When Medicare was established as the secondary payer for injuries covered by other insurance, Congress strengthened that policy with Mandatory Insurer Reporting (MIR) under §111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. MIR requires responsible reporting entities (RREs), liability insurers (including self‑insureds), no‑fault carriers, and workers’ compensation plans to electronically report claims involving Medicare beneficiaries. These reports allow the Centers for Medicare & Medicaid Services (CMS) to identify when another party should pay medical bills first, recover conditional payments, and protect Medicare’s interests.
For self‑insured employers, carriers, TPAs, attorneys, and adjusters, MIR is a critical compliance requirement. Errors or delays in reporting trigger civil money penalties (CMPs), extend the life of a claim, and inflate reserves. CMS has adopted a penalty rule with an applicability date of October 11, 2024, and enforcement beginning October 11, 2025. With audits underway, organizations should understand how reporting mistakes translate into dollars and how to prevent them.
Understanding Mandatory Insurer Reporting
What Must Be Reported
Congress required RREs to report any payment to a Medicare‑eligible claimant where medical expenses are claimed or released. The law distinguishes between two types of reports
- Total Payment Obligation to the Claimant (TPOC) – the total amount of a settlement, judgment, award, or other payment, which must be reported when the claim resolves.
- Ongoing Responsibility for Medicals (ORM) – situations where a workers’ compensation or no‑fault plan assumes ongoing responsibility for medical expenses; RREs must report when they assume and when they terminate ORM.
Only the RRE or its designated reporting agent may submit data. A common misconception is that using a TPA or insurer relieves a self‑insured employer of responsibility. In reality, liability remains with the applicable plan, and late or incorrect reporting can result in penalties.
Why Accuracy Matters
Section 111 reports help Medicare coordinate benefits, seek reimbursement, and avoid paying claims it should not. Inaccurate data can cause Medicare to pay when it shouldn’t and then demand reimbursement, delaying claim closure. Incorrect or incomplete reporting can also prevent termination of ORM, keeping Medicare’s payment responsibility on hold and prolonging an insurer’s obligation to fund treatment.
The Cost of Non‑Compliance and Late Reporting
Civil Money Penalty Schedule
CMS’s Final Rule on civil money penalties took effect on December 11, 2023, and is applicable to coverage records with TPOC or ORM effective dates of October 11, 2024, or later; enforcement started October 11, 2025. The rule sets base penalties of $250, $500, and $1,000 per day (depending on how long the record is overdue) and caps the total penalty for any single instance of non‑compliance at $365,000. Because federal law requires these amounts to be adjusted annually for inflation, CMS has published inflation‑adjusted rates. As of the January 2026 Federal Register update, CMS’s CMP webpage states that the 2025‑inflation‑adjusted rates are $378 per day for records reported 1–2 years late, $756 per day for 2–3 years late, and $1,512 per day for 3 or more years late. The total penalty for a single instance of non‑compliance may not exceed $551,880. These amounts will continue to change with yearly inflation adjustments.
CMS will not “target” individual filers; it uses a randomized quarterly audit. Starting January 1, 2026, CMS began auditing approximately 250 coverage records per quarter (combined NGHP and GHP records). A record must both be reported late and be selected in this audit to trigger a CMP. Underlying statutes also permit penalties of up to $1,000 per day per claimant for failure to submit required information, and courts have upheld similar sanctions. These potential CMPs are in addition to reimbursement obligations for conditional payments or double damages under the Medicare Secondary Payer statute.
Administrative and Legal Costs
Penalties are only part of the story. CMS requires RREs to submit Total Payment Obligation to the Claimant (TPOC), and Ongoing Responsibility for Medicals (ORM) records within 365 days of the settlement or the date ORM is assumed. Failing to meet this timeliness requirement can trigger civil money penalties, and delays in reporting or correcting errors prolong claim resolution and increase attorney fees. The NGHP User Guide encourages direct data‑entry RREs to transmit claim information within 45 days of establishing a TPOC or assuming ORM so that the Benefits Coordination & Recovery Center can identify Medicare beneficiaries; however, this 45‑day guidance is an administrative recommendation rather than a penalty timeframe.
Prolonged disputes can increase indemnity and medical payments, while time spent correcting data diverts adjusters from moving other claims forward.
