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).”
B. Josh Pettingill, of Orlando based Synergy Settlement Services, says, “At the heart of the announcement is the following text which Synergy has continually indicated was 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.’
“Enforcement of the MSP as it pertains to future Medicare covered services began back in 2001 when CMS announced in a policy memorandum the requirement to set aside a portion of workers’ compensation settlements allocated to future Medicare covered expenses. Accordingly, the MSP enforcement only took place in the context of workers’ compensation matters. The practical implication of this memorandum was the advent of the Medicare set aside. In 2007, Section 111 Reporting Requirements (part of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA)) added a mechanism for CMS to track Medicare beneficiaries who receive liability, workers’ compensation or no-fault liability settlements, judgments or awards. This Section 111 Reporting Requirement gave CMS further ammunition to track compensable ICD codes related to the liability case.
There has been little to no enforcement of MSP in the context of liability settlements up until now. In most instances, 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. 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. They are also suggesting there will be certain cases where LMSAs will not be necessary; although, this latest alert did not specify these circumstances.”
Medicare Set Asides require an attorney get a professional estimate of future care costs and invest a portion of the trial verdict or settlement amount to fund those costs. This prevents medicare recipients from using tax money to pay for health care when they have been paid, in theory, for their future medical care in the lawsuit result. The process is murky but the horizon appears clear and less murky. MSAs are coming.
Here is a link to the announcement: