CMS Once Again Considering Set Asides in Liability and No-fault Cases

031016_1424_CMSPublishe1.jpgOn June 8, 2016, the Center for Medicare and Medicaid Services (CMS) published an announcement on its website indicating that it is considering the expansion of 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 amounts. The announcement also indicated that CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. The announcement also informed that CMS will provide future announcements of the proposal and expects to schedule town hall meetings later this year.

As many of you will recall, this is not the first time CMS has announced their intention to expand their voluntary MSA program to liability and no-fault cases. As we previously reported, the CMS published an Advance Notice of Proposed Rulemaking (ANPRM) on June 14, 2012, soliciting comments on standardized options to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers’ compensation when future medical care is claimed or the settlement, judgment, award or other payment releases (or has the effect of releasing) claims for future medical care.

A look back at the 2012 ANPRM Proposed General Rule

The 2012 ANPRM tried to introduce many of the same processes and methodologies already used in workers’ compensation cases when attempting to take Medicare’s future interests into account. In other words, they proposed to expand the general rule that if an individual obtains a settlement, judgment, award or other payment 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 would be required to satisfy Medicare’s interest with respect to future medicals related to his or her settlement using any one of several options.

Option 1

The individual/beneficiary pays for all related future medical care until his/her settlement is exhausted and accordingly documented. As a routine matter, Medicare would not review documentation in conjunction with this option, but would occasionally request documentation from beneficiaries selected at random as part of Medicare’s program integrity efforts.

Option 2

Medicare would not pursue “future medicals” if:

  • The amount of liability insurance (including self-insurance) settlement is a defined amount or less and the following criteria are met:
    • The accident, incident, illness or injury occurred one year or more before the date of settlement;
    • The underlying claim did not involve a chronic illness/condition or major trauma;
    • The beneficiary does not receive additional settlements; and
    • There is no corresponding workers’ compensation or no-fault insurance claim.
  • The amount of liability insurance (including self-insurance) settlement is a defined amount or less and all of the following criteria are met:
    • The individual is not a beneficiary as of the date of settlement;
    • The individual does not expect to become a beneficiary within 30 months of the date of settlement;
    • The underlying claim did not involve a chronic illness/condition or major trauma;
    • The beneficiary does not receive additional settlements; and
    • There is no corresponding workers’ compensation or no-fault insurance claim

Option 3

The individual/beneficiary acquires/provides an attestation regarding the Date of Care Completion from his/her treating physician.

A. Before Settlement

When the treating physician attests on behalf of the beneficiary regarding the Date of Care Completion, and the Date of Care Completion is before the settlement, Medicare’s recovery claim would be limited to the conditional payments made for Medicare-covered and otherwise reimbursable items and services provided from the Date of Incident through and including the Date of Care Completion.

B. After Settlement

When the treating physician attests on behalf of the beneficiary after settlement regarding the Date of Care Completion, Medicare would pursue recovery for related conditional payments it made from the Date of Incident through and including the date of settlement. Further, Medicare’s interest with respect to future medical care would be limited to Medicare covered and otherwise reimbursable items and services provided from the date of settlement through and including the Date of Care Completion.

Option 4

The beneficiary submits a proposed Medicare Set-Aside Arrangement amount for CMS’ review and obtains approval.

Option 5

The beneficiary participates in one of Medicare’s recovery options.

  • $300 Threshold: If a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) settlement of $300 or less, and does not receive or expect to receive additional settlements related to the incident, Medicare will not pursue recovery against that particular settlement.
  • Fixed Payment Option: When a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) settlement of $5,000 or less, and does not receive or expect to receive additional settlements related to the incident, the beneficiary may elect to resolve Medicare’s recovery claim by paying 25 percent of the gross settlement amount.
  • Self-Calculated Conditional Payment Option: When a beneficiary alleges a physical trauma-based injury that occurred at least 6 months prior to electing the option, anticipates obtaining a liability insurance (including self-insurance) settlement of $25,000 or less, demonstrates that care has been completed, and has not received nor expects to receive additional settlements related to the incident, the beneficiary may self-calculate Medicare’s recovery claim. Medicare would review the beneficiary’s self-calculated amount and provide confirmation of Medicare’s final conditional payment amount.

