On September 6, 2011, the Medicare Secondary Payer Recovery Contractor (MSPRC) announced that Medicare has implemented a $300 threshold for certain liability cases.
The announcement states that Medicare will not recover against a beneficiary’s lump sum settlement, judgment, award or other payment if the following conditions are met:
- The beneficiary’s settlement, judgment, award or other payment claims/releases a physical trauma-based incident/injury/accident/illness. (This does not include alleged ingestion, implantation or exposure-based incident/injury/accident/illness).
- The beneficiary obtains a liability insurance (including self- insurance) settlement, judgment, award, or other payment for a Total Payment Obligation to Claimant (TPOC) of $300 or less.
- There are no multiple settlements, judgments, awards or other payments for the same underlying claim, which total more than $300.
- A demand has not been issued.
The MSPRC protects the Medicare Trust fund, under the authority of the Medicare Secondary Payer (MSP) Act, by identifying and recovering Medicare conditional payments that Medicare made when another entity had primary responsibility.
This is an important development because this is the first time that Medicare has announced a threshold for conditional payment recovery. It seems that this threshold is in response to a similar position in the widely supported SMART bill that it is not cost-effective for Medicare to pursue very low dollar conditional payment recoveries. The need for a threshold was also mentioned in recent congressional hearings.