CMS has issued an alert which provides for an option for certain liability settlements below $5000 to pay a fixed percentage of their settlements starting on November 7, 2011. A Medicare beneficiary who elects this process will simply pay 25% of his/her total liability settlement instead of using the traditional recovery process.
Additionally, the alert provides the following criteria to utilize this fixed payment option (ALL criteria must be met):
1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant.)
2. The total liability settlement, judgment, award, or other payment is $5000 or less.
3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.
4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
A full explanation, including instructions on how and when to elect this option, will be available on the MSPRC website on November 7, 2011. The alert also states that if a beneficiary elects this option, he/she will be forfeiting the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount.
This fixed payment option seems to have its pros and cons. It will be a helpful option for those seeking to settle small liability claims quickly and do not want to utilize the traditional recovery process which can take several months. However, the downside is that parties to a settlement may end up paying more by electing this option instead of using the traditional recovery process. Parties to a liability settlement of $5000 or less which meet the above criteria will have to weigh their options and decide what is more important to them- obtaining the exact recovery amount or settling more quickly.
This alert may be a reaction to the the Congressional hearing from June 22nd of this year, in which the Chief Financial Officer of CMS, Deborah Taylor, was highly scrutinized for CMS’ collection practices of nominal conditional payment amounts in which the collection costs exceed the recovery amount. The alert could also be a reaction to the proposed SMART Act which seeks reform of the MSP, specifically as it relates to conditional payment recovery. As an aside, the SMART Act was introduced in the Senate last week on October 17th and has gained large bi-partisan support in the House of Representatives.
To view the alert on the MSPRC website, please click here.
To view the Press Release regarding the SMART Act being introduced into the Senate, please click here.