Common Reporting Errors That Drive Costs
CMS routinely publishes the top reporting errors. In early 2023, the most frequent mistakes included:
| Error code | Description | Records affected |
| CR12 | Representative phone missing when the injured party has a representative | 13,271 records |
| SP32 | Invalid termination date (ORM termination date equals the CMS date of incident) | 7,224 records |
| CI05/CI06 | Invalid diagnosis code(s) | 5,505 and 1,036 records |
| CP13 | No‑fault insurance limit under $500 | 5,475 records |
| SP49 | Delete transaction not matched to prior report | 4,798 records |
| TN99 | Invalid TIN or office code | 1,750 records |
| CJ07 | TPOC threshold error—ORM indicator “N” with cumulative TPOC amount of $0 | 724 records |
| CI03 | Invalid alleged cause of injury code | 2,259 records |
| CI31 | Incorrect ICD indicator for incident dates after Oct 1 2015 | 574 records |
Even “soft” errors that don’t cause rejection still show up on CMS response files and must be corrected. When these mistakes go unresolved, CMS cannot determine who should pay first, which delays conditional payment demands and can leave insurers funding treatment longer than necessary.
Recent CMS Guidance and Compliance Updates
CMS has recently issued several updates and clarifications that affect Section 111 reporting. Many industry articles summarize the penalty schedule or list top errors; however, they often omit these newer details. Understanding them helps organizations anticipate compliance challenges and avoid pitfalls.
20 % File‑Error Threshold and Hard Errors
In July 2024, CMS reiterated that certain “hard” errors (e.g., invalid TIN, invalid diagnosis codes or unmatched delete transactions) cause records to be rejected. If 20 % of claims in a quarterly claim file contain errors, the entire file will be suspended and not processed. This suspension can delay reporting of ongoing responsibility for medicals (ORM) or total payment obligations to claimants (TPOC) and may expose the RRE to late‑reporting penalties. Monitoring file‑level error rates and correcting data before submission prevents mass rejection and preserves timely reporting.
Audits beyond Section 111 Submissions and Limited Notice
The NGHP User Guide notes that CMS will audit both Section 111 reports and records from other sources to identify situations where an RRE may have completely failed to report. RREs will only be informed when CMS identifies a potential instance of non‑compliance. Silence does not mean compliance; adjusters should proactively validate that all reportable events are captured and that past errors are corrected.
$750 Reporting Threshold and Annual Review
CMS maintains a $750 low‑dollar threshold for conditional payment recovery and mandatory reporting. Liability, no‑fault, and workers’ compensation TPOCs of $750 or less generally are not reportable, and Medicare will not seek recovery of conditional payments below that amount. CMS’s November 18, 2025, alert confirmed that this threshold will remain at $750 for the 2026 reporting year, continuing the level that has been in place since 2017. Certain ingestion, implantation, or exposure claims are excluded from the threshold. CMS reviews the recovery threshold each year, so employers and carriers should monitor annual alerts to avoid unnecessary reports or missed obligations.
Complex settlements and Recovery Agent TIN Requirement
The latest NGHP User Guide provides new guidance for complex settlements. When a settlement or Medicare Set‑Aside (MSA) resolves multiple claims with different dates of incident, RREs must report the earliest date of incident and include all diagnosis codes for each injury or claim. Another change requires that if a recovery agent name is reported, the RRE must also include the recovery agent’s tax identification number (TIN); this field becomes mandatory for reports submitted on or after October 6 2025. These requirements necessitate careful data collection from all settlement partners.
New Response Codes and Technical Changes
CMS announced technical updates, including new unsolicited response reason codes and corrected response file timelines, effective April 2026. Updating systems and working with reporting agents before these codes take effect will prevent unexplained rejections or delays.
Timely Reporting Rules and Random Audits
CMS reiterates that TPOC coverage records must be submitted within 365 days of the settlement, judgment award, or other payment, and ORM coverage records must be submitted within 365 days of assuming ORM. A random quarterly audit of 250 records began in January 2026, and CMS plans to complete its first audit in February 2026. Records selected in these audits will include both Section 111 and non‑Section 111 records. If an RRE disagrees with CMS’s timeliness finding, it may provide mitigating evidence during the informal notice process. Maintaining a detailed timeline and supporting documents helps defend against unjust penalties.
