News

CMS Reduces Liability Reporting Threshold to $750 for 2017

Monday, December 12, 2016

After announcing last month that CMS was reducing the recovery threshold for physical trauma-based liability settlements from $1,000 to $750 for 2017, CMS has now issued an Alert that as of 1/1/2017 the mandatory reporting threshold for liability insurance Total Payment Obligation to the Claimant (TPOC) Amounts dated 1/1/2017 or after is changing from $1,000 to $750. CMS further announced that in 2017 it 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 (ORM).

Implications

Effective 1/1/2017 if the most recent liability settlement’s TPOC Date is on or after January 1, 2017, and the cumulative TPOC Amount is greater than $750, the TPOC(s) must be reported. In regard to workers’ compensation and no-fault settlements the $750 threshold is currently in place and will remain so in 2017.

Background

Section 202 of the SMART Act requires CMS to assess annually the costs it incurs in collecting Medicare conditional payments versus the amount collected for the purpose of setting a threshold settlement amount whereby the expected conditional payment amount to be collected is more than the cost of collection.

In determining the 2017 liability threshold, CMS found the estimated cost of collection per Non-Group Health Plan case was approximately $368.75. The $368.75 was then compared to the average demand amount per settlement range. As the average demand amount for settlements of $750 or less is $384.25, CMS determined the liability threshold should be set at $750.  A similar analysis was completed for workers’ compensation and no-fault and resulted in the $750 threshold for those settlements.

ExamWorks Clinical Solutions will be working with our clients over the next few weeks to ensure they are aware of these new thresholds, and have processes in place to ensure reporting of settlements in excess of $750.

The Alert can be found here.

Information on the methodology used to determine the thresholds can be found here.