Can Medicare’s repayment be reduced for my attorney fees and case costs?

· 3 min read

Yes. A federal regulation, 42 C.F.R. § 411.37, requires Medicare to reduce what it recovers from an injury settlement to account for the attorney fees and litigation costs the injured person incurred to obtain that recovery. This is called the procurement-cost reduction, and because it is built into the recovery formula itself, it is one of the few discounts an injured person does not have to argue for from scratch once the settlement details are reported.

The fairness rationale

The reduction rests on a straightforward idea. Medicare made conditional payments expecting reimbursement, but it is the injured person, paying a lawyer and advancing costs, who actually creates the fund Medicare then recovers from. Requiring Medicare to share those procurement expenses prevents it from taking the full benefit of a recovery it spent nothing to produce. The result is that Medicare collects its related charges minus a proportional slice tied to the cost of obtaining the settlement.

How the reduction is figured

The regulation sets a ratio. When Medicare’s conditional payments are smaller than the total recovery, it divides the procurement costs by the total settlement, applies that percentage to its conditional payments, and subtracts the result, so its demand drops by the same share that fees and costs took from the recovery. When its payments equal or exceed the settlement, Medicare instead recovers the settlement minus the full procurement costs. To run either version, Medicare needs settlement information that typically includes:

  • The total settlement, judgment, or award amount.
  • The attorney fee, stated as a dollar figure or a percentage.
  • The additional costs the injured person bore to obtain the recovery, such as filing fees, expert charges, and records costs.

After that information is submitted, Medicare applies the reduction to its related-charge total and issues a final demand reflecting the lower number. Reporting accurate fee and cost figures is therefore essential, because understating them inflates the amount Medicare keeps.

Reductions beyond procurement costs

The procurement-cost reduction is the standard adjustment, but it is not the only way to lower a Medicare demand. Two other paths can help:

  • Disputing unrelated charges. Removing treatment that is not connected to the accident shrinks the base before the procurement reduction applies.
  • Hardship and proportionality relief. Medicare’s rules include mechanisms for situations where full repayment would be inequitable or would consume too much of a modest recovery.

Stacking an unrelated-charge audit on top of the automatic fee reduction often produces a meaningfully smaller final figure.

The bottom line

Medicare’s repayment can and generally must be reduced for the attorney fees and case costs that produced the settlement, under a federal procurement-cost rule that applies once the settlement is reported. Combined with disputing unrelated charges, that reduction can substantially lower the final demand.

This article is for general educational and informational purposes only and is not legal advice. It does not create an attorney-client relationship, and Georgia law may change. For advice about a specific situation, consult a licensed Georgia personal injury attorney.

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