Good‑faith Compliance Safe Harbor
When RREs cannot obtain the claimant’s “Big Five” data points—first name, last name, date of birth, gender and Social Security number (or Medicare ID)—CMS offers a good‑faith compliance safe harbor. During its 2026 webinar, CMS explained that RREs must make three attempts to gather this information: two attempts in writing (mail or email) and one additional attempt by phone, mail or email. RREs should maintain records of these attempts for at least five years. The safe harbor is satisfied once these attempts are documented, and if the claimant’s attorney refuses to provide the information in writing, no further outreach is required.
Contact Information, ICD codes, and TIN Verification
CMS advises RREs to keep Account Representative and Account Manager contact information current, because CMP correspondence will only be sent to those contacts. Reporting agents and designees will not receive these notices. CMS also recommends verifying TIN addresses using the U.S. Postal Service and reminds RREs that reports must include at least one valid ICD diagnosis code. Using excluded codes will cause rejection, so adjusters should cross‑check against CMS’s accepted ICD‑10 lists and correct records promptly.
Medicare Set‑Aside (MSA) Discrepancies
Beginning April 4 2025, CMS’s Section 111 reporting rules require workers’ compensation RREs to include Medicare Set‑Aside (MSA) amounts and related data for TPOC settlements. CMS has indicated that two quarterly reporting periods will pass before it begins assessing CMPs for non‑compliance. Legal commentators note that discrepancies between the MSA amount reported in the TPOC and the amount approved by CMS can disrupt the settlement process.
Industry briefings have noted that the Workers’ Compensation Review Center (WCRC) sometimes acts when the Medicare Set‑Aside (MSA) data reported in a Total Payment Obligation to the Claimant (TPOC) does not align with what CMS approved. For instance, WCRC has closed pending MSA submissions when a TPOC report lists a zero‑dollar MSA amount; it has also changed an “approved” MSA to non‑approved status when the TPOC shows an MSA amount lower than the CMS‑approved value. In some cases, WCRC has even switched a professional administration designation to self‑administration based on the data reported in the TPOC
Such discrepancies can derail settlements and force parties back to CMS for approvals, increasing attorney fees and keeping reserves open. To avoid these costly setbacks, RREs should cross‑check the MSA allocation in settlement agreements against the amount reported to CMS and verify that MSA data fields (time period, funding method, deposit amounts, and case control number) are complete and accurate. RREs should also document any changes to the MSA after settlement and coordinate with reporting agents to ensure that updates are correctly captured.
How Reporting Errors Inflate Claim Costs and Reserves
Extended Claim Life and Higher Indemnity/Medical Payments
When CMS flags errors or missing data, claim files remain open longer. Adjusters cannot close the file until CMS confirms that Medicare’s interests are protected. During this extended period, employers and insurers continue paying medical bills, wage replacement, and case management expenses. This directly increases the claim’s indemnity and medical costs.
Reserve Impact
Claims reserves represent the money set aside to pay future benefits and expenses. Accurate reserves provide financial stability and prevent unexpected spikes in expenses. Adjusters establish reserves early, often before they have complete medical information. As new facts emerge, reserves should be adjusted; however, unresolved Section 111 issues add uncertainty.
When a claim remains open because of unresolved MIR errors or MSA discrepancies, the adjuster must maintain a higher reserve. Over‑reserving ties up capital that could be used elsewhere, while under‑reserving risks underestimating liabilities, which can strain budgets when payments are due. Failing to regularly update reserves or relying on outdated assumptions are common mistakes that cause financial instability. Inaccurate reporting compounds this problem by obscuring the true exposure.
Litigation and Recovery Actions
Incorrect reporting can also trigger recovery actions by Medicare. CMS may seek reimbursement of conditional payments plus interest or double damages in court. Disputes over conditional payments and MSAs often require legal counsel, mediation, and additional discovery, further inflating claim costs and requiring adjustments to reserves. While this blog focuses on reporting penalties, readers should remember that Medicare has broad recovery rights.
