CMS announces Settlement Amount for Fixed Percentage Demand

September 18, 2023 / 4 min read

The Centers for Medicare and Medicaid Services (CMS) has announced that effective October 2, 2023, the maximum total settlement amount for the Fixed Percentage Demand Calculation Option will be raised from $5,000 to $10,000 regarding CMS traditional Medicare (Parts A and B) conditional payment claims.

imagelio9

By way of background, the Fixed Percentage Option is one of several demand calculation options offered to claimants and their attorneys by CMS to help streamline the conditional payment recovery process. These options may be used in lieu of the traditional Medicare Final Demand process in certain limited circumstances to calculate the Medicare conditional payment Final Demand amount.^[1]

Under the Fixed Percentage Option, if a settled case meets CMS’ eligibility criteria, a claimant or their attorney or other representative can request that Medicare accept 25% of the total settlement amount in satisfaction of Medicare’s conditional payment recovery.

The eligibility criteria for CMS’s Fixed Percentage Option, as listed on CMS’s website, are as follows:

The liability insurance (including self-insurance) settlement, judgment, award or other payment is related to an alleged physical trauma- based incident,^[2]
The total settlement is for $5,000 (Note: this amount will be raised to $10,000, effective October 2, 2023) or less,
The Fixed Percentage Option is elected within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
The claimant has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

CMS notes that the intention of the Fixed Percentage Option is to provide claimants and their attorneys with a straightforward process for obtaining the amount due to Medicare and reduce the time associated with the conditional payment recovery process.^[3] With this increase in the maximum total settlement amount, more settlements will be eligible to use the Fixed Percentage Option.

While the Fixed Percentage Option offers an alternative to the traditional Medicare Final Demand process in some circumstances, it is important to note that the Fixed Percentage Option has specific requirements, timeframes, and certain limitations which need to be followed and considered. By way of example, requests for the Fixed Percentage Option must be submitted to Medicare in writing and if the Fixed Percentage Option is elected and approved, the beneficiary may not seek an appeal or waiver of Medicare’s conditional payment recovery. Further, when calculating the Fixed Percentage Option, Medicare uses the gross settlement amount and does not reduce for attorneys fees and costs. More information about the Fixed Percentage Option and other conditional payment demand calculation options can be found at Medicare’s website here.

Additionally, while the Fixed Percentage Option may allow claimants and their attorneys to resolve the CMS recovery claims related to traditional Medicare (Parts A and B) conditional payments, the parties should be aware that Medicare Advantage and Medicare Part D Prescription Drug Plan liens would not be included or resolved by this process.

When settling claims involving Medicare beneficiaries, insurance carriers, self-insureds, and attorneys should evaluate all of Medicare’s demand calculation options to identify the appropriate method for claim resolution. Please do not hesitate to contact the author with any questions.

[1] CMS’s other options include the Final Conditional Payment Process using the Medicare Secondary Payer Recovery Portal (MSPRP) and the Self Calculated Conditional Payment Amount. See CMS’s webpage for information on these options.

[2] In reviewing the above criteria, it is interesting to note that as part of CMS’s e-mail alert announcing the changes to the Fixed Percentage Option, the agency references both “workers’ compensation” and “liability” cases applying to the Fixed Percentage Option. However, the eligibility criteria as stated on CMS’s website does not include worker’s compensation cases. In this regard, as reflected in the first bullet above, CMS’s website states: “The liability insurance (including self-insurance) settlement, judgment, award or other payment is related to an alleged physical trauma- based incident.” Thus, it is unclear if CMS’s inclusion of workers’ compensation claims as part of the introductory verbiage in the e-mail alert was intended to expand this process to worker’s compensation or was simply an oversight. This article will be updated if CMS’s issues any further information or clarification on this point.

[3] See, CMS' website

CMS announces increase to Maximum Settlement Amount for Fixed Percentage Demand Calculation Option starting October 2, 2023