Keenan Briefings

Briefing

Center for Medicare Services: Avoid Section 111 Civil Monetary Penalties

On January 15, 2026, the Center for Medicare Services (CMS) hosted a webinar providing an industry update on the Civil Monetary Penalties Final Rule and the auditing process for noncompliance with Section 111 reporting requirements, which became effective October 11, 2024.

CMS Compliance Alert

While Keenan will maintain Section 111 reporting compliance to CMS, as the employer and the responsible reporting entity (RRE), these informal notifications from CMS may come directly to your attention via email, as you are registered as the Account Representative. Following the informal notification, formal notice of proposed determinations of Civil Monetary Penalty will be sent via certified mail.

If you receive a notice from CMS for noncompliance and Civil Monetary Penalty, it is critical that you notify Keenan immediately. These penalty notifications are extremely time-sensitive, allowing only 30 days to investigate the record and for the submission of mitigating evidence. CMS has advised that time extensions beyond the 30 days will not be granted.  

Starting as early as February 2026, CMS will begin random quarterly audits, pulling in 250 records regarding non-group health plans (NGHP) and Group Health Plans (GHP) to determine whether a Responsible Reporting Entity may be subject to a Civil Monetary Penalty. This means that effective October 11, 2025, that Ongoing Responsibility for Medical (ORM) and/or reporting of settlements/Total Payment Obligation to the Claimant (TPOC) made on or after October 11, 2024, must be reported through Section 111 Reporting within 365 days of the event.

Due to CMS’s requirement to report added mandatory TPOC data fields inclusive of the Medicare Set Aside amount and coverage period effective April 4, 2025, the TPOC auditing process will become effective July 1, 2026. If reporting fails to occur within the first 365 days of the event, the Responsible Reporting Entity is subject to Civil Monetary Penalties.

• Noncompliance includes failing to report new beneficiary records to CMS timely and accurately, untimely or incorrect reporting of required ORM or TPOC information, and/or late notification of the assumption of ORM.
• Timeliness is determined by comparing when the date a record was submitted and accepted against the date CMS should have received the record. The date CMS should receive a record is determined by the effective date of coverage or the date of claim settlement.
• Noncompliance includes untimely or inaccurate reporting of TPOC date and of the total amount of the Compromise & Release settlement.
• Noncompliance includes untimely reporting of ORM.

Notification by CMS for Non-Compliance and The Appeal Process

• CMS - Informal Written Pre-Notice of CMP – 30 days to issue a timely response with rationale and supporting documentation or mitigating information prior to a formal notice
• CMS - Formal Written Notice proposed determinations of CMP – this notice follows the informal notice. If CMS determines a CMP will be imposed, CMS will provide the following:
• Notification of the triggering event (ORM/TPOC was not timely reported)
• Total Amount of Civil Monetary Penalty
• Offer of next steps to include the right to a hearing before an Administrative Law Judge

If you have questions about the changes to CMS regulations, please contact your designated Risk Management Analyst; Dara Overholt, WC Compliance Manager; or Jessica Blakiston, Director, at 310-212-0363.

Keenan is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities, and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.