Medicare has increased the threshold for when a physical trauma-based liability settlement is large enough that the beneficiary need report it and repay conditional payments. On February 18, 2014, the Centers for Medicare & Medicaid Services (“CMS”) issued an alert which increases the current reporting threshold from $300 to $1,000. The threshold increase is a result of the mandatory review required by Section 202 of the Strengthening Medicare and Repaying Tax Payers Act of 2012 (“SMART Act”) to determine at what level do the costs related to collecting data and determining the amount of Medicare’s recovery claim outweigh the benefits of recovering the conditional payments.
The new threshold is effective as of February 18, 2014 for cases where a recovery demand has not yet been issued. It is important to note this threshold does not apply to settlements for alleged ingestion, implantation or exposure cases. This means that physical trauma-based liability settlements of $1000 or less do not need to be reported, nor will the beneficiary need to repay Medicare’s conditional payments.
The SMART Act was designed to save Medicare money and part of that savings is to come from an annual review meant to ensure that the federal government does not spend more money pursuing a reimbursement amount than the cost of that recovery effort.
In an announcement to its membership, the AAJ stated:
“I am writing to inform you that the Centers for Medicare & Medicaid Services (CMS) has completed its analysis as required under the SMART Act regarding what the claim threshold should be for reporting and reimbursing Medicare Secondary Payer (MSP) claims. CMS has raised the threshold to $1,000.00.
Previously, CMS had set the threshold at $300, but supporters of the SMART Act, the American Association for Justice (AAJ) included, believe that CMS was actually losing money collecting reimbursements from small dollar settlements.
Going forward, the new threshold means that claims with total settlement value of $1000 or less do not need to be reported or reimbursed. While we recognize that this new threshold likely does not impact that many of your cases, we do believe it will free up time and resources for the government’s MSP contractor to focus on its remaining caseload, therefore improving overall efficiency.”
The alert is available on the CMS website by click here.