Medicare Lien Reduction Formula

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.

I really hope these two formulas help you make more informed decisions when it comes time to settle your personal injury cases. If you have any questions about Medicare lien reductions, Contact us at 1-800-ASK-DAVE. Our attorneys are here to help!

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