Section 111 reporting: CMS’s road map to conditional payment recovery

March 13, 2025 / 18 min read

With the release of the Centers for Medicare and Medicaid Services (CMS’s) Section 111 civil money penalties (“CMPs”) final rule,^[1]Medicare Section 111 reporting has been the focus of much attention for the insurance industry. As outlined more fully in our recent article, in general, under CMS’s final rule, Section 111 Responsible Reporting Entities (RREs)^[2] are subject to Section 111 CMPs for untimely reporting of Total Payment Obligation to the Claimant (“TPOC”) and Ongoing Responsibility for Medicals (“ORM”) records regarding non-group health plans (NGHP).^[3]

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While timely TPOC and ORM reporting will allow RREs to avoid Section 111 penalties, it is important not to forget that Section 111 reporting also has a downstream impact on CMS’s Medicare conditional payment recovery process regarding claimants enrolled in Medicare Parts A and/or B (“traditional Medicare”).^[4] In a nutshell, CMS uses Section 111 reporting to initiate and coordinate conditional payment recovery in the NGHP context. In this regard, it is critical that primary plans and payers (e.g. insurers)^[5]understand how CMS uses Section 111 data as part of its CMS conditional payment recovery process to avoid potentially negative consequences and liability.

Toward this goal, the author outlines the following:

Keep in mind that CMS has strong recovery rights

Before we even get into the mechanics of CMS’s recovery process, a key starter question to consider is “why is understanding CMS recovery so important?” In short, understanding how CMS’s process works is important because CMS has strong recovery rights against primary payers (and others) under the Medicare Secondary Payer (“MSP”) statute and failure to properly address and resolve conditional payments could result in significant liability.^[6]

For example, CMS can seek conditional payment recovery from the claimant, primary plan, claimant’s attorney, and other parties when the primary plan has “demonstrated responsibility” as defined under the MSP.^[7] Under the MSP, a “primary payer's responsibility for payment may be demonstrated by (1) A judgment; (2) A payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or (3) By other means, including but not limited to a settlement, award, or contractual obligation.”^[8]

If Medicare’s conditional payments are not reimbursed, CMS has several potential recourses. For example, CMS may pursue the primary payer, claimant, and other parties for reimbursement.^[9] CMS can also charge interest if reimbursement is not made within 60 days of a demand for reimbursement.^[10] In addition, CMS may also refer unresolved debts to the Department of Treasury for collection.^[11]CMS can also potentially seek “double damages” if its recovery claim is not reimbursed.^[12]

With this quick level-set of CMS’s rights and recourses under our belts, we can now turn to “how” CMS goes about pursuing conditional payment recovery, with Section 111 reporting serving as the epicenter of CMS’s process as follows:

CMS uses Section 111 reporting to initiate its conditional payment recovery process

In order to identify situations where an RRE may be the primary payer, CMS requires RREs to report certain information regarding claims involving Medicare beneficiaries through the Section 111 reporting process.^[13]While a complete examination into CMS’s detailed Section 111 reporting process is beyond this article’s scope, in general, under Section 111, CMS has established two reporting triggers: (1) Ongoing Responsibility for Medicals (ORM) and (2) Total Payment Obligation to Claimant (TPOC).

In general, CMS states that ORM “refers to the RRE’s responsibility to pay, on an ongoing basis, for the injured party’s (the Medicare beneficiary’s) ‘medicals’ (medical care) associated with a claim. Typically, ORM only applies to no-fault and workers’ compensation claims.”^[14] Under the ORM trigger, the RRE must report the required Section 111 data points when the RRE has made a “determination to assume ORM … which is when the RRE learns, through normal due diligence, that the beneficiary has received (or is receiving) medical treatment related to the injury or illness sustained.”^[15]CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2024), Chapter III, Chapter 2. On the other hand, CMS describes TPOC, in general and in part, as “refer[ring] to the dollar amount of a settlement, judgment, award, or other payment in addition to or apart from ORM. A TPOC generally reflects a ‘one-time’ or ‘lump sum’ settlement, judgment, award, or other payment intended to resolve or partially resolve a claim. It is the dollar amount of the total payment obligation to, or on behalf of the injured party in connection with the settlement, judgment, award, or other payment. Individual reimbursements paid for specific medical claims submitted to an RRE, paid due the RRE’s ORM for the claim, do not constitute separate TPOC Amounts.” Id. (CMS’s emphasis).

