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New Threshold and Process Set by Medicare for Recovery in Liability Cases

February 6, 2012

The Medicare Secondary Payer Statute requires that no payments for treatment or services for a beneficiary be made by Medicare when payment has been made, or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.

Notwithstanding the terms of the secondary payer statute, Medicare may make conditional payments, which payments must be reimbursed to Medicare if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.

In order to recover payment made, the United States may bring an action against any or all entities that are or were required or responsible to make payment. When settling a liability case, Medicare must be reimbursed for past conditional payments made on behalf of the plaintiff. Medicare recently set forth some new procedures regarding its recovery rights in liability cases.

On September 6, 2011, Medicare set a new threshold of liability cases wherein it will not seek recovery against a beneficiary’s settlement. Medicare will not pursue recovery on liability settlements, judgments or other awards of $300 or less. Certain criteria must be met. The case cannot relate to ingestion, exposure or implant. No additional incident related settlement can exist or be expected. There must be no Final Demand letter issued in the case.

On November 7, 2011, Medicare implemented a new process for resolving its reimbursement claim in liability cases where the settlement amount does not exceed $5000.00. This is called the “Fixed Percentage Option.” A beneficiary can satisfy Medicare’s reimbursement claim by paying 25% of the total liability insurance payment (i.e., gross settlement received) to Medicare. Again, the liability case must not be ingestion, exposure or implant and No additional incident related settlement can exist or be expected. The request for the Fixed Percentage Option must be requested prior to or with a notice of settlement.

Additional guidance or details on these procedures can be found at