Medicare Implements Liability Recovery Threshold

Medicare has taken a look at the recovery process and made the decision to implement a liability settlement specific recovery threshold. This decision is likely a result of recent concerns noted by the industry in regard to Medicare’s collection activities specifically relating to the collection of small dollar value debts where the cost of pursuing the recovery claim outweighs the recovery amount.

This issue was a major focus of the July hearing before the Oversight and Investigation Subcommittee entitled “Protecting Medicare with Improvements to the Secondary Payer Regime” which was scheduled to examine how CMS has been implementing the Medicare Secondary Payer statute, the state of the current system, and whether it adequately protects the interests of Medicare beneficiaries, businesses, health plans, taxpayers, and the Medicare Trust Fund. The MSPRC has posted the following information on their website regarding a recovery threshold for certain liability settlements:

Medicare has implemented a $300 threshold for certain liability insurance cases. If all of the following criteria are met, Medicare will not recover against the beneficiary’s settlement, judgment, award or other payment:

  • The beneficiary’s settlement, judgment, award or other payment claims/releases a physical trauma-based incident/injury/accident/illness. (This does not include alleged ingestion, implantation or exposure-based incident/injury/accident/illness).
  • The beneficiary obtains a liability insurance (including self- insurance) settlement, judgment, award, or other payment for a Total Payment Obligation to Claimant (TPOC) of $300 or less.
  • There are no multiple settlements, judgments, awards or other payments for the same underlying claim which total more than $300.
  • A demand has not been issued.

Please note that this threshold specifically excludes settlements where an insurer is paying medicals bills directly or on an ongoing basis. This threshold also does not apply if a demand letter was already issued for the case.

NOTE: Section 111 Mandatory Insurer Reporting is not required for settlements that meet all of the above criteria.

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