2025 Medicare Recovery Thresholds Remain at $750

On December 16, 2024, the Centers for Medicare & Medicaid Services (CMS) published their annual update regarding conditional payment recovery and mandatory insurer reporting thresholds for certain liability, no-fault and workers compensation settlements.

 The alert confirms that CMS will maintain the $750 threshold for a ninth year in a row, without adjustment:

 As required by section 1862(b) of the Social Security Act, the Centers for Medicare and Medicaid Services (CMS) has reviewed the costs related to collecting Medicare’s conditional payments and compared this to recovery amounts.

 Beginning January 1, 2025, 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.

 Information on the methodology used to determine the threshold is provided here.

 Sanderson Firm Commentary:

 Despite inflation and increasing medical costs, CMS has continued to maintain the $750 threshold for almost a decade. In its explanation of the methodology used to calculate the threshold amount CMS noted that the average cost of collection is $339, which is nearly an 8% increase from last year’s $315 cost of collection.

 Per CMS, for liability insurance, the calculated cost of collection of $339 most closely aligns with and without exceeding the average highlighted demand amount of $462.18 for settlements of over $500 to $750.  For no-fault and workers’ compensation insurance the calculated cost of collection of $339, most closely aligns with and without exceeding the average highlighted demand amount of over $500 to $750.

Notably, these figures from CMS only mention costs incurred by the Benefits Coordination & Recovery Center (BCRC), and there is no mention or calculation of what costs of collection the Commercial Repayment Center (CRC) incurs in its recovery process.

As CMS utilizes two contractors for its conditional payment recoveries, both the BCRC as well as the CRC, it does seem questionable why the CRC’s costs were not considered in calculating the CMS thresholds. The CRC is primarily responsible for recoveries of conditional payments in workers’ compensation and no-fault claims where Ongoing Responsibility for Medical (ORM) has been reported.

 Further, it is unclear what consideration the collection costs of the CRC may have been given in determining CMS’ thresholds especially considering that multiple recovery actions may be created over the course of a single claim with the CRC as long as ORM remains. Thus, it seems that the potential costs across both contractors could be different than outlined in CMS’ current methodology, had the CRC’s costs been included.

 If you have questions regarding the $750 reporting threshold, or Sanderson Firm’s Section 111 reporting and audit solutions, please contact us.