Each of the options is employed in such a way that Medicare’s interest with respect to future medicals is satisfied for the specified settlement. Therefore, when a beneficiary participates in any one of these recovery options, they have also met his/her obligation with respect to future medicals.

Option 6

The beneficiary makes an upfront lump sum payment depending on whether or not ongoing responsibility for medicals was imposed, demonstrated or accepted by defendant.

A. If ongoing responsibility for medicals was imposed, demonstrated or accepted from the date of settlement through the life of the beneficiary or life of the injury, CMS may review and approve a proposed amount to be paid as an upfront lump sum payment for the full amount of the calculated cost for all related future medical care.

B. If a beneficiary obtains a settlement, and ongoing responsibility for medicals has not been imposed on, demonstrated by or accepted by the defendant, the beneficiary may elect to make an upfront payment to Medicare in the amount of a specified percentage of beneficiary proceeds.

Option 7

If the beneficiary obtains either a compromise or a waiver of recovery, Medicare would have the discretion not to pursue future medicals related to the specific settlement where the compromise or waiver of recovery was granted. If the beneficiary obtains additional settlements, Medicare would review the conditional payments it made and adjust its claim for past and future medicals accordingly.

CMS Voluntarily Withdraws Proposed Options

Comments, suggestions and recommendations about these options or other ideas were welcomed and received by CMS. However, the overwhelming number of responses expressed frustration with all of these options, and toward CMS lack of authority to promulgate such rules. Although we believed interim final rules were submitted by CMS to the Office of Management and Budget (OBM) for review, such rules were never published. All stakeholders waited for more than two years until October 8, 2014, when without any explanation, CMS voluntarily withdrew the proposed rules. Many have suggested this was a preemptive move by CMS to avoid OBM rejecting the rules. Others have suggested that after hearing concerns from several national organizations representing various stakeholders, CMS decided to withdraw its proposal fearing legal challenges to such proposals.

Reconsidering Set Asides in Liability and Auto No-fault

Perhaps because of its success with workers’ compensation set-asides, the improved level of understanding and acceptance of the MSA process or simply the realization of the billions of dollars lost by not adopting a set-aside process in liability and no-fault cases, we all knew it was just a matter of time before CMS attempted again to adopt an MSA process to review proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. As CMS reconsiders their position we will continue to report on the potential expansion and any announcements of scheduled of town hall meetings. Should new requirements come to pass, you can also rest assured we’ll be actively engaged to help ensure a timely and compliance implementation. For questions or for more information, please contact us at asktheexpert@helioscomp.com.

This entry was posted in Medicare Secondary Payer (MSP), Medicare Set-Asides (MSAs) on by .

About Rafael Gonzalez

As vice president of strategic solutions, Rafael Gonzalez serves as a thought leader on all aspects of Medicare and Medicaid compliance issues, including mandatory insurer reporting, conditional payments resolution, Medicare set aside allocations, CMS approval, and professional administration of Medicare set asides and special needs trusts. Prior to joining Helios, over the last 30 years, Rafael served as director of Medicare & Medicaid compliance and post settlement administration for Gould & Lamb in Bradenton, Florida. Before that, he served as chief executive officer for the Center for Lien Resolution, the Center for Medicare Set Aside Administration and the Center for Special Trusts Administration in Clearwater, Florida. Prior to that, he served as corporate counsel for FCCI Insurance, a workers’ compensation/property casualty insurance company in Sarasota, Florida. And before that, he practiced social security disability, workers’ compensation, longshore and personal injury law in Tampa, Florida. Rafael Gonzalez received his Bachelor of Science degree from the University of Florida and his Jurisprudence Doctorate degree from the Florida State University.

Leave a Reply