CMS Issues Alert Regarding Annual Recovery Thresholds; PAID Act is Now Effective

By: Brendon De Souza, Esq., CMSP

Associate Attorney, Sanderson Firm

Alert: Annual Recovery Thresholds

Yesterday, the Centers for Medicare & Medicaid Services (CMS) issued its annual alert regarding mandatory insurer reporting thresholds. The alert provides the following language:

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, 2022, 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 at https://www.cms.gov/files/document/computation-annual-recovery-thresholds-nghp-2022-1.pdf

Sanderson Firm Commentary: Section 202 of the Strengthening Medicare and Repaying Tax Payers Act of 2012 (SMART Act) requires Medicare to publish an annual “settlement threshold” for physical trauma-based incidents. The annual threshold has remained $750.00 since 2017, and 2022 proves to be no different. Effective January 1, 2022, settling parties remain exempt from Medicare Secondary Payer (MSP) laws if the total settlement is $750.00 or less. Notably, Section 202 of the SMART Act requires that CMS publish this annual report by November 15 every year. CMS has exceeded this deadline in prior years (i.e., the 2021 annual report was published on November 25, 2020, and the 2020 annual report was published on November 26, 2019), and this year’s delayed publishing was likely the result of CMS’ intense focus on PAID Act implementation.

Update: PAID Act is Now Effective

The Provide Accurate Information Directly (PAID) Act was signed into law on December 11, 2020 and became effective on December 11, 2021. As you may recall, the Act requires CMS to provide Responsible Reporting Entities (RREs) with the name, address, and plan number of all Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D) in which a Medicare beneficiary was enrolled during the previous three (3) years. Now that primary plans are armed with previously missing (or at best, unreliable) data points regarding Part C and D plans, such plans, if proactive, may actively seek to resolve all conditional payments issues thereby reducing litigation exposure for failure to timely reimburse Part C and/or Part D plans. We anticipate that entities such as MSP Recovery LLC will aggressively file double damages lawsuits against primary plans that do not avail themselves of the benefits of the PAID Act. As such, we recommend that primary plans establish a protocol for receiving, storing, and acting upon CMS’ reliable Part C and Part D data.

Please contact us with any questions regarding the annual recovery threshold or the PAID Act.