An RRE’s ORM and TPOC reports directly impact how CMS pursues conditional payment recovery. Specifically, when an RRE reports ORM, CMS initiates conditional payment recovery against the primary payer and uses its contractor, the Medicare Commercial Repayment Center (CRC), to do this.^[16] The CRC uses the information provided via Section 111 reporting to seek recovery for medical treatment paid by CMS which it believes is related to the claim from the date of incident forward.^[17]

Conversely, when an RRE reports TPOC, CMS uses that information to pursue conditional payment recovery from the claimant.^[18]In this instance, CMS uses its contractor, the Benefits Coordination and Recovery Center (BCRC).^[19]The BCRC will conduct a search of Medicare’s system for any medical treatment paid for by Medicare between the date of incident and the TPOC date which Medicare believes to be related to the claim and will issue a formal recovery demand.^[20]This demand will seek reimbursement from the claimant for any identified conditional payments.^[21] Of note, while Medicare typically pursues the claimant in this situation, under 42 C.F.R. § 411. 24, the primary payer remains potentially liable for reimbursement if the claimant fails to repay Medicare.^[22]

CMS uses Section 111 reporting to help determine its conditional payment recovery period and amount

An RRE’s TPOC and ORM reports not only trigger CMS’s recovery process (as described above), they also give CMS information regarding the time period covered by an RRE’s ORM or TPOC record, which, in turn, helps CMS determine the time period and scope during which it may have made conditional payments. For example, the CRC will search for potential conditional payments from the date of incident through the date the RRE’s responsibility for treatment ended in cases where the RRE has reported ORM.^[23] In the case of a TPOC, the BCRC will seek recovery for conditional payments from the date of incident through the date of the TPOC.^[24] Similarly, if an ORM termination date has been reported, the CRC will seek recovery for conditional payments through and including the termination date.^[25] This underscores the importance of promptly reporting an ORM termination date to CMS when ORM can be terminated per the CMS’s specific criteria as outlined in the agency’s Section 111 NGHP User Guide.^[26]

In addition, the information reported through Section 111 helps CMS determine the limits of its recovery amount. In this regard, pursuant to 42 CFR § 411.24(c)(1)(ii), CMS’s conditional payment recovery is limited to the full primary payment amount that the RRE is obligated to pay.^[27] In practical terms, when CMS pursues recovery based on a TPOC report, this means that the BCRC’s conditional payment recovery is limited to the total TPOC (e.g., settlement) amount. Putting the spotlight on no-fault claims, it is noted that RREs are required to report the no-fault insurance policy limits as part of their Section 111 reporting, which alerts CMS to the potential funds available under the no-fault coverage.^[28] If the RRE exhausts the no-fault policy limits, the no-fault exhaust date can be reported to CMS which, in turn, alerts CMS that no additional funds remain available to reimburse Medicare.^[29]Thus, in the big picture, through timely and accurate Section 111 reporting, RREs are able to let CMS know when the coverage period of their ORM and TPOC records have ended, thus ending their primary payment responsibility for conditional payments.

