The issue of whether medicare was going to pay for expenses related to workers compensation cases or third party liability cases (auto or Car accident case) has been out there since 1981. The answer to this question was quickly answered in the workers compensation arena by medicare with the requirements that medicare must be considered by all parties in a workers compensation case before a case is settled and the medicals are closed.
All parties include the claimant, the insurance carrier, the claimants attorney and the Maryland workers compensation commission. Failure to do so can result in a denial of medicare benefits to the medicare recipient. In addition failure to do so can result in medicare holding all parties responsible for repayment to medicare for past benefits medicare has paid that are related to the workers compensation case.
All parties include the workers compensation insurance carrier, the claimant’s lawyer as well as the claimant. In theory it could also include the Workers Compensation Commission. To the insurance carrier the fallout would result in additional costs after a case has been settled. For the claimant, medicare could demand a refund and reimbursement for medicals previously paid by medicare or denial of future benefits. For the claimants lawyer medicare may demand reimbursements for medicals previously paid that were not reimbursed as well as malpractice suits from clients who are sued by medicare or denied benefits by medicare.
In response to these issues the Maryland Workers Compensation board has taken the lead by requiring that all full and final settlement agreements that close the medicals take medicare into consideration and failure to do so will result in denial of the settlement approval.The Maryland Workers Compensation Commission Requires that all settlements have the following language in the body of the settlement.” Employer and Insurer also agree to reimburse Medicare for any provisional or conditional payments made by Medicare that are ultimately determined to be the responsibility of the employer and insurer, up to the date of approval by the Commission of this agreement.”
Therefore because of this language even if medicare has not been reimbursed for medicals paid by medicare which are related to the work related accident prior to the accident the responsibility remains with the workers compensation insurance carrier to reimburse medicare even after the settlement is approved. While a prudent workers compensation insurance carrier and claimant and claimant attorney would make sure medicare is not billed for these expenses and if they pay them make sure they are reimbursed, the workers compensation commission has made it clear that the workers compensation insurance carrier is the party that will ultimately be responsible for medicals paid by medicare prior to the date the settlement is approved.
With regard to future medical expenses the workers compensation commission has been requiring a medical set aside or a letter from a physician certifying that the claimant will not need not need medical treatment in the future that would be causally related to the work related accident. Medical set asides are typically prepared by a company that specializes in evaluating the need for future medical care based upon regulation and guidance provided by medicare.
While medicare will only review medical set asides that reach a certain threshold because of the inability to review every workers compensation claim, they still expect the parties to follow the same guidelines that would be followed as if the case was going to be reviewed by medicare.
Medicare’s answer to the issue of whether medicare was going to pay for expenses related to third party liability cases while clear by statute has been unclear or non-existent in the enforcement arena. While Congress legislated the same scrutiny as was required in workers compensation cases, medicare has been slow in practice to require the same level of scrutiny and had set up no system for review with regard to the issue of future medical needs in a third party liability situation.
While medicare requires that it be reimbursed out of the proceeds of a third party settlement when medicare makes payments for a third party claim, this requirement until recently seemed to only be enforced with regard to medical expenses incurred and paid prior to the time the case was settled.Medicare has continued to process medical claims as if there never were a recovery made for future medical care. On very rare occasions, they would deny medial claims submitted by providers.
Once the case was settled ,medicare would be contacted, medicare would provide a lien amount for medical expenses paid by medicare that would have to be repaid and there has been no requirement or discussion from medicare as to what was to happen with medical expenses in the future.
It seems likely that congress intended the same level of scrutiny by medicare in the liabilty of third party area with regard to future medical expenses as has actually taken place in the workers compensation arena. The statute that required the scrutiny applied to both. It must have since they are both referred to in the same sentence.
The Medicare Set-aside (MSP) is a series of statutory provisions enacted in 1981 as part of the Omnibus Reconciliation Act with the goal of reducing federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. CFR Title 42, Part 411, Subpart B, Section 411.20 (2) provides “[s]ection 1862(b)(2)(A)(ii) of the Act precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following” (i) Workers’ compensation; (ii) Liability insurance; (iii) No-fault insurance.
The intent of the statute has been interpreted as being ambiguous because it only applies to” Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made”. The regulations with regard to workers compensation claims requires a provision for future medical expenses so why would the intent be any different for a third party claim. Arguments to date likely centered on the following.
