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What a Medicare conditional payment letter means for your settlement disbursement

A conditional payment letter lists the claims Medicare has paid for the injury so far; it is not the amount Medicare will collect. Medicare's recovery is set in the final demand, issued after the settlement is reported and reduced for the fees and costs of obtaining the settlement. The final demand is due within 60 days of the letter's date, and interest accrues from that date if it is not paid in time.

For personal injury attorneys, case managers and settlement staff · Reviewed November 5, 2026

Conditional payment letter versus final demand

Conditional payment letter (CPL)Issued by Medicare's Benefits Coordination & Recovery Center (BCRC) after the case is reported, listing claims Medicare has paid that appear related to the injury. It is interim: Medicare may keep paying related claims while the case is pending, and the related claims can be disputed.
Final demandIssued after the settlement amount, date, attorney fees and costs are reported. This is the amount owed. Payment is due within 60 days of the letter's date; unpaid demands accrue interest from that date and can be referred to the Treasury for collection.

How Medicare reduces its claim

Medicare shares in the cost of getting the recovery. Under 42 C.F.R. 411.37, when Medicare's payments are less than the settlement, its recovery is reduced in proportion to the fees and costs the beneficiary paid to obtain it.

Gross settlement184,220.14
Attorney fee (one third) plus case costs62,276.14
Procurement cost ratio (62,276.14 ÷ 184,220.14)33.8053%
Conditional payments Medicare made14,569.14
Reduction (14,569.14 × 33.8053%)(4,925.14)
Final demand9,644.00

Getting a final figure before you settle

Waiting for the final demand after settlement is a common reason PI disbursements stall. Medicare offers ways to lock the figure earlier.

  1. Final Conditional Payment processThrough the Medicare Secondary Payer Recovery Portal (MSPRP), notify the BCRC that the case is within 120 days of settlement. Disputes submitted through the portal are addressed within 11 business days. Request the final conditional payment amount, settle within 3 business days of that request, and submit the settlement information within 30 calendar days. The process can be started once per case, and is not available for no-fault cases, cases with ongoing medical responsibility, or once another calculation option has been chosen.
  2. Self-calculated conditional payment amountFor smaller physical trauma cases: the total settlement cannot exceed $25,000, treatment must be complete with no further care expected, at least 90 days before you submit, and the incident must be at least six months old. See CMS's demand calculation options for the full criteria.
  3. Fixed percentage optionFor physical trauma settlements of $10,000 or less (not ingestion, exposure or implant cases), Medicare's recovery can be set at a flat 25 percent of the settlement, if elected before a demand is issued.

What to hold in trust, and when to pay

  • Do not pay the client's share against the conditional payment letter. Hold the amount Medicare may claim in trust until the final demand is issued.
  • Pay the final demand from trust within 60 days of its date, even if you plan to appeal or ask for a waiver. Interest accrues during an appeal, paying does not give up the appeal, and Medicare refunds the difference if the appeal or waiver is granted.
  • Record the conditional figure, the final demand and the payment on the client's ledger, so the settlement statement and the trust record show the same number.
  • If a Medicare Advantage plan paid for the care, the plan may assert its own reimbursement claim separately from the BCRC process. Ask the plan too, and track its claim as its own lien.

Where software fits

suss. keeps the conditional payments, the final demand and the correspondence against the matter, flags matters approaching settlement without a final figure, and carries the final demand onto the settlement statement. The held amount stays visible on the client's ledger until Medicare is paid. Working the claim with Medicare stays with the firm or its lien vendor.

Common questions

Is the conditional payment letter the amount I owe Medicare?

No. It is an interim list of related claims Medicare has paid. The amount owed is in the final demand, which Medicare issues after the settlement is reported and which is reduced for procurement costs.

How long do I have to pay Medicare's final demand?

Payment is due within 60 days of the date of the final demand letter. If it is not paid by then, interest is charged from the date of the letter.

Can I get Medicare's final amount before the case settles?

Yes, through the Final Conditional Payment process on the Medicare Secondary Payer Recovery Portal: notify Medicare the case is within 120 days of settlement, resolve disputes, request the final amount, and settle within 3 business days of that request.

See these checks run on your own trust account.

suss. reconciles bank, book and every client ledger daily, flags the exceptions in this guide, and keeps the record your bar asks for.

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Sources and rules cited (7)
  1. CMS, What to know about conditional payment letters
  2. CMS, Demand Calculation Options
  3. MSPRP help: Begin Final Conditional Payment Process and Provide 120 Days' Notice
  4. CMS, Final Conditional Payment flow chart (pro rata reduction under 42 C.F.R. 411.37)
  5. MSPRP help: Final Demand and interest
  6. MSPRP help: Fixed Percentage Option
  7. CMS, Reimbursing Medicare

General information, not legal or tax advice. Rules vary by state and change; confirm the current rule for your jurisdiction.

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