CMS Reduces Liability Recovery Threshold to $750 for 2017


11/17/2016

After announcing two months ago that CMS was maintaining the recovery threshold for physical trauma-based liability settlements at $1,000 for 2016, CMS has now issued an Alert that as of 1/1/2017 the liability recovery threshold will be reduced to $750.  CMS further announced in this 11/15/2016 Alert that in 2017 it will maintain the $750 threshold for no-fault insurance and workers’ compensation settlements, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals. 

Implications

Effective 1/1/2017 physical trauma-based liability settlements exempt from Section 111 Mandatory Insurer Reporting requirements and efforts by CMS and its contractors from Medicare conditional payment recovery drops from $1,000 to $750.  In regard to workers’ compensation and no-fault settlements the $750 threshold is currently in place and will remain so in 2015.

Background

Section 202 of the SMART Act requires CMS to assess annually the costs it incurs in collecting Medicare conditional payments versus the amount collected for the purpose of setting a threshold settlement amount whereby the expected conditional payment amount to be collected is more than the cost of collection. 

In determining the 2017 liability threshold, CMS found the estimated cost of collection per Non-Group Health Plan case was approximately $368.75.   The $368.75 was then compared to the average demand amount per settlement range.  As the average demand amount for settlements of $750 or less is $384.25, CMS determined the liability threshold should be set at $750.

A similar analysis was completed for workers’ compensation and no-fault and resulted in the $750 threshold for those settlements.

ExamWorks Clinical Solutions will be working with our clients over the six weeks to ensure they are aware of these new thresholds, and have processes in place to ensure reporting of settlements in excess of $750.

The Alert can be found here.

Information on the methodology used to determine the thresholds can be found here.

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