CMS Lowers SCHIP Reporting Threshold for Workers’ Compensation Cases
Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 implemented mandatory reporting requirements for Medicare beneficiaries who had settlements, judgments, awards or other payments for non-group health plans such as liability insurance, no fault insurance or workers’ compensation. Thereafter, Section 202 of the SMART Act required that settlement thresholds be established wherein settlements falling below the threshold would not have to be reported to CMS and conditional payments would not need to be reimbursed. The initial settlement threshold for both workers’ compensation and liability cases was established at $1,000.
On September 26, 2016, CMS issued a memorandum lowering the workers’ compensation submission threshold to $750. The threshold applies when cases are resolved and the employer’s Ongoing Responsibility for Medical (ORM) is extinguished as a result of settlement. This results in insurers being required to report an additional number of settlements to CMS in accordance with SCHIP. The reduction was warranted according to CMS based upon the average cost of recovery incurred by CMS in recovering conditional payments. According to the September 26, 2016, memorandum, the $750 threshold was established based upon CMS having an average conditional payments demand in workers’ compensation of $499 with an associated cost of recovery to CMS of $421.
Where a nuisance settlement is a viable option with a Medicare beneficiary, the $750 threshold should be kept in mind. Where cases can be settled for $750 or less and Medicare made conditional payments, the settlement can proceed without the need for SCHIP reporting nor conditional payments reimbursement.