CMS uses ICD codes to identify related treatment

Another important part of CMS’s recovery process involves the RRE’s reporting of ICD codes as part of Section 111 reporting. In general, CMS uses this information to further refine and drive recovery. While a complete review of ICD code reporting is outside this article’s scope, in general, as part of the Section 111 reporting process, RREs are required to report valid International Classification of Diseases, Ninth/Tenth Revision, Clinical Modification (ICD-9/ICD-10) diagnosis codes (“ICD codes”) for each TPOC and ORM record that is submitted.^[30]CMS notes that these ICD codes are used to provide a description of the alleged illness, injury, or incident relating to the TPOC or ORM record and are used by Medicare for claims payment and conditional payment recovery purposes.^[31] Specifically, these ICD codes are used by the BCRC and CRC to identify treatment paid for by Medicare which may be related to the TPOC or ORM record for which Medicare may seek to recover for conditional payments.

Improving your compliance practices

As outlined above, there are many moving parts to CMS’s recovery process and it is critical to understand how CMS uses the data received through Section 111 reporting to drive conditional payment recovery. In general, some starter considerations include: First, RREs should ensure that the data that is submitted to CMS via their Section 111 reporting is accurate to minimize any downstream impacts that can occur from improper Section 111 reporting. In this regard, CRC, as part of its Non-Group Health Plan (NGHP) Applicable Plan Appeals Reference Guide, states that the “CRC proceeds with the recovery process under the expectation the reported records are accurate.”^[32] For this reason, it is crucial that RREs understand the potential implications of Section 111 reporting data and also ensure that accurate information is timely reported to Medicare. Second, RREs should understand how CMS uses Section 111 data to drive conditional payment recovery and be prepared to address conditional payment recovery at different stages in the life of a claim. For instance, when reporting a TPOC, the parties should have a plan in place to address potential conditional payment recovery against the claimant. Finally, proactive practices to identify conditional payments (and, if applicable, dispute inappropriate charges) early in the claims cycle are generally helpful in making sure CMS’s claim is addressed timely, which can help reduce the potential for interest accrual and Treasury actions.

How Verisk Can Help

Verisk has several services to help you address CMS conditional payment claims, including our standard Medicare conditional payment service and our Treasury service. We also offer our popular CP Link^® program which provides a proactive approach to Medicare recovery claims that leverages your Section 111 data to initiate the conditional payment process. In general, CP Link helps speed up the conditional payment process by identifying potential conditional payment claims through Section 111 data, helps reduce adjuster time, and facilitates a holistic compliance approach to address conditional payment claims. Through our experienced team, we consistently deliver extraordinary savings for our customers. For example, in 2024, we saved our clients over $140 million in conditional payments and nearly $1 million in Treasury savings.

Please contact us with any questions regarding CMS’s recovery process or if you would like to learn more about Verisk’s services.

[1] CMS’s Section 111 CMPs are published at 42 CFR § 402.1(22). See also, CMS’s Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70372 (October 11, 2023).

[2] Briefly, in the Section 111 context, the party obligated to report under Section 111 is referred to as the “Responsible Reporting Entity (RRE).” Very generally, the RREs are insurers and self-insurers but could involve other risk-bearing entities such as self-insurance pools or assigned claims funds depending on the facts. Claimants and claimant lawyers are never RREs. See generally, CMS’s Section 111 NGHP User Guide, Chapter III (Version 7.9, January 6, 2025), Chapter 6.

[3] Very generally, under CMS’s final rule, CMS may impose CMPs when the NGHP RRE “[f]ails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment [TPOC], or the effective date where on-going payment responsibility for medical care has been assumed by the entity” as more specifically defined in CMS’s final rule. 42 CFR § 402.1(22)(i).

Regarding timely TPOC reporting, CMS has advised that in situations where a TPOC Date is reported by an NGHP RRE it will compare the RRE’s file submission date with the TPOC Date and, in the event that the TPOC date is greater than 1 year prior to the file submission date, the TPOC report in question may be subject to the assessment of a penalty due to the RRE’s failure to report in a timely fashion. Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023). In the event that a Funding Delayed Beyond TPOC Start Date is also reported, CMS states that it will utilize that date (“the funding of a settlement, judgment, award, or other payment, if delayed”), as opposed to the TPOC Date, to assess the timeliness of the report. Fed. Reg. Vol. 88, No. 195, at 70370 and 70372 (October 11, 2023).

