CMS $750 Low Dollar Threshold Remains for 2024

February 20, 2024 / 8 min read

The Centers for Medicare and Medicaid Services (CMS) has released its 2024 low dollar reporting and recovery threshold via a new alert dated February 14, 2024. In this new alert, CMS has announced that it is retaining its current $750 low dollar threshold for certain cases in 2024 as more fully described below.

Two people holding pens, looking at a piece of paper, on a work surface with two laptops.

By way of brief background, CMS is required to publish an annual low dollar threshold amount according to Section 202 of the Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2012.^[1] In general, under this section, CMS is required to publish an annual single threshold amount below which Section 111 reporting and conditional payment recovery is inapplicable for certain settlements, judgments, awards, or other payments, along with supporting information on how CMS calculated this threshold.^[2] Of note, CMS is technically required to publish its low dollar threshold “not later than November 15^th before each year.”^[3] In recent years CMS has released its annual low threshold around or shortly after this date. However, for unknown reasons, CMS’s release of the 2024 low dollar threshold was apparently delayed.

CMS’s new “low dollar” alert is broken down as follows:

CMS’s $750 low dollar threshold

CMS’s alert is titled 2024 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments and states, in pertinent part, as follows:

Beginning January 1, 2024, 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.^[4]

In reviewing the language above, careful attention should be paid to which cases CMS’s “low dollar” threshold applies, and to which cases the low dollar threshold does not apply.

CMS’s calculation/methodology

CMS’s alert also contains a link to its report to Congress which contains a computation breakdown of how the agency arrived at its decision to keep the low dollar threshold at $750 for 2024.^[5]

As part of this document, CMS explains that “[t]o determine the settlement thresholds, we compared the estimated cost of collection per case of approximately $315 to the average demand amounts per settlement range for liability insurance (including self-insurance), no-fault insurance, and workers’ compensation plans.”^[6] CMS reports the average demand amount as $388.90 for liability cases, $495.52 for no-fault cases, and $664.13 for workers’ compensation cases regarding settlement ranges of “over $500, less than or equal to $750.”^[7]

From the above, CMS concluded as follows:

Based on this information, CMS determined that it will maintain a $750 threshold for 2024 so that physical trauma-based settlements of $750 or less do not need to be reported and Medicare’s conditional payment amount for these settlements does not need to be repaid. For liability insurance, the calculated cost of collection of $315 most closely aligns with and without exceeding the average highlighted demand amount of $388.90 for settlements of over $500 to$750. For no-fault and workers’ compensation insurance settlements, CMS will maintain the current threshold of $750, where the no-fault insurer and workers’ compensation carrier does not otherwise have ongoing responsibility for medical expenses. For no-fault and workers’ compensation insurance the calculated cost of collection of $315, most closely aligns with and without exceeding the average highlighted demand amount of over $500 to $750.^[8]

Please do not hesitate to contact the author if you have any questions about this matter or other Medicare related issues.

[1] Section 202 of the SMART Act is codified at 42 U.S.C. 1395y(b)(9).

In pertinent part, this section states:

(A) In general

Clause (ii) of paragraph (2)(B) and any reporting required by paragraph (8) shall not apply with respect to any settlement, judgment, award, or other payment by an applicable plan arising from liability insurance (including self-insurance) and from alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) constituting a total payment obligation to a claimant of not more than the single threshold amount calculated by the Secretary under subparagraph (B) for the year involved.

(B) Annual computation of threshold

(i) In general

Not later than November 15 before each year, the Secretary shall calculate and publish a single threshold amount for settlements, judgments, awards, or other payments for obligations arising from liability insurance (including self-insurance) and for alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) subject to this section for that year. The annual single threshold amount for a year shall be set such that the estimated average amount to be credited to the Medicare trust funds of collections of conditional payments from such settlements, judgments, awards, or other payments arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section shall equal the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section for the year. At the time of calculating, but before publishing, the single threshold amount for 2014, the Secretary shall inform, and seek review of, the Comptroller General of the United States with regard to such amount.

(ii) Publication

The Secretary shall include, as part of such publication for a year--

(I) the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents; and

(II) a summary of the methodology and data used by the Secretary in computing such threshold amount and such cost of collection.

For purposes of this paragraph and with respect to a settlement, judgment, award, or other payment not otherwise addressed in clause (ii) of paragraph (2)(B) that includes ongoing responsibility for medical payments (excluding settlements, judgments, awards, or other payments made by a workers’ compensation law or plan or no fault insurance), the amount utilized for calculation of the threshold described in subparagraph (A) shall include only the cumulative value of the medical payments made under this subchapter.

(D) Report to Congress

Not later than November 15 before each year, the Secretary shall submit to the Congress a report on the single threshold amount for settlements, judgments, awards, or other payments for conditional payment obligations arising from liability insurance (including self-insurance) and alleged incidents described in subparagraph (A) for that year and on the establishment and application of similar thresholds for such payments for conditional payment obligations arising from worker compensation cases and from no fault insurance cases subject to this section for the year. For each such report, the Secretary shall--

(i) calculate the threshold amount by using the methodology applicable to certain liability claims described in subparagraph (B); and

(ii) include a summary of the methodology and data used in calculating each threshold amount and the amount of estimated savings under this subchapter achieved by the Secretary implementing each such threshold.

[2] Id.

[3] 42 U.S.C. 1395y(b)(9)(B)(i).

[4] CMS’s 2024 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments (February 14, 2024).

[5] This document is titled: Report to Congress, Calendar Year 2024, Strengthening Medicare and Repaying Taxpayers Act Medicare Secondary Payer (MSP) Non-Group Health Plan (NGHP) Threshold Report to Congress.

As part of this document, CMS states the following in the “Requirement” section of this report:

Section 202 of the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act) amended Section 1862(b) of the Social Security Act (the Act), in part by adding paragraph (9), which requires the Secretary of the Department of Health and Human Services (the Secretary) to calculate and publish each year a single threshold amount for settlements, judgments, awards or other payments (hereafter referred to as settlements) for obligations arising from liability insurance (including self-insurance) for alleged physical trauma based incidents (excluding alleged ingestion, implantation, or exposure cases). The legislation also requires the Centers for Medicare & Medicaid Services (CMS) to report on the establishment and application of similar thresholds for conditional payment obligations arising from workers’ compensation and no-fault insurance cases. The single threshold amount for a year is to be set so that the average cost of collecting conditional payments is at least equal to the amount credited to the Medicare Trust Fund. This requirement ensures that CMS is not spending more to recover funds than it is collecting. Report to Congress, Calendar Year 2024, Strengthening Medicare and Repaying Taxpayers Act Medicare Secondary Payer (MSP) Non-Group Health Plan (NGHP) Threshold Report to Congress, at 2.

[6] Report to Congress, Calendar Year 2024, Strengthening Medicare and Repaying Taxpayers Act Medicare Secondary Payer (MSP) Non-Group Health Plan (NGHP) Threshold Report to Congress at 3.

[7] Id.

[8] Id. at 4.

CMS retains its $750 “Low Dollar” threshold for 2024

CMS’s $750 low dollar threshold

CMS’s calculation/methodology