CMS Clarifies Threshold Exemption – Through Technical Alert
Roy Franco
June 7, 2014

This past February, CMS published a MSP exemption as required by the SMART legislation.  On November 15th of each year, SMART requires the Secretary to publish calculations for this important exemption that applies liability settlements, judgments, awards or other payments involving physical trauma.  Once published the rate would take effect for the following calendar year.  Presently, the threshold amount is set at $1,000 or less which meant that even if CMS became aware of a physical trauma case that settled for $1,000 or less involving a Medicare beneficiary, it would not pursue any claims it has under the Medicare Secondary Payer Act.  Of course, when CMS published this number, the MIR threshold for data reporting was for liability claims over $2,000 with a settlement, judgment, award or other payment.  This created confusion.

 What we must remember is that MSP compliance has three parts – 1) Conditional Payment Resolution; 2) Protecting Medicare’s Interest (MSAs) and 3) MIR Data Reporting.  Each track is independent of the other.  Thus if a claim is not reported because it does not meet the present reporting thresholds, it does not necessarily follow, that if CMS becomes aware of those settlements it would not research and pursue a conditional payment recovery.   It typically does, and has established well over 78 special projects within the Coordination of Benefits & Recovery contractor to improve self-awareness.  Prior to SMART, CMS had a policy that it would not pursue MSP compliance for any liability case resolved for $300 or less.  SMART made the threshold a law.  Since it is now law, an issue has arisen regarding claims that may be MIR reported that fall within the exemption.  In the past error code CJ07 was typically returned by CMS when a liability case under $300 was reported.  Now that error code is being modified to return the error code as of 1/1/2015 if claims of $1,000 or less are reported.
To review a complete copy of the Technical Alert, click here.