How does Medicare handle expenses when they come off the top? Is there a dollar for dollar reduction or are expenses ignored and only % fee reduction applied?
Medicare will recognize expenses even if they come off the top. The procurement reduction would not be in the form of a dollar for dollar reduction, but rather a pro-rata share reduction. The formula used by Medicare is as follows:
1. Amount of settlement $__________________
2. Medicare payments $__________________
3. Attorney fees $__________________
4. Other procurement costs incurred $__________________
5. Total procurement costs (lines 3 + 4) $__________________
6. Ratio of procurement costs to settlement (line 5 / line 1) _________________%
7. Medicare’s share of procurement costs (line 2 x line 6) $__________________
8. Medicare’s claim to be recovered (line 2 minus line 7)$____________________
It is important to note that if Medicare payments equal or exceed the amount of the liability insurance payment, judgment or settlement amount, Medicare recovers the entire liability insurance payment, total judgment or settlement payment up to the providers’ charges, minus the total procurement costs.
I hope that helps…