On September 6, 2011, the Medicare Secondary Payer Recovery Contractor (MSPRC) announced through its website that Medicare has implemented a $300 threshold for certain liability insurance cases. This announcement (“Alert”) represents the first time that Medicare has imposed a threshold related to its rights of reimbursement under the Medicare Secondary Payer (MSP) Act (42 U.S.C. §1395y(b)(2)).
Assuming certain criteria are met when a liability insurance claim is resolved, Medicare will not recover from the recovery proceeds. Those criteria are as follows:
1) the settlement (generally defined by Medicare as including settlement, judgment, award or other payment) is related to an alleged physical trauma-based incident (as opposed to an alleged exposure, ingestion or implantation);
2) the claimant does not have any additional settlements related to the same alleged incident; and
3) Medicare has not already issued a final demand.
The qualifying criteria specifically exclude alleged exposure, ingestion and implantation incidents from benefitting from this Alert. Thus, it remains business as usual for parties to asbestos claims and other similar incidents (pharmaceutical, environmental, etc.) when working with Medicare to assess, satisfy and resolve Medicare’s rights of recovery.
The practical impact of this announcement is twofold. First, by implementing this recovery threshold in certain liability settlements, the MSPRC will be able to process conditional payment requests and final demand requests with greater efficiency. Second, this recovery threshold demonstrates that Medicare is working to find a solution to concerns expressed by the defense community.
The DRI Medicare Secondary Payer Task Force continues to monitor developments at the MSPRC, and will report any future developments to the DRI community. For more information about this announcement and other MSP compliance issues, including conditional payment reimbursement, Medicare Set-Asides and MMSEA Section 111 reporting, please see http://www.dri.org/open/mstf.aspx.
To view the Alert as posted by the MSPRC on its website, please follow this link: http://www.msprc.info/.