CMS Medicare Secondary Payer Enforcement for Workers' Comp Settlements
Summary
CMS announced enforcement actions for Medicare Secondary Payer Section 111 quarterly reporting, with penalties effective October 11, 2025 for settlements involving Medicare beneficiaries. CMS will conduct random quarterly audits using AI tools and publicly report results. Self-insured employers and insurance companies with workers' compensation claims settlements must ensure proper reporting to avoid penalties.
What changed
CMS announced two significant enforcement milestones for Medicare Secondary Payer compliance. First, October 11, 2025 marks the effective date for imposing penalties for failure to report settlements reached on or after October 11, 2024 under Section 111 reporting requirements. Failure to report a settlement within one year could result in significant penalties. Second, in February 2026, CMS announced it will begin random quarterly audits of Medicare Secondary Payer records, has engaged a new contractor to conduct audits, is using AI tools to perform these audits, and plans to publicly report audit results.
Self-insured employers and insurance companies must immediately review their Section 111 quarterly reporting compliance for workers' compensation claim settlements involving Medicare beneficiaries that resolved future medical issues since October 11, 2024. Entities should consult with workers' compensation counsel to confirm proper reporting is completed. Any settlements reached on or after October 11, 2024 that were not reported within one year may be subject to penalties. Companies should develop internal compliance procedures to ensure timely and accurate Section 111 reporting going forward.
What to do next
- Review Section 111 quarterly reporting compliance for all workers' compensation settlements involving Medicare beneficiaries since October 11, 2024
- Ensure any unreported settlements with future medical allocations are reported immediately to avoid penalties
- Consult with workers' compensation counsel to confirm Section 111 compliance and develop ongoing reporting procedures
Penalties
Significant civil penalties for failure to report settlements within one year; exact amounts not specified in this document
Source document (simplified)
April 6, 2026
A Full Court Press on Medicare Compliance
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While most of the country is engaged in basketball mania, the worker’s compensation community is huddling up to prepare for the Centers for Medicaid & Medicare Services’ (CMS) upcoming “full-court press” following its recent enforcement announcements. Developing a winning strategy for compliance requires careful attention to several key areas, including Section 111 quarterly reporting for ongoing worker’s compensation claims involving Medicare beneficiaries, evaluations of future medical care allocations, and settlement reporting obligations such as Total Payment of Compensation (TPOC). These conversations have taken on renewed urgency in light of CMS’s latest reporting enforcement initiatives:
October 11, 2025: CMS announced that this is the effective enforcement date for CMS to impose penalties for failure to report/noncompliance related to settlements reached on or after October 11, 2024, under Section 111. Failure to report a settlement reached within one year could result in significant penalties.
February, 2026: CMS announced it will begin random quarterly audits of Medicare Secondary Payer records for Section 111 reporting compliance. CMS has engaged a new contractor (CMS’ “referee”), is using AI tools to perform these audits, and plans to publicly report the audit results.
We recommend that self-insured employers and insurance companies develop a winning game plan by evaluating their Section 111 quarterly reporting compliance. This includes reviewing worker’s compensation claim settlements finalized since October 11, 2024, that involved Medicare beneficiaries and resolved a future medical issue, to ensure proper reporting is completed. Accurate and timely reporting can help employers avoid being “whistled” for penalties.
Self-insured employers and administrators should consult with their worker’s compensation counsel to review CMS reporting requirements and confirm Section 111 compliance, helping them stay off the bench and in the game.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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Ice Miller
2026
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