CMS Will Maintain $750 Recovery Threshold for 2020

Mandatory Insurer Reporting, Medicare Set-Aside Blog, MSP News on November 27, 2019
Posted by Jean S. Goldstein, JD, CMSP

The Medicare Secondary Payer (MSP) provisions of the Social Security Act prohibit Medicare from making payment where payment has been made or can reasonably be expected to be made by a primary plan.  If payment has not been made, or cannot reasonably be expected to be made promptly by the plan, Medicare may pay for the medical expense, conditionally, meaning that Medicare will seek reimbursement for the payment made from the primary plan, once primary responsibility has been demonstrated.   However, Medicare incurs costs to seek recovery of payments made; costs which may include compiling related claims, calculating conditional payments, applying reductions, sending demands, and providing other customer service related to the recovery of the payments.   The Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act) requires the Centers for Medicare & Medicaid Services (CMS) to publish an annual threshold for recovery of conditional payments in November, each year.  This threshold amount reflects an amount for which CMS will not spend more on collections than a claim is likely to yield.  The 2020 recovery threshold for all non-group health plans will not change, and will remain at $750.  This means that settlements of $750 or less do not need to be reported and Medicare’s conditional payment amount related to these cases does not need to be repaid.

In determining to maintain the $750 threshold, CMS reviewed the costs related to collecting data and determining the amount of Medicare’s recovery claim, as well as the available data (between August 2018 and July 2019) related to liability insurance (including self-insurance) cases, no-fault insurance and workers’ compensation cases.  CMS estimated the average cost of recovery for liability and workers’ compensation cases is approximately $351 per case, based upon the amount of invoices paid to the Benefits Coordination and Recovery Contractors for work related to identifying and recovering NGHP conditional payments.  CMS then did a comparison of the estimated cost of collection to the average demand amounts per settlement range to arrive at the determination to maintain the $750 threshold amount for 2020.

The threshold methodology as described above can be found here.