CMS and Liability Medicare Set-Asides

CMS’s newest time frame to create a Liability Medicare Set Aside (“LMSA”) process has come and gone. Again. We’ve seen CMS make multiple attempts to create a process and then pull them back.

CMS’s Liability Medicare Set-Aside History

• In 2012, CMS issued an Advanced Notice of Proposed Rulemaking (“ANPR”) requesting comment on potential rules;
• CMS withdrew that ANPR in 2014;
• In 2016 (and reissued in 2017), CMS issued a Request for Proposal (“RFP”) for a new MSA review contract. In that RFP, CMS noted it “is considering expanding its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts.”
• When CMS awarded its newest MSA review contract, the final RFP for that contract noted, “Offerors shall propose a technical approach for developing … Liability Medicare Set-asides…”
• In February 2017, CMS issued Change Request 9893 directing its contractors to deny payments where a payment should be made from an MSA. In fact, it specifically stated that payment for diagnosis codes associated with an open LMSA or No-Fault MSA should be denied; and,
• CMS rescinded that guidance on October 3, 2017.

Part of the RFP for Medicare’s new MSA Review Contractor indicated CMS would have an option to expand review to LMSAs on July 1 of each year of the contract. July is in the rearview mirror and no process has been defined by CMS. Then, industry consensus is that any LMSA review program will be on hold until at least January 1, 2020 as CMS generally takes a methodic approach while announcing rules and regulations. As we’ve learned from this LMSA history: we might be waiting longer even if CMS begins announcing regulations.

What are Your Obligations?

Defendants and their insurers are made primary by the Medicare Secondary Payer Act. This means that Medicare isn’t meant to pay for any case-related care until the primary plan runs out. If you consider the settlement fund as taking over as the primary plan after settlement, then, Medicare is not meant to pay until settlement funds are exhausted. Or more simply put: an LMSA is appropriate under the current law – unless you have an alternative method.

Of course, the analysis should be much deeper than the above. Without regulations from Medicare it seems appropriate to consider a full apportionment of the settlement, meaning, what portion is fairly designated as future medicals.

Regardless, all parties to the settlement should consider Medicare and future medicals. Whether that is through a Liability MSA or other vehicle is another question for another day. If you need help with Medicare or Medicare Set-Asides please let us know by contacting us at 844.633.5436 or send an email to [email protected].