The Centers for Medicare and Medicaid Services (CMS) has released its low dollar recovery threshold for 2019 via an alert dated November 15, 2018. CMS is generally required to publish an annual low dollar threshold amount pursuant to Section 202 of the Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2012.
CMS’ alert, entitled 2019 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments can be obtained here.
In this alert, CMS announced it is retaining its current $750 low dollar threshold as follows:
Beginning January 1, 2019, the threshold for physical trauma-based liability insurance settlements will remain at $750. CMS will maintain the $750 threshold for no-fault insurance and workers’ compensation settlements, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals. This means that entities are not required to report, and CMS will not seek recovery on settlements, as outlined above. Please note that the liability insurance (including self-insurance) threshold does not apply to settlements for alleged ingestion, implantation or exposure cases.
As part of its calculations, CMS estimated the average cost of collection for Non-Group Health Plan (NGHP) cases as approximately $297 per case. CMS explained that this collection figure was “based on the amount paid (invoices) to our Benefits Coordination and Recovery Contractors for work related to identifying and recovering NGHP conditional payments” using data between August 2017 and July 2018.
Further, CMS reports that for liability insurance and workers’ compensation settlements, “the calculated cost of collection of $297 most closely aligns, without exceeding, to the average demand amounts of $368.40 and $518.18 respectively for settlements of over $500 to $750.” Regarding no-fault claims, CMS states that “[a]lthough the cost of collection of $297 most closely aligns with the average demand for settlements of $300 to $500, the limited number of demands for no-fault within this range represents a minimal amount of missed potential recoveries.” Click here for a full review of CMS’ calculation methodology.
Please do not hesitate to contact the author if you have any questions.
 Section 202 of the SMART Act is codified at 42 U.S.C. 1395y(b)(9)(B). In pertinent part, this section states:
Not later than November 15 before each year, the Secretary shall calculate and publish a single threshold amount for settlements, judgments, awards, or other payments for obligations arising from liability insurance (including self-insurance) and for alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) subject to this section for that year. The annual single threshold amount for a year shall be set such that the estimated average amount to be credited to the Medicare trust funds of collections of conditional payments from such settlements, judgments, awards, or other payments arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section shall equal the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section for the year.