In a worker’s compensation claim the law is clear, a worker’s compensation insurance carrier is legally responsible for future causally related medical expenses. In a third party liability case, while future medical expenses are usually included as a possible measure of damages, there is no law that requires the trier of fact to award such benefits. Most settlements or jury verdicts are for a lump sum and usually do not itemize what they were intended to cover.
But with regard to third party liability claims all medicares requirements with regard to future medical treatment considerations are about to change.Last week, the Centers for Medicare and Medicaid Services (CMS) released a “CMS Manual System” “One-Time Notification” regarding Liability Medicare Set Asides and enforcement of the Medicare Secondary Payer statute (MSP). Starting October 1, 2017, Medicare and their contractors will reject medical claims submitted post-resolution of a liability settlement on the basis those claims “should be paid from a Liability Medicare Set Aside (LMSA)”. The commentary cites the basis for rejection of the claims as enforcement of the MSP statute. It is also important to note that the alert mentions that “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions”.
At the heart of the announcement is the following text of CMS’s position regarding liability settlements and enforcement of the MSP:
“Pursuant to 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of LMSA or NFMSA funds. However, Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”
This latest commentary indicates an imminent change in the near future in regards to enforcement of the MSP. CMS is subtly sending the message that LMSAs are going to be a necessary mechanism in order to avoid denial of medical claims post-resolution.
CMS Manual System Pub 100-20 One-Time Notification Transmittal 1787
Department of Health & Human Services (DHHS)
Centers for Medicare & Medicaid Services (CMS)
Date: February 3, 2017
I I Change Request 9893 SUBJECT: New Common Working File (CWF) Medicare Secondary Payer (MSP) Type for Liability Medicare Set-Aside Arrangements (LMSAs) and No-Fault Medicare Set-Aside Arrangements (NFMSAs)
EFFECTIVE DATE: July 1, 2017 – MCS, VMS, FISS and CWF Analysis and Design; October 1, 2017
– MCS, VMS, FISS and CWF Coding and Testing
*Unless otherwise specified, the effective date is the date of service.
IMPLEMENTATION DATE: July 3, 2017 – MCS, VMS, FISS and CWF Analysis and Design;
October 2, 2017 – MCS, VMS, FISS and CWF Coding and Testing
A. Background: To comply with the Government Accountability Office final report entitled MSP Additional Steps are Needed to Improve Program Effectiveness for Non Group Health Plans (GAO-12-333), the Centers for Medicare & Medicaid Services (CMS) will establish two new set-aide processes: Liability Medicare Set-aside Arrangement (LMSA) and a No-Fault Medicare Set-aside Arrangement (NFMSA). An LMSA or NFMSA is an allocation of funds from a liability or an auto/no-fault related settlement, judgment, award, or other payment that is used to pay for an individual’s future medical and/or future prescription drug treatment expenses that would otherwise be reimbursable by Medicare. This CR: 1) addresses the policies, procedures, and system updates required to create and utilize an LMSA and NFMSA MSP record, similar to a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) MSP record and 2) instructs the A/B MACs and shared systems when to deny payment for items or services that should be paid from an LMSA or NFMSA fund.
B. Policy: Pursuant to 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of LMSA or NFMSA funds. However, Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.
CR 9893 addresses (1) the policies, procedures, and system updates required to create and utilize an LMSA and an NFMSA MSP record, similar to a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) MSP record, and (2) instructs the MACs and shared systems when to deny payment for items or services that should be paid from an LMSA or an NFMSA fund. Pursuant to 42 U.S.C. Sections 1395y(b)(2) and 1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of LMSA or NFMSA funds. However, Liability and NoFault MSP claims that do not have a Medicare Set-Aside Arrangement (MSA) will continue to be processed under current MSP claims processing instructions.
Key Points of CR9893 Medicare will not pay for those services related to the diagnosis code (or related within the family of diagnosis codes) associated with the open LMSA or NFMSA MSP record when the claim’s date of service is on or after the MSP effective date and on or before the MSP termination date. Your MAC will deny such claims using Claim Adjustment Reason Code (CARC) 201 and Group Code “PR” will be used when denying claims based on the open LMSA or NFMSA MSP auxiliary record. In addition to CARC 201 and Group Code PR, when denying a claim based upon the existence of an open LMSA or NFMSA MSP record, your MAC will include the following Remittance Advice Remark Codes (RARCs) as appropriate to the situation: • N723—Patient must use Liability Set Aside (LSA) funds to pay for the medical service or item. • N724—Patient must use No-Fault Set-Aside (NFSA) funds to pay for the medical service or item. Where appropriate, MACs may override and make payment for claim lines or claims on which: • Auto/no-fault insurance set-asides diagnosis codes do not apply, or • Liability insurance set-asides diagnosis codes do not apply, or are not related, or MLN Matters® Number: MM9893 Related Change Request Number: 9893 Page 3 of 3 • When the LMSA and NFMSA benefits are exhausted/terminated per CARC or RARC and payment information found on the incoming claim as cited in CR9009.
