Conditional Payment Alert: MSPRC Institutes $300 Recovery Threshold on Certain Liability Settlements

On September 6, 2011, the Medicare Secondary Payer Recovery Contractor (MSPRC) indicated that they will not seek recovery against a liability insurance settlement, in certain instances, if:

  • The total lump-sum settlement, award or other payment is $300.00 or less;
  • Involves only a liability insurance settlement (not no-fault/workers’ compensation);
  • The resolution of the claim is for alleged physical injuries (and not for ingestion, exposure or implantation;
  • There are no additional settlements related to the same claim; and
  • A demand has not been issued.

This is the first time that the MSPRC has implemented a low-dollar recovery threshold. As we had mentioned earlier this summer, a June Congressional hearing on MSP recovery practices highlighted concerns that CMS and the MSPRC were focusing energy on circumstances where the recovery would be too minimal.  This threshold is at least indirectly responsive to those concerns.

While any threshold is welcome, the $300 is unlikely to relieve much of the administrative burden for CMS, the MSPRC, plaintiffs and insurers.  In June, the RAND Corporation unveiled a study that articulately argued for a much higher recovery threshold – of $5,000.  A copy of that study can be found here, and should be required reading for the key decision makers at CMS and the MSPRC.  This announcement by the MSPRC is at least a step toward recognizing the concerns highlighted in the RAND study, as well as HR 1063.

The alert can be found below and on the MSPRC’s website.

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