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4/21/2021 By Lauren Macina and Shreyas Malhotra

Last year, The Center for Medicare and Medicaid Services (CMS) proposed a new methodology related to enforcement of penalties for failure to report per the Medicare Secondary Payer Act (MSP) reporting requirements. These proposed changes help ensure that all Responsible Reporting Entities (RREs) are reporting to Medicare accurately and in a timely manner.


In 1980, Congress passed the MSP, making Medicare the secondary payer when medical costs are incurred for injuries or illnesses caused by another. It was an effort to shift costs from Medicare to the appropriate private sources of payment. The legislation mandates that costs are not to be paid solely by Medicare if another entity is paying — whether via other insurance or by indemnifying the injured party, such as through a legal settlement.

As a result, there are mandatory reporting requirements for Medicare beneficiaries that have coverage under Group Health Plan (GHP) arrangements, as well as those who receive settlements, judgments, awards, or other payments from liability insurance — including self-insurance, no-fault insurance, or workers’ compensation (referred to as Non-Group Health Plan entities, or NGHPs). Section 111 of the Medicare Secondary Payer Mandatory Reporting Provisions[1] details rules and protocols for how corporations can report their settlements to Medicare. While entities can manage the reporting manually, they can also work with other parties to help with reporting. For example, KCIC acts as a reporting agent for RREs to help them fulfill the mandatory reporting requirements.

Proposed Changes

The proposed changes that apply to both GHPs and NGHPs — including corporations paying settlements to Medicare beneficiaries — are outlined below:

Failure to Report/Inaccurate Information Reported and/or Maintained
"An entity that fails to comply to the required Section 111 reporting requirements shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual."

The Takeaway: This proposed change focuses on reporting settlements to Medicare within the required timeframe. Reporting entities need mechanisms in place to ensure a report is made to Medicare within a timely fashion once the payment obligation is known. Therefore, it can be helpful to work with a partner like KCIC that understands the rules and can ensure all paid settlements are reported within the correct timeframe to avoid potential fines under Section 111.

Given the possibility of large penalties to the RRE, it is important to report the best available information to Medicare. Having a thorough review process when reaching settlements with Medicare beneficiaries can be crucial to reporting success. When KCIC partners with RREs for reporting, part of the settlement process is to confirm all Medicare required data points are correct in our systems. KCIC maintains periodic system data validation checks for each RRE to ensure accurate reporting of the data points per CMS guidelines. This helps ensure that RREs will not be subject to further penalties due to data inaccuracies.

Poor Quality of Reported Data
CMS has proposed an error tolerance that would not exceed a 20% threshold. Reported information that exceeds any of the established error tolerance(s) threshold(s) and exceeds those tolerances for any four out of eight consecutive reporting periods, would be subject to a civil money penalty with the fourth occurrence above the tolerance submission.”

The Takeaway: The new 20% threshold ensures that the submission file to Medicare does not contain too many error records. Now more than ever, a standard quality control process related to reported data and file submissions to CMS is crucial — both for reporting success and avoiding consecutive error files that would result in penalties. 

Looking Ahead

CMS accepted comments regarding these proposed changes through April 20, 2020. KCIC is expecting a follow up from CMS as a result of the comment process and will continue to monitor any updates related to proposed reporting changes.

In case the changes go into effect, entities should be preparing by setting up processes in advance to collect, review, and report this data. Working with a trusted partner like KCIC would streamline that process.


[1] The language in the 42 U.S.C. 1395y(b)(7) related to reporting responsibilities under Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Section 111 can be accessed at

Lauren Macina

About Lauren Macina

Lauren Macina manages projects that involve insurance coverage litigation and settlement, development of claims processing procedures and systems, and complex analysis of claims and insurance. Lauren is involved in all aspects of client's needs and understands how claims data impacts litigation and forecasting.

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Shreyas Malhotra

Shreyas Malhotra