Prior to the 2017 rule change the only guidance we had was The May 2011 “Stalcup Handout”
DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services Division of Financial Management and Fee for Service Opprtn VI 1301 Young Street Room 833 Dallas, Texas 75202 Phone (214) 767-6441 Fax (214) 767-4440 May 25, 2011
This specific handout was prepared as a service to the public and is not intended to grant rights or impose obligations. It may contain certain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. Readers are encouraged to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents. It is intended to provide consolidated guidance to those attorneys, insurers, etc., working liability, no-fault and general third party liability cases for any Medicare beneficiary residing in Oklahoma, Texas, New Mexico, Louisiana and Arkansas and is not to be considered a CMS official statement of policy.
If the Medicare beneficiary involved in your case is not a resident of one of these states, please contact the appropriate Centers for Medicare & Medicaid Services’ (CMS) Medicare Secondary Payer Regional Office (MSP RO). If you do not have that information please contact Sally Stalcup (contact information below) for that information.
Medicare’s interests must be protected; however, CMS does not mandate a specific mechanism to protect those interests. The law does not require a “set-aside” in any situation. The law requires that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or liability case. There is no distinction in the law.
Set-aside is our method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary.
Section 1862(b)(2)(A)(ii) of the Social Security, Act [42 USC 1395 y(b)(2)], precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance. This also governs Workers’ Compensation. 42 CFR 411.50 defines the term “liability insurance”. Anytime a settlement, judgment or award provides funds for future medical services, it can reasonably be expected that those monies are available to pay for future services related to what was claimed and/or released in the settlement, judgment, or award. Thus, Medicare should not be billed for future services until those funds are exhausted by payments to providers for services that would otherwise be covered and reimbursable by Medicare. If the settlement, judgment, award .y are not funded there is no reasonable expectation that third party funds are available to pay for those services.
The new provisions for Liability Insurance (including Self-Insurance), No-Fault Insurance, and Workers’ Compensation found at 42 U.S.C. 1395y(b)(8) add reporting rules and do not eliminate any existing statutory provisions or regulations. The new provisions do not eliminate CMS’ existing processes if a Medicare beneficiary (or his/her representative) wishes to obtain interim conditional payment amount information prior to a settlement, judgment, award, or other payment. The new provisions do NOT require a set-aside when there is a recovery for future medicals, in fact this legislation does not address that subject. This legislation is unofficially known as “Mandatory Insurer Reporting” because it does just and only that. It specifies the entity mandated to report a settlement/judgment/award/recovery to Medicare and addresses specifics of that issue.
There is no formal CMS review process in the liability arena as there is for Worker’ Compensation. However, CMS does expect the funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is ever billed. CMS review is decided on a case by case basis.
The fact that a settlement/judgment/award does not specify payment for future medical services does not mean that they are not funded. The fact that the agreement designates the entire amount for pain and suffering does not mean that future medicals are not funded.
The only situation in which Medicare recognizes allocations of liability payments to nonmedical losses is when payment is based on a court of competent jurisdiction’s order after their review on the merits of the case. A review of the merits of the case is a review of the facts of the case to determine whether there are future medicals – not to determine the proper allocation of funds. If the court of competent jurisdiction has reviewed the facts of the case and determined that there are no future medical services Medicare will accept the Court’s designation.
While it is Medicare’s position that counsel should know whether or not their recovery provides for future medicals, simply recovers policy limits, etc, we are frequently asked how one would ‘know’. Consider the following examples as a guide for determining whether or not settlement funds must be used to protect Medicare’s interest on any Medicare covered otherwise reimbursable, case related, future medical services. Does the case involve a catastrophic injury or illness? Is there a Life Care Plan or similar document? Does the case involve any aspect of Workers’ Compensation? This list is by no means all inclusive.
We use the phrase “case related” because we consider more than just services related to the actual injury/illness which is the basis of the case. Because the law precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance, Medicare’s right of recovery, and the prohibition from billing Medicare for future services, extends to all those services related to what was claimed and/or released in the settlement, judgment, or award. Medicare’s payment for those same past services is recoverable and payment for those future services is precluded by Section 1862(b)(2)(A)(ii) of the Social Security Act.
