CMS Offers New Fixed Percentage Program for Certain Liability Settlements

Following its September 30, 2011 Alerts, earlier today the Centers for Medicare & Medicaid Services (CMS), issued an Alert on its website that introduces a streamlined 25% (gross) payment option to resolve Medicare’s reimbursement rights.

The option will be available for certain Medicare enrolled beneficiaries who settle, receive judgments for, or receive other payments related to liability cases beginning November 7, 2011 as follows:

1. The underlying injuries must be physical, trauma-based (rather than exposure or ingestion-based);
2. The total amount of a settlement, judgment or other payment does not exceed $5,000;
3. The option is elected within a specified time frame (to be provided on November 7, 2011 on Medicare’s website);
4. Medicare has not issued a final demand letter or made any requests for reimbursement prior to the election being made;
5. The beneficiary has not received, and does not expect to receive any further payments or judgments related to the trauma-based incident.

If all of the above conditions are met, a beneficiary will be able to resolve and satisfy Medicare's reimbursement claim by paying Medicare 25% of his/her total liability insurance settlement or other payment, rather than using the traditional recovery process.

Advantages of the 25% Fixed Payment Option

The primary advantages of the Fixed Percentage Option will be that in liability cases with $5,000 or less in payments made arising from physical trauma-based injuries, settling parties will know the exact amount to repay Medicare, and will have a quicker path towards resolution. For example, in liability cases involving unrepresented claimants where the total amount of payments to be made are within this threshold, knowing the exact amount to pay Medicare will permit a more efficient settlement process.

The parties will still have to verify Medicare enrollment, noting that the Medicare payment for a $5,000 settlement will be $1,250 exactly. But, the process of opening a tort recovery record, requesting conditional payments, auditing those payments, and then working for a final demand letter will no longer be necessary.

Disadvantages of the 25% Fixed Payment Option

Prior to electing, the Medicare enrolled beneficiary needs to carefully balance speed and certainty with paying the right amount. That is because once elected, the beneficiary will give up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount. So before giving up that right, beneficiaries will want to ensure that the fixed payment option, when compared to those known medical expenses paid, makes economic sense.

A full explanation, including instructions on how and when to elect this option, will be available on Medicare’s website on November 7, 2011 in the Fixed Percentage Option section of both the Attorney and Beneficiary Toolkits.

Garretson Resolution Group is available to answer your questions about the provisions of this Alert. Please contact us if you would like us to review or help develop your internal processes and to provide training for all parties that are involved in your healthcare compliance process.