Medicare Reports to Congress About MSP Thresholds
Each year, Medicare is required to report to Congress the computation of Annual Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation Settlement Recovery Medicare Secondary Payer (MSP) Thresholds. The threshold amounts are set so that the average cost of collecting conditional payments is at least equal to the amount credited to the Medicare Trust Fund.
To determine the cost of collection, CMS obtained the most recent twelve month’s costs of the contractor that operated the Benefits Coordination & Recovery Center (BCRC) that performs MSP work. In 2017, the BCRC spent $66,510,786 on benefit coordination and recovery activities for liability insurance, no-fault insurance, and workers’ compensation. To calculate an average cost per recovery case, the total cost was divided by the total number of demand letters. This results in an average cost of collection per case of $322.51 ($66,510,786.65 / 206,228 cases = $322.51).
Based on this information, CMS determined that it should establish a $750 threshold for 2018 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. For liability insurance settlements, the calculated cost of collection most closely aligns with the average highlighted demand amount of $417.79 for settlements of over $500 to $750. For workers’ compensation and no-fault insurance settlements, CMS will maintain the current threshold of $750, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medical costs.
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