“Otherwise covered” means that the funds must be used to pay for only those services Medicare would cover so there is a savings to the Medicare trust funds. For example, Medicare does not pay for bathroom grab bars, handicapped vans, garage door openers or spas so use of the funds for those items is inappropriate. We include the designation of “otherwise reimbursable” because Medicare does not pay for services that are not medically necessary even if the specific service is designated as a covered service and Medicare does not pay primary when Group Health Plan insurance has been determined to be the primary payer. At this time, the CMS is not soliciting cases solely because of the language provided in a general release. CMS does not review or sign off on counsel’s determination of the amount to be held to protect the Trust Fund in most cases.
We do however urge counsel to consider this issue when settling a case and recommend that their determination as to whether or not their east provided recovery funds for future medicals be documented in their records. Should they determine that future services are funded, those dollars must be used to pay for future otherwise Medicare covered case related services. CMS does not review or sign off on counsel’s determination of whether or not there is recovery for future medical services and thus the need to protect the Medicare Trust Funds and only in limited cases do they review or sign off on counsel’s determination of the amount to be held to protect the Trust Funds.
There is no formal CMS review process in the liability arena as there is for Worker’ Compensation, however Regional Offices do review a number of submitted set-aside proposals. On occasions, when the recovery is large enough, or other unusual facts exist within the case, this CMS Regional Office will review the settlement and help make a determination on the amount to be available for future services.
We are still asked for written confirmation that a Medicare set-aside is, or is not, required. As we have already covered the “set-aside” aspect of that request we only need to state that IF there was/is funding for otherwise covered and reimbursable future medical services related to what was claimed/released, the Medicare Trust Funds must be protected. If there was/is no such funding, there is no expectation of funds with which to protect the Trust Funds. Each attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds. They must decide whether or not there is funding for future medicals.
If the answer for plaintiff’s counsel is yes, they should to see to it that those funds are used to pay for otherwise Medicare covered services related to what is claimed/released in the settlement judgment award. If the answer for defense counsel or the insurer, is yes they should make sure their records contain documentation of their notification to plaintiff’s counsel and the Medicare beneficiary that the settlement does fund future medicals which obligates them to protect the Medicare Trust Funds. It will also be part of their report to Medicare in compliance with Section 111, Mandatory Insurer Reporting requirements.
Medicare educates about laws/statutes/policies so that individuals can make the best decision possible based on their situation. This is not new or isolated to the MSP provisions. Probably the best example I can give is the 2008 final rule adopting payment and policy changes for inpatient hospital services paid under the Inpatient Prospective Payment System. That final rule also adopted a number of important changes and clarifications to the physician self-referral rules sometimes known as the Stark provisions. The physician self-referral law prohibits physicians from referring Medicare and Medicaid patients to certain entities with which the physician or a member of their immediate family has a financial relationship. Exceptions apply.
Requests for determinations as to whether or not the physician met the exception criteria, or whether or not their situation was covered by this prohibition poured in. CMS/Medicare did not and continues to make no such determinations. It is the responsibility of the provider to know the specifics of their situation and determine their appropriate course of action.
Sally Stalcup MSP Regional Coordinator CMS Medicare Fee for Service Branch Division of Financial Management and Fee for Service Operations 1301 Young Street, Room 833 Dallas, Texas 75202 (214) 767-6415 (214) 767-4440 fax
The next guidance given on this topic was the the September 2011 CMS HQ Memo. On 9/29/11, CMS issued a memorandum indicating there is no need for a liability Medicare set aside and that its interests would be satisfied if certain conditions (outlined below) were met. In the first memo coming from CMS HQ regarding Liability Medicare Set Asides, Charlotte Benson, Acting Director Financial Services Group for CMS, gives us an exception to the need to create a set aside in liability cases. According to the memo, a liability Medicare set aside isn’t necessary when the Medicare beneficiary’s treating physician certifies in writing that all of the care related to the claimed injury has been completed as of the date of the settlement. The memo says:
“Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) “settlement” has been completed as of the date of the “settlement”, and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular “settlement”, satisfied. If the beneficiary receives additional “settlements” related to the underlying injury or illness, he/she must obtain a separate physician certification for those additional “settlements.
When the treating physician makes such a certification, there is no need for the beneficiary to submit the certification or a proposed LMSA amount for review. CMS will not provide the settling parties with confirmation that Medicare’s interest with respect to future medicals for that “settlement” has been satisfied. Instead, the beneficiary and/or their representative are encouraged to maintain the physician’s certification.”
