead to the imposition of the aforementioned civil monetary penalties. 

CMS advised that it planned to randomly audit 250 records to assess for Section 111 compliance starting in early 2026. However, RREs and Medicare professionals reported significant issues with completing the required reporting, most notably with the seven new data fields related to settlement that CMS began requiring. Likely as a result of the outcry within the Medicare industry, during a webinar hosted by CMS in January 2026, the agency delayed the enforcement mechanism and imposition of penalties to July 2026 for workers’ compensation claims. Presumably, sometime in the third quarter of 2026, the first random auditing will take place, and the first RREs will be fined for failure to comply with Section 111 reporting requirements. 

In light of this latest news from CMS, RREs involved in workers’ compensation claims have another few months to get their Medicare compliance in order. CMS has indicated that any triggering event after July 1, 2025, will be subject to the civil monetary penalties starting one year after that date, which potentially means a delinquent carrier may face civil monetary penalties as soon as this July. While the initial penalties will be limited to the $250 daily amount, an RRE that neglects its reporting responsibilities could be looking at up to a $1,000 daily fine if it has not reported the triggering event within three years. Even worse, as outlined above, since there are two triggering events (ORM and TPOC) and the penalties apply per violation, an RRE could theoretically be fined up to $2,000 per day if it fails to report both. 

Medicare compliance is an ever-changing field. CMS has given RREs nearly a year of a lifeline from its original plan to start issuing penalties to ensure that compliance is up to speed. There is still time to ensure full compliance by July 2026, but RREs need to be prepared to face stiff and escalating penalties if they fail to get their Medicare house of cards in order soon. 

Jeff Stinson, a partner at law firm Swift Currie, has more than 23 years of experience advocating for and counseling insurance companies and employers through difficult workers’ compensation claims and is recognized by peers as being an expert in Medicare compliance. He can be reached at jeff.stinson@swiftcurrie.com. 

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