CMS Issues Clarifying Memo on Reporting, CP Safe Harbor & Computation of Threshold
Jeff Signor
March 3, 2014

In a move that was expected, on February 28, 2014, CMS issued the attached Alert clarifying the $1,000 / $2,000 issue we identified in our recent blog.  The MIR threshold for TPOC’s in liability settlements remains at $2,000 until October 14, 2014 when it is reduced to $1,000.  Settlements below $1,000 are exempt from conditional payment development.   This means that for the next seven months there will be a need for primary plans to report settlements judgments or awards that are over $2,000; and if such S/J/A’s are between $1,000 and $2,000 then there is still a need to be concerned about conditional payments Medicare may have made.  However, once seven months have passed, the safe harbor and MIR thresholds will both be at $1,000 — which should make things simpler.   The Alert also references Error Code CJ07, stating that this code needs to be updated to reflect the threshold changes.  CMS will provide further guidance on this issue at a later date.

The second Alert CMS released yesterday demonstrates how it arrived at the settlement recovery threshold for liability matters, as required by the SMART Act.  Essentially, CMS is taking the position that it costs an average of $335 per case to develop and issue payment information.  Based upon this number, CMS concludes that settlement ranges effected are those between $750 and $1,000, and this is why cases settling for $1,000 or below are provided safe harbor status.  We have worked with MARC (Medicare Advocacy Recovery Coalition) as a steering committee member, to look closely at the cost-per-case issue, and MARC has insight to offer regarding CMS’s conclusions.  There may be more changes coming here.  Stay tuned. 

CMS Clarifying Memo

CMS Threshold Definition