The memo is very important for a number of reasons. First, it is the first official memorandum from the CMS central office in Baltimore to substantively address liability Medicare set asides. Second, it provides a mechanism, if the case facts fit the criteria, to avoid the necessity of creating a liability Medicare set aside. It is a limited exception as the treating doctor must attest in writing that all of the treatment for the released injuries was completed at the time of settlement. Third, it avoids the need to request CMS review of a proposed “zero” liability Medicare set aside and the parties just need to retain a copy of the doctor’s letter/certification. Fourth, and most importantly, it reinforces the negative in that if you don’t fall within this exception then a liability Medicare set aside should be considered.
The next guidance came from the ANPRM. In an apparent attempt to create regulations governing liability set asides, on May 3 of 2012, the Office of Management and Budget received advanced notice of proposed rulemaking (ANPRM) entitled “Medicare Secondary Payer and ‘Future Medicals’ (CMS-6047-ANPRM)” from CMS. On June 14th, 2012 the contents of the proposal were released by CMS CMS Proposed General Rule
“If an individual or Medicare beneficiary obtains a ‘settlement’ and has received, reasonably anticipates receiving, or should have reasonably anticipated receiving Medicare covered and otherwise reimbursable items and services after the date of ‘settlement,’ he or she is required to satisfy Medicare’s interest with respect to ‘future medicals’ related to his or her ‘settlement’ using any one of the following options outlined later in this ANPRM.”
The notice outlined seven options to comply with the general rule. As of the writing of this article, no further action has occurred with respect to the proposal for proposed rulemaking.
There are situations where there is not an attestation by a treating physician where future medicals aren’t funded. A Connecticut case, Sterrett v. Klebart, is illustrative of this point. In Sterrett, the court stated that “the settlement payment to Sterrett does not address any future medical expenses that may be covered by Medicare and the facts of this case mandate the conclusion that the defendants and their carriers lack liability with regard to any such expenses.”
The court found that the settlement represented a “substantial compromise” considering the potential verdict range. The settlement was a compromise due to the nature of the injuries and defenses according to the court. Further, the court understood that even though Sterrett would incur medical bills payable by Medicare, the settlement didn’t compensate for such future medical benefits. Instead, the limited settlement funds it found were payable for the plaintiff’s non-economic damages with a small portion to be used for non-Medicare covered economic damages. For those reasons, the court held that no set aside was required and found that the parties had reasonably considered the interests of Medicare in the settlement of the case. Many personal injury cases fit within these parameters and the argument can be made that future medicals haven’t been funded.
Arguably, every personal injury case resolves for a compromised amount. What happens when there are significant damages with a limited recovery? What if the plaintiff has pre-existing conditions? What if there are small policy limits? What if the liability is questionable? In our opinion, all of these issues must be taken into account before arriving at a final MSA amount.
All of the cases cited above which existed before 2017, provide good guidance for how this situation will be handled in the future.
medicare set aside in an auto accident case-when settling a claim, medicare’s interests must now be protected.
While congress wants medicare to refuse to pay for future medical expenses related to a third party claim just like it presently doe refuse in workers compensation claims, clearly the situations are different in many different ways.
Problem (1) The carriers are experienced in the area of Worker’s Compensation Medicare set asides (WCMSAs).Since 2001, insurance companies have been using Worker’s Compensation Medicare Set Aside agreements (WCMSA) as a tool to resolve cases involving a Medicare beneficiary with a future medical component. Trying to use a WCMSA in a liability claim is like putting a square peg in a round hole.
There is a fundamental difference between worker’s compensation claims and liability claims. The primary issue with WCMSA’s is they fully fund future Medicare allowable expenses related to an industrial accident since the carrier is liable for all future medical costs. Whereas, most liability cases resolve for a compromised amount due to issues such as pre-existing conditions, liability, causation, caps on damages and limited coverage. The common result in liability settlements involving Medicare beneficiaries is a disagreement between the parties as to what should be done for MSP compliance once the liability claim resolves, as well as how much, if any, of the settlement proceeds should be set aside. This disagreement causes delays in the settlement and ends up costing all parties involved.
Problem (2)At present, CMS does not have a formal process to review and approve liability MSAs as they do in workers’ compensation cases. CMS review of proposed LMSAs is determined on a case-by-case basis by the appropriate regional office. For example, both the California and Atlanta Regional offices routinely refuse to review LMSAs submitted for formal approval. In years’ past, Medicare would respond with a letter saying, “due to resource constraints, CMS is not providing a review of this proposed liability Medicare set aside arrangement.”