Best Practices to Prevent Reporting Errors
1. Collect Complete Data Early
CMS allows penalties to be waived when an RRE makes a good faith effort to obtain the key beneficiary identifiers (last name, first name, middle initial if available, date of birth, gender, and Social Security number or Medicare ID). Under CMS’s safe‑harbor guidance, the RRE must make three separate attempts to gather this information: two written requests (usually by mail or email) to the claimant and, where applicable, to the claimant’s attorney, and one additional attempt by telephone, mail, or email. Once either the claimant or their attorney refuses to provide the information, or after three unsuccessful attempts, the RRE may stop. However, the RRE must document each outreach and retain records for five years. Adjusters should initiate these requests promptly and ensure that documentation is readily available to demonstrate compliance if CMS later questions the submission.
2. Train Staff on TPOC and ORM Rules
Many errors stem from misunderstanding when to report or terminate ORM. CMS has updated ORM termination rules and encourages automation. Provide regular training to adjusters and TPAs on when ORM must be reported, how to enter termination dates, and the monetary thresholds for TPOCs.
3. Validate Data Against CMS Error Codes
Use CMS’s top error codes as a checklist. Build system edits to verify that representative phone numbers, diagnosis codes, TINs, and insurance limits are correctly populated. Verify TIN addresses through the U.S. Postal Service and confirm that each record includes at least one valid ICD‑10 diagnosis code—using codes from the excluded list will cause rejection. Ensure that deleted transactions match previously accepted reports and that the TPOC threshold logic aligns with CMS rules. Incorporate a second set of eyes or automated validation before submitting reports to keep the file‑error rate below CMS’s 20 % suspension threshold.
4. Cross‑check MSA Amounts
With MSA reporting becoming mandatory, confirm that the MSA amount in the settlement documents matches what will be reported to CMS. Perform an internal audit or engage an outside expert to compare the MSA allocation against the approved amount and the TPOC. Do not rely solely on a reporting agent; verify that the data is consistent before submission.
5. Review and Adjust Reserves Promptly
Establish a process to review reserves at regular intervals and update them whenever new information becomes available. Document the rationale for each reserve change and communicate with all stakeholders, including defense counsel and medical providers, to ensure that reserves reflect current exposure. Early resolution of MIR issues shortens claim duration and allows reserves to be released sooner.
6. Partner with Experienced Compliance Counsel
Misconceptions about who must report and when persist. Experienced counsel can help determine whether the employer, insurer, or TPA is the RRE and can develop reporting protocols. They can also audit historical data, correct inaccuracies, and represent your organization in communications with CMS.
7. Keep Contacts and Regulatory Thresholds Current
CMS will only send civil money penalty notices to the Account Representative and Account Manager on file. Update these contacts regularly through the Coordination of Benefits Secure Website and your electronic data interchange (EDI) representative so that critical notices are not missed. Monitor annual CMS announcements on the reporting and recovery threshold (currently $750) and ensure systems are updated for new unsolicited response codes and technical changes.
Insights from Cattie & Gonzalez
Attorneys John Cattie and Barrye Panepinto Miyagi have published articles dispelling common myths about Section 111 reporting and reminding employers that penalties can reach $1,000 per day per claimant under existing statutory authority. Rafael Gonzalez and other commentators have cautioned that inaccurate MSA reporting can result in CMS notices and even conversion of an approved MSA to a non‑approved status when the TPOC amount is inconsistent with the approved allocation (see discussion above). They stress the importance of verifying that reported MSA amounts align with the approved allocation and of cross‑checking conditional payments to ensure accuracy.
These insights underscore the value of sound compliance practices. Reviewing conditional payments, set‑aside allocations, and demographic details before submission reduces the risk of discrepancies and preserves settlement approvals. Drawing on guidance from subject‑matter experts—including past publications by Cattie & Gonzalez and other experienced Medicare Secondary Payer practitioners—can help refine internal processes, reduce errors, and protect Medicare’s interests without resorting to penalties or prolonged disputes.
Final Thoughts
Mandatory Insurer Reporting is more than a regulatory obligation—it is a key driver of claim efficiency. Errors or delays can lead to significant civil money penalties, prolonged claim durations, inaccurate reserves, and expensive disputes. With CMS’s penalty rule now in place, self‑insured employers, carriers, TPAs, attorneys, and adjusters invest in accurate data collection, staff training, and regular audits. Using CMS’s error codes as a roadmap, cross‑checking MSA amounts, and implementing the best practices outlined here help organizations stay compliant. Through proactive planning, organizations reduce claim costs, free up reserves, and protect their bottom line while protecting Medicare’s interests.