If that the Funding Delayed Beyond TPOC Start Date is found to be more than 1 year prior to the RRE’s file submission date, the TPOC report in question may be subject to the assessment of a penalty. Id.

Regarding timely ORM reporting, CMS has stated that it will look to compare the date of the RRE’s file submission with the date upon which the RRE assumed ORM. Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023).

While CMS indicates it will measure CMPs from the date the RRE “assumes” ORM, at present, CMS only collects the Date of Incident via the Section 111 process. As part of its January 18, 2024 webinar, CMS stated that it will calculate timeliness of ORM reporting by comparing the Date of Incident with the date of the RRE’s initial successful ORM submission, and if the Date of Incident is found to be more than one year prior to the date of the initial successful report, the RRE would be considered non-compliant and potentially subject to a penalty. CMS’s NGHP Section 111 CMPs Webinar (January 18, 2024). CMS also noted that in situations where there is a delay in an RRE’s initial report of ORM, the NGHP RRE should present mitigating evidence to CMS as part of the informal notice process in support of the reason(s) for the delayed report in the event that CMS is seeking to impose CMPs in this situation. Id.

[4] https://www.cms.gov/medicare/coordination-benefits-recovery/mandatory-insurer-reporting

[5] Under the MSP, the term “primary plan” is defined to “mean[] a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.” 42 U.S.C. § 1395y (b)(2)(A)(ii). The term “primary payer” is defined as follows: “Primary payer means, when used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans.” 42 C.F.R. § 411. 21.

[6] On this point, CMS’s recovery rights, in main part, are outlined in 42 U.S.C. § 1395y (b)(2)(B)(ii). This statutory section, states in full, as follows: “Subject to paragraph (9), a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).” Id.

[7] 42 U.S.C. § 1395y (b)(2)(B)(ii). See also 42 C.F.R. § 411. 24 (e) which states as follows: “Recovery from primary payers. CMS has a direct right of action to recover from any primary payer.” Id. In addition, 42 C.F.R. § 411. 24 (g) states as follows: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

[8] 42 U.S.C. § 1395y (b)(2)(B)(ii). Of note, under the MSP, the term “primary payer” is defined as follows: “Primary payer means, when used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans.” 42 C.F.R. § 411. 21.

[9] 42 U.S.C. § 1395y (b)(2)(B)(ii). See also, 42 C.F.R. § 411. 24 (g) which states: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

[10] 42 U.S.C. § 1395y (b)(2)(B)(ii).

[16] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[12] 42 U.S.C. § 1395y (b)(2)(B)(iii).

[13]42 U.S. Code § 1395y(b)(8)(ii)

[14]CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2024), Chapter III, Chapter 2.

[15] See generally, CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2024), Chapter III, Section 6.3.

[16] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[17] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[18] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[19] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[20] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[21]https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[22] Specifically, 42 C.F.R. § 411. 24 (i) states as follows: “Special rules.(1) In the case of liability insurance settlements and disputed claims under employer group health plans, workers’ compensation insurance or plan, and no-fault insurance, the following rule applies: If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.” Id.

[23]https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[24] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[25] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[26] CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2025), Chapter III: Policies, Chapter 6.3.2, p. 6-12 through 6-13.

[27]42 CFR § 411.24 (c)(1)(ii).

[28] CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2025), Chapter V: Appendices, Appendix A: Claim Input File Layout, p. A-18.

[29] CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2025), Chapter V: Appendices, Appendix A: Claim Input File Layout, p. A-18.

[30] CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2025), Chapter IV: Technical Information, Chapter 6.2.5, p. 6-10.

[31] Id at 6-10.

[32] CMS’ Non-Group Health Plan (NGHP) Applicable Plan Appeals Reference Guide (Version 1.1, July 1, 2024), Section 3.1.