This form letter would go on to say “this does not constitute a release or a safe harbor from any obligations under any Federal law, including the MSP statute.” (Emphasis added). In bold print the letter would warn, “All parties must ensure that Medicare is secondary to any other entity responsible for payment of medical items and services related to the liability settlement, judgment or award.” Currently, most regional offices have discontinued sending response letters to LMSAs. They simply will not bother to respond at all. Nevertheless, CMS does expect the funds to be set aside and spent on Medicare covered services before Medicare is ever billed, regardless of whether the MSA is reviewed/approved by CMS.
Problem (3) There is a tremendous amount of misinformation in the marketplace about Liability MSAs.Some insurance carriers are convinced that failure to address Medicare’s future interests on liability case exposes them to future liability if not properly addressed. There is a small contingent of MSA vendors who have convinced the insurance industry that if you do not do an MSA when resolving a liability claim, then CMS can levy serious fines, penalties, or bring legal action against them. The most common argument by these MSA vendors is that CMS can impose a lien post-settlement; therefore, retroactively exposing the carrier for not properly extinguishing all the liens. This argument is completely without merit. Since there are no regulations or statutes empowering Medicare to take any punitive action at all against a carrier for LMSAs, insurance carriers should be more concerned with conditional payments and reporting requirements.
Problem (4)On the other side of the spectrum, many plaintiff attorneys believe that they do not need to do anything with respect to protecting Medicare’s future interests. The plaintiff’s bar rightfully takes the position that one never has to do an MSA. While there is currently no regulation or law that mandates a liability Medicare set aside, it does not mean there will be no consequences when a plaintiff attempts to shift the burden to Medicare for future injury-related care. It is very clear from Medicare’s public statements that the agency believes that set-asides are the best method to protect the program from paying for injury-related care when future medicals are funded by a settlement. That does not mean it is the only way to demonstrate that Medicare’s interests were taken into account when a case involving a Medicare beneficiary is settled, it simply means it is one way.
The real issue, when a case involving a Medicare beneficiary is settled, boils down to the risk taken by the plaintiff in terms of coverage of their future injury-related care by Medicare. This is not a defense issue; it is a plaintiff issue. The plaintiff, if he/she does nothing without legal justification, could face a situation where Medicare denies future injury-related care since nothing was set aside. The plaintiff needs to understand this risk before settling their case. Since the settlement will be reported to Medicare under the Mandatory Insurer Reporting laws (Section 111 reporting), Medicare will be on notice of the settlement and the injury related ICD codes. That could trigger a denial of
Action Steps-CMS has stated the MSA issue is the plaintiff’s responsibility and the role of the defendant is to report current Medicare beneficiaries under Section 111 reporting. The reality is that the defendant has no exposure for failure to address the MSA issue. However, plaintiff’s counsel has legal malpractice risks if they fail to properly advise the client regarding the set aside issue when they are currently eligible to receive Medicare beneficiary benefits.
What is the SOL for Medicare Conditional Payments? MEDICARE COMPLIANCE
What is the statute of limitations for Medicare to institute an action for repayment of conditional payments used to be a question with more than one answer.
The plaintiff’s bar and Medicare enrollees argued that the shorter three (3) year statute of limitations was the correct standard for claims arising out of tort. That statute provides
“every action for money damages brought by the United States or an officer or agency thereof which is founded upon a tort shall be barred unless the complaint is filed within three years after the right of action first accrues…”28 U.S.C. § 2415(b).
When President Obama signed the Strengthening Medicare and Repaying Taxpayers Act (“SMART”) on January 10, 2013 he answered this question in favor of Medicare beneficiaries. Additionally, unlike some of the other components of the “SMART” Act this section is self-enacting and does not need rule promulgation or post a proposed rulemaking in the Federal Register for this to be effective. By operation of statute this new time limit became effective six (6) months after signing. Therefore, all cases that settle after July 10, 2013 will be controlled by the three (3) year statute of limitations. The “SMART” Act reads in pertinent part:
“(a) In General.–Section 1862(b)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395y(b)(2)(B)(iii)) is amended by adding at the end the following new sentence: `An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made…’”Pub. L. No. 112-242, § 205(a) (2013)
In the recent case U.S. v. Stricker, Lexis 15204 (11th Cir. July 26, 2013) the court provides an excellent analysis of the above competing statutes of limitation and confirms that the “SMART” Act has resolved the controversy for settlements after July 10, 2013.