CMS Section 111 refers to the Medicare Secondary Payer (MSP) mandatory reporting requirements under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). It obligates Responsible Reporting Entities (RREs) – such as liability insurers, no-fault insurers, workers’ compensation plans, and self-insured entities – to report information about Medicare beneficiaries who have primary coverage or receive settlements, judgments, awards, or other payments (including Total Payment Obligation to the Claimant or TPOC, and Ongoing Responsibility for Medicals or ORM). The goal is to ensure Medicare acts as a secondary payer where appropriate and to facilitate recovery of conditional payments.

This year, audits become part of CMS’s enforcement mechanism for Section 111 compliance, specifically targeting Non-Group Health Plans (NGHP) like workers’ compensation, liability, and no-fault insurance. These audits focus on verifying timely reporting of MSP occurrences. According to official CMS guidance, audits commenced in January 2026 and are conducted quarterly thereafter.

New Audit Process

– – Selection: CMS randomly selects 250 new MSP records per quarter from all accepted Section 111 submissions during the review period, plus records from non-Section 111 sources (e.g., self-reports from beneficiaries or providers). The sample is proportionate to the volume of Group Health Plan (GHP) and NGHP records.
– – Focus Areas: Audits check for timeliness, requiring reports within 365 days of key dates like the settlement date, funding delayed beyond TPOC date, or assumption of ORM. Non-Section 111 records are also reviewed if no matching Section 111 report exists within that window.
– – Compliance Review: RREs are notified only if potential non-compliance is identified. They can provide mitigating evidence (e.g., documentation of good-faith efforts). If non-compliance is confirmed, CMS issues an Informal Notice, followed by a Notice of Proposed Determination (with 60 days to request a hearing), and potentially a Final Determination.
– – Timeline Notes: The compliance “clock” started on October 11, 2024, for reportable events on or after that date. Enforcement via Civil Money Penalties (CMPs) applies prospectively from October 11, 2025. First notices of potential CMPs may issue as early as March 2026.

Informal Notice- Intention to Impose a Civil Money Penalty

– – First letter (Notice) issued when a noncompliant record was identified on CMS’ quarterly audit.
– – A CMP is not being assessed at this point, rather, the RRE’s noncompliant record is identified along with the associated information so that an RRE may investigate the record.
– – The process to submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance is outlined in this letter. Mitigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice. This is the opportunity for RREs to explain why a CMP should not be imposed.

As of the 2026 adjustment, the maximum daily penalty for NGHP reporting non-compliance is $1,512 (up from $1,428 in 2024).  Late Reporting Timeframe Penalty per Day:

– – More than 1 year but less than 2 years late $357 per day.
– – More than 2 years but less than 3 years late $714 per day.
– – More than 3 years late $1,512 per day.
– – Maximum per instance: $365,000

More information about the new audit process, and compliance with Section 111 is available on the CMS website.