CMS Retains its $750 Low Dollar Threshold for 2025

By Mark Popolizio, J.D., Jeremy Farquhar

December 19, 2024 / 5 min read

The Centers for Medicare and Medicaid Services (CMS) has released its 2025 low dollar reporting and recovery thresholds via a new alert dated December 16, 2024.

colleagues-conversing-around-conference-table

In this new alert, CMS has announced that it is retaining its current $750 low dollar threshold for certain cases in 2025 as more fully described below as follows:

Background

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 prior years CMS had released its annual low threshold around or shortly after this date. However, for unknown reasons, CMS’s latest release of the low dollar threshold was delayed beyond the above November date.

CMS’s $750 low dollar threshold

CMS’s newly published alert is titled 2025 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, 2025, 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]

Authors’ Comments

In reviewing the language above, careful attention should be paid to which cases CMS’s “low dollar” threshold applies, and to which cases the threshold does not apply. For example, CMS states this threshold does not apply to “liability insurance (including self-insurance) … settlements for alleged ingestion, implantation, or exposure cases.”[5]

On this point, while not specifically referenced in CMS’s new Alert, the authors note that CMS in its latest Section 111 NGHP User Guide (Version 7.8) (which was released on December 6, 2024) also indicates that this low dollar threshold does not apply to workers’ compensation or no-fault settlements for alleged ingestion, implantation, or exposure cases. Specifically, in Chapters III and IV, Section 6.4.2 (No-Fault TPOCs), CMS states, in pertinent part, that “[t]his threshold does not apply to non-trauma no-fault reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases.”[6] Similarly, in Section 6.4.4 (workers’ compensation TPOCs) CMS states, in pertinent part, that “[t]his threshold does not apply to non-trauma workers’ compensation reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases.”[7]

The above referenced NGHP User Guide excerpts contain updates initially applied by CMS as part of the agency’s NGHP User Guide Version 7.5 (April 1, 2024), which provided clarification to the agency’s February 14, 2024 low dollar alert which, of note, contained nearly identical language as the current December 16, 2024 low dollar alert publication.

By way of background, prior to CMS’s updates in NGHP User Guide Version 7.5 (April 1, 2024) CMS’s language in Chapters III and IV, Section 6.4.2 (No-Fault TPOCs) read as follows: “This threshold does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases.”[8] Similarly, CMS’s prior language in Section 6.4.4 (Workers’ Compensation TPOCs) read: “This threshold does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases.”[9]

Further, it is noted the CMS’s annual low dollar alerts have contained the same alert verbiage as quoted above over the past several years, with each one failing to reference that the threshold does not apply to no-fault and workers’ compensation settlements for alleged ingestion, implantation, or exposure claims. With that in mind, the authors find it significant that CMS, as noted above, clarified that the threshold does not apply to those settlements in its NGHP User Guide Version 7.5 (April 1, 2024), which the agency retained in its most recent NGHP User Guide Version 7.8 (December 6, 2024) released just ten days ago. Thus, from the authors’ perspective, CMS’s failure to note this threshold exclusion in its newly published alert would appear to be an oversight on CMS’s part rather than an actual change in guidance.

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 2025.[10]

While a detailed analysis into CMS’s calculations is beyond the scope of this article, CMS concludes this report as follows:

CMS determined that it will maintain a $750 threshold for 2025, which was the same threshold amount in 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 $339 most closely aligns with and without exceeding the average highlighted demand amount of $462.18 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 $339, most closely aligns with and without exceeding the average highlighted demand amount of over $500 to $750.

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

Questions?

Please do not hesitate to contact the authors or our Sales Team if you have any questions, or to learn how Verisk can help you address Section 111 reporting 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 Alert, 2025 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments (December 16, 2024).

[5] Id.

[6] CMS’s Section 111 NGHP User Guide (Version 7.8, December 6, 2024), Chapter III and IV, Section 6.4.2.

[7] CMS’s Section 111 NGHP User Guide (Version 7.8, December 6, 2024), Chapter III and IV, Section 6.4.4.

[8] CMS’s Section 111 NGHP User Guide (Version 7.4, January 22, 2024), Chapter III and IV, Section 6.4.2.

[9] CMS’s Section 111 NGHP User Guide (Version 7.4, January 22, 2024), Chapter III and IV, Section 6.4.4.

[10] 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 annually 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 Secretary 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 the Centers for Medicare & Medicaid Services (CMS) is not spending more to recover funds than it is collecting. Report to Congress, Calendar Year 2025, Strengthening Medicare and Repaying Taxpayers Act Medicare Secondary Payer (MSP) Non-Group Health Plan (NGHP) Threshold Report to Congress, at 2.

[11] CMS’s Alert, 2025 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Pay