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Addressing Pro-Rata Lien Amount Reductions | Best Practices Series

• Blog
• September 23rd, 2021

Q: Is there usually a percentage that Medicare, Medicaid, and Workers’ Compensation take of the lien after settlement?

A: While the case is ongoing, Medicare issues “conditional payment amounts.” These amounts are repayable to Medicare on the condition that the case settles or there is a plaintiff verdict.

Medicare will reduce this conditional amount and provide the plaintiff with a “final demand amount” which does reduce the conditional amount by a percentage based upon attorney fees and expenses, pursuant to 42 CFR 411.37. However, it is imperative that when settlement is reported to Medicare by plaintiff counsel or third-party administrator, also included with the gross settlement figure are the specific amounts of attorney’s fees and expenses. Without these figures, Medicare cannot compute the pro-rata final demand reduction.

Medicaid offers no such universally applied formula.