On June 15th, Medicare released a list of proposed guidelines to address Medicare’s recovery of medical expenses incurred after settlement, commonly known as the “Medicare Set-Aside” (MSA) issue.
Since 2001, the Center for Medicare & Medicaid Services (“CMS”) has recommended a formal, yet voluntary, MSA arrangement for workers’ compensation settlements to satisfy obligations under the Medicare Secondary Payer (MSP) statute. Now, this new notice from CMS invites the public to comment on how and whether Medicare should implement a similar process for liability insurance settlements.
Under the following proposed rules, CMS is seeking commentary from the public in areas where a claimant or Medicare beneficiary obtains a settlement and there is a reasonable anticipation they will receive Medicare reimbursable services or items after the date of settlement. Proposed options 1-4 would be available to Medicare beneficiaries and individuals who are not yet Medicare beneficiaries. Options 5-7 would be available to Medicare beneficiaries only.
Available to Medicare Beneficiaries and Individuals
1. Self-Funding. Under this option, the beneficiary pays for all related future medical expenses until the settlement proceeds are exhausted.
2. Low Threshold Exemption. Medicare would not pursue recovery of future medicals under certain conditions, most notably, if the settlement was below a threshold amount (as of yet undefined) and the underlying claim did not involve chronic illness or major trauma.
3. Physician Attestation. The injured person could provide Medicare with an attestation from his or her treating physician as to the date the care relating to the injury was completed. Medicare would not pursue future medicals if the beneficiary’s physician states that care was completed before settlement. Alternatively, if the beneficiary receives a physician attestation after settlement, Medicare’s future interests would be limited to expenses incurred before the date of the attestation.
4. Medicare Set Aside. MSAs reflect a process by which settlement funds are used to pay for future medical expenses otherwise covered by Medicare. A MSA can take many forms, depending on the circumstances of the settlement, and is not necessarily a formal process or separate account. Medicare has established processes to review and approve MSAs in the workers compensation context, but not for liability settlements. The proposal requests input on how a MSA review/approval process in the liability context should be structured. Current regulations do not require MSAs for non-workers compensation settlements, but they can be a useful tool to minimize the settling of a defendant’s liabilities under MSP regulations.
Available to Medicare Beneficiaries Only
5. Low Threshold Reimbursement Options. Beneficiaries can participate in the following “recovery” options, which have been implemented by the Medicare Secondary Payer Recovery Contractor:
- $300 Threshold case option;
- Fixed Payment option; or
- Self-Calculated Payment option.
Additional information regarding these recovery options can be found at www.msprc.info. Under the existing system and proposed rules, when a Medicare Beneficiary participates under these recovery options, they are still required to consider and protect Medicare’s future interests.
6. Upfront Payment. Medicare proposes a system through which a one-time, upfront payment to the federal government would satisfy Medicare’s recovery interests related to future medical expenses.
7. Waiver. Medicare proposes to extend the existing waiver process, in which the beneficiary obtains a compromise or waiver of recovery as to “future medicals.”
Although the proposal lacks concrete guidance for addressing future expenses, it does highlight options and considerations that could be utilized now, depending on the circumstances of the settlement. Since no one option satisfies all possible scenarios, it is assumed that more than one would be adopted. At the very least, one thing that is clear is the intent of CMS on trying to address the problems that have arisen from mandatory insurer reporting, resulting in denials of future care and the insistence by defendants to set aside a portion of the settlement when settling cases with Medicare beneficiaries.
Comments to the proposed guidelines (click here for a PDF copy) are due by August 5, 2012 and should be submitted to the Centers for Medicare & Medicaid Services (CMS), which administers Medicare. Recommendations for other methods to address future medicals may also be submitted. CMS will likely issue final proposed rules after all comments they receive are considered.
