In 2025, Settlements Over $750 Must Be Reported and Reimburse Conditional Payments

Rafael Gonzalez, Esq.

Medicare & Medicaid Update Newsletter 8

The Centers for Medicare and Medicaid Services (CMS) recently published its annual report to Congress on the Medicare Secondary Payer (MSP) Non-Group Health Plan (NGHP) Mandatory Insurer Reporting (MIR) and conditional payment reimbursement threshold. What follows is a verbatim review of the data, analysis, review, and conclusions reached by CMS regarding the 2025 threshold.

The SMART Act

Section 202 of the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act) amended Section 1862(b) of the Social Security Act (the Act), in part by adding paragraph (9), which requires the Secretary of the Department of Health and Human Services (the Secretary) to annually calculate and publish each year a single threshold amount for settlements, judgments, awards or other payments (hereafter, referred to as “settlements”) for obligations arising from liability insurance (including self-insurance) for alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases).

Starting Jan 1, 2025, Reporting Threshold Remains $750

Pursuant to Section 202 of the SMART Act, in 2023, CMS reviewed all estimated costs related to collection of conditional payments arising from liability insurance, no-fault insurance, or workers’ compensation for alleged physical trauma-based incidents. Based on these estimates, effective January 1, 2025, the threshold for physical trauma-based liability insurance, no-fault insurance, and workers’ compensation settlements will be $750. Settlements of $750 or less do not need to be reported to Medicare, and Medicare’s conditional payments do not need to be repaid, as long as such settlements are under the threshold amount and the relevant primary payer does not have ongoing responsibility for medical expenses.

BCRC Spent $54 Million on 160,000 Demand Letters

To determine the cost of collection, CMS reviewed costs of the contractor that performs MSP work related to identifying and recovering conditional payments for liability insurance, no-fault insurance, and workers’ compensation settlements for the most recent twelve months. The CMS Benefit Coordination & Recovery Center (BCRC) performed this work, spending $53,942,108.80 on benefit coordination and recovery activities for liability insurance, no-fault insurance, and workers’ compensation. To calculate an average cost per recovery case, CMS divided the total cost of the relevant recovery activities performed by the BCRC by the total number of demand letters, 159,231. This resulted in an average cost of collection per case of $339 ($53,942,108.80 / 159,231 cases = $338.77).

No Conditional Payments Owed on Settlements of Less Than $750

To determine the settlement thresholds, CMS compared the estimated cost of collection per case of approximately $339 to the average demand amounts per settlement range for liability insurance (including self-insurance), no-fault insurance, and workers’ compensation plans. Based on this information, CMS determined that it will maintain a $750 threshold for 2025, which was the same threshold amount in 2024, so that physical trauma-based settlements of $750 or less do not need to be reported and Medicare’s conditional payment amount for these settlements does not need to be repaid.

Liability, No-Fault, and Work Comp Threshold Remains at $750

For liability insurance, the calculated cost of collection of $339 most closely aligns with and without exceeding the average highlighted demand amount of $462.18 for settlements of over $500 to $750. For no-fault and workers’ compensation insurance settlements, CMS will maintain the current threshold of $750, where the no-fault insurer and workers’ compensation carrier does not otherwise have ongoing responsibility for medical expenses. For no-fault and workers’ compensation insurance the calculated cost of collection of $339, most closely aligns with and without exceeding the average highlighted demand amount of over $500 to $750.

Conclusion

Once again, as of January 1, 2025, the reporting and reimbursement threshold for liability, no-fault, and workers compensation claims will remain at $750. Therefore, any liability, no-fault, or work comp settlement greater than $750 must be reported through the CMS mandatory insurer reporting system and all related conditional payments must be reimbursed. In addition, starting April 4, 2025, in such reportable settlements, the amount of and details regarding settlement monies allocated for future medical care in work comp claims must also be reported as part of Total Payment Obligation to Claimant (TPOC). And last, starting October 11, 2025, Civil Money Penalties (CMPs) will become effective on late reporting on Ongoing Responsibility for Medicals (ORM) and TPOC.

To learn more about Cattie & Gonzalez, PLLC, our products, including our mandatory reporting, conditional payments, and set aside services, please visit us at www.cattielaw.com, email us at [email protected], or call us at 844.546.3500. In addition, you may follow us on LinkedIn at www.dhirubhai.net/company/cattie-gonzalez, on Twitter/X at www.x.com/cattiegonzalez, and YouTube at www.youtube.com/@CattieAndGonzalez.