The MSPRC recently announced that CMS will implement a new payment option for beneficiaries who receive certain types of liability insurance settlements of $5,000 or less to resolve Medicare’s recovery claim.  A beneficiary who elects this option will be able to resolve Medicare’s lien by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process.  In order to quality for this option, the following criteria must be met:
1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant); and
2. The total liability settlement, judgment, award, or other payment is $5000 or less; and
3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
The new option will be available on November 7, 2011.  A full explanation, including instructions on how and when to elect the option, will be available on MSPRC’s website on November 7, 2011.

Beneficiaries may not be willing to pay a quarter of a small settlement to Medicare, especially where the beneficiary is represented by an attorney and will have to pay attorney’s fees from those settlement proceeds.  It does not appear that this option provides a reduction for procurement costs.

Click here to see the MSPRC announcement.