CMS Implements Increased Fixed Percentage Conditional Payment Option of $10,000 for Liability Settlements
Written by: Kayla Pigeon, Esq.
On September 13, 2023, The Centers for Medicare and Medicaid Services (CMS) announced that effective October 2, 2023, the Fixed Percentage Option (FPO) settlement amount threshold will increase from $5,000 to $10,000.
This blog will explain What the FPO is, How it is requested, When the window to submit the request expires and Why this option may be beneficial.
What is the Fixed Percentage Option (FPO)?
The FPO is a settlement tool available for Liability claims that was initially rolled out by CMS and the Benefits Coordination and Recovery Center (BCRC) on November 7, 2011. The primary goal of this option is to provide a more efficient post-settlement recovery process for claims that meet the following eligibility requirements outlined by CMS:
Your liability insurance (including self-insurance) settlement, judgment, award or other payment is related to an alleged physical trauma- based incident (not related to ingestion, exposure, or medical implant) and;
The total settlement is for $5,000 (Note this amount will be raised to $10,000, effective October 2, 2023) or less.
You elect the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.
You have not received and do not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
If the above criteria are met, then the recovery claim can be resolved by agreeing to pay 25% of the gross settlement. The gross settlement would not be reduced for attorney fees and costs, and this would forgo the traditional post-settlement final demand process. In other words, it is possible that parties utilizing the FPO process might pay more in conditional payments than might be owed if parties would undergo the standard Medicare conditional payment resolution process; however, the key benefit here is knowing that only 25% of the settlement is owed and parties could settle more quickly.
How do you opt for the FPO?
A written request must be submitted to utilize the FPO. This request must be submitted by the Beneficiary or be submitted with a valid Proof of Representation (POR). CMS has given us Model Language for this request. The request cannot be faxed to the BCRC and must be mailed to: Fixed Percentage Option P.O. Box 138880 Oklahoma City, OK 73113.
When is the deadline to request the FPO?
In order to elect the FPO, the request must be submitted with or prior to the notice of settlement; however, the settlement must occur before the request can be made. If a Conditional Payment Notice (CPN) has been issued, then the request needs to be made prior to the response due date. Once a demand has been issued, it is too late to elect the FPO option. The response to the submitted request can take up to 30 days. If the request is rejected, then the traditional recovery processes will resume.
Why and when is it beneficial to select the FPO?
The FPO was intended by CMS to streamline the recovery process for lower dollar Liability settlements. By selecting this option, it erases any unknowns or surprises regarding the amount of the final demand. It also eliminates the time it takes to have a final recovery action created as well as the potential appeals process that would follow. This saves time for both CMS and the parties to the settlement.
The downsides to this selection are that if approved, the beneficiary cannot seek a waiver of recovery or appeal the amount. Attorney’s fees and costs are also not considered in the calculation of the amount. As previously stated, there is also a potential that by choosing to pay the flat 25% of the settlement, the amount paid to Medicare could be greater than what would have been owed under the traditional recovery process.
In determining whether to elect the FPO or utilize the traditional Medicare conditional payment resolution process, we would recommend proactively conducting a conditional payment search prior to settlement in order to determine potential conditional payment exposure. This allows settling parties to be better equipped to determine whether the FPO is the right choice for your settlement.
Further Sanderson Firm Commentary on the Fixed Percentage Option and Medicare Advantage Plans
It would be wise not to forget that electing the Fixed Percentage Option for traditional Medicare Part A & B would not preclude recovery by the Medicare Advantage Part C and Prescription Drug Part D plans. Lien searches should also be conducted proactively with Part C & D plans to ensure that all lien exposure is known at the time of settlement and when determining if the Fixed Percentage Option makes sense for you.
Sanderson Firm offers a variety of recovery services that include handling all aspects of recovery at the time of settlement and on average, we save our clients 80% disputing inaccurate conditional payments with traditional Medicare, Medicare Advantage Plans and Part D plans. To learn more about our Conditional Payment services, please contact us.
