Effective January 1, 2012, Medicare will require insurers and self-insured companies to report settlements, awards, and judgments that involve a Medicare beneficiary to the Centers for Medicare and Medicaid Services (CMS). In the first year of the law's implementation, claims resolved for less than $5,000 will be exempt from the reporting requirement. In the second year, the threshold for reporting will fall to $2,000 and then $600. In the third year, all claims will have to be reported regardless of payment size. As a first step toward informing the policy debate about the costs of compliance, the amounts likely to be available for recovery under the Medicare Secondary Payer (MSP) Act, and the effects of different thresholds on these quantities, the researchers analyzed the effects of the eventual phaseout of the $5,000 threshold. The results of the analysis suggest that collecting on low-value claims provides Medicare with relatively little revenue and that such claims represent a substantial fraction of the reporting burden.
This research was supported by the RAND Institute for Civil Justice (ICJ).
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