Commencing October 2, 2023, the new maximum settlement amount for the Fixed Percentage Option (FPO) will be $10,000. This is double the current maximum settlement amount for the FPO of $5,000.

The function of a FPO in Medicare conditional payments cases is that it streamlines the process for handling monies owed to Medicare. When a liability or workers’ compensation case settles and certain criteria is met, the beneficiary, the beneficiary’s attorney, or other representative can make a request that a Medicare conditional payments lien be calculated using the FPO. When electing to proceed with the FPO, Medicare’s recovery claim can be resolved by paying Medicare 25% of the gross total settlement, as opposed to utilizing the traditional Medicare conditional payments recovery process. Please note the gross settlement is not reduced for attorney’s fees and costs. By electing to use the FPO and pay Medicare 25% of the gross total settlement, this simplifies the Medicare conditional payments process and saves the parties’ time and resources.

Pursuant to the Centers for Medicare and Medicaid Services (CMS), to qualify for the FPO, all the following criteria must be met:

1. Your liability insurance (including self-insurance) settlement, judgment, award or other payment is related to an alleged physical trauma-based incident;
2. The total settlement is for $10,000 or less effective as of October 2, 2023 (a change from the current $5,000 threshold);
3. You elect the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident; and
4. You have not received and do not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

A written request for a FPO must be made to CMS. Upon receipt of the written request, CMS will decide whether the FPO will be allowed within 30 days. If the request for FPO is approved, payment must be made to CMS by a date certain that will be indicated on the approval letter. If the request for FPO is not approved, the parties will need to handle Medicare conditional payments via the traditional recovery process. It is important to note that if a FPO is elected, the beneficiary may not subsequently seek an appeal.

For questions about these updates, as well as general inquiries about Section 111 reporting and all things Medicare Secondary Payer, please contact us at info@allankoba.com.