  # Medicare Lien Reduction Formula

Today, I want to talk about the Medicare lien reduction formula. There are two formulas that you use in Medicare lien reductions on personal injury cases.

### Formula 1:

If Medicare payments are less than the settlement or judgment amount, then the Medicare lien formula you use is as follows.

Step number one: add attorney fees and costs to determine the total procurement cost.

Step number two: take the total procurement cost and divide that by the gross settlement amount to determine the ratio.

Step number three: multiply the lien amount by the ratio to determine the reduction amount.

Step number four: take the lien amount and subtract the reduction amount to determine Medicare’s final demand. That’s their final lien amount.

### Formula 2:

The second Medicare lien formula is used if Medicare payments equal or exceed the settlement or judgment amount.

Step number one: add attorney fees and costs to determine the total procurement cost.

Step number two: take the gross settlement amount and subtract the total procurement cost to determine Medicare’s final lien demand.

### Formulas

Formula 1:

(Attorney’s fees) + (costs) = Total Procurement Cost

(Total Procurement Cost) / (Gross Settlement Amount) = Ratio

(Lien Amount) x (Ratio) = Reduction Amount

(Lien Amount - Reduction Amount) = Medicare’s Final Demand

Formula 2:

(Attorney’s fees) + (costs) = Total Procurement Cost

(Gross Settlement Amount) - (Total Procurement Cost) = Medicare’s Final Demand

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