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. As required by Section 202 of the Strengthening Medicare and Repaying Tax Payers Act of 2012 (“SMART Act”) CMS has revised the single threshold for physical trauma-based liability insurance settlements. The new threshold is effective as of February 18, 2014 for cases where a recovery demand has not yet been issued.
On September 6, 2011 the Medicare Secondary Payer Recovery Contractor (“MSPRC”) announced the initial implementation of a minimum threshold. The criteria that applied to the original $300 threshold continue to apply to the revised $1,000 threshold. The September 6, 2011 administrative announcement has now been replaced by this alert which CMS promulgates to meet its statutory mandate imposed by Section 202 of the SMART Act.
As with the original announcement from 2011, and in accordance with Section 202, the qualifying criteria specifically exclude alleged exposure, ingestion and implantation incidents from benefitting from this threshold change. Thus, it remains business as usual for parties to asbestos claims and other similar incidents (pharmaceutical, environmental, etc.) when working with Medicare to assess, satisfy and resolve Medicare’s rights of recovery.
Section 202 of the SMART Act is meant to ensure that the federal government does not spend more money pursuing a secondary payer claim than it could recover from that claim. It requires the Health and Human Service (“HHS”) Secretary to, beginning in 2014, annually calculate the threshold at which the reimbursement amount would result in the receipt of funds at or below the government’s recovery cost. Based on this analysis (which determined that amount to be $335 currently), CMS determined that the gross settlement threshold should be increased from $300 to $1,000.
The practical impact of this announcement is that for trauma based settlements, more cases will fall below the threshold for recovery and reporting allowing lower value cases to avoid the need to determine and satisfy Medicare’s interest. In turn, pressure on The Benefits Coordination and Recovery Center (“BCRC”) in terms of sheer case volume should decrease.
CMS issued a notice on February 21, 2014 that they will issue a new User Guide which will incorporate the threshold change, as it applies to Section 111 reporting. GRG will post a client advisory as soon as that User Guide is available.
The Garretson Resolution Group continues to monitor developments at the CMS, and will report future developments to the settlement community. For more information about this announcement and other MSP compliance services, including conditional payment reimbursement, MSA services and MMSEA Section 111 reporting, please see www.garretsongroup.com.
To view the Alert as posted by the CMS on its website, please click here.