Reducing Medicare Recovery Reporting Threshold will Raise and Cost Millions

One of the most annoying aspects of settling small personal injury settlements today is the reporting requirement of the Medicare Secondary Payer Act, which is designed to ensure that Medicare gets reimbursed for past payments that it has made on plaintiff's behalf, and that Medicare's future interst in future claims arising from the injury are protected.  The RAND Institute for Civil Justice recently published "Recovery Under the Medicare Secondary Payer Act: Impact of Reporting Thresholds." The study concludes that CMS can recover $1 billion per year from auto accidents - the most-common type of claim - and that retaining the already very low $5,000 reporting threshold would reduce recoveries by 2.4 percent while reducing the number of claims that must be reported by 43 percent.  The monetary cost to CMS of retaining the $5,000 threashold is estimated at $24 million, but that does not compute the added administrative cost to parties.  The $24 million in lost recovery to CMS equates to 123,000 cases whith a threashold of less than $5,000.  If one assumes that dealing with release letters rom CMS adds an additional 2 hours of time for plaintiff counsel and two hours for defense counsel, at an average rate of $200 per hour, the administrative burden to parties would equal an added $98.4 million of private administrative cost.  Even if one assumes that the vast majority of these small claims involve insurance and legal staff only, assuming a rate of $20.00 per hour and 4 hours combined time, would equal almost $10 million.  And that does not even consider the delays that will result in settling these very small claims.  Most such claims settle within 14 days of injury, but CMS reporting requirement will delay such settlements by months. 

Comments

[Living Wills Doylestown]

Interesting article, this helped me understand a lot of whats going on with medicare cuts. Thanks for sharing this.