Liability Medicare Set Asides: One Step Closer to Reality

CMS continues to forge ahead with establishing formal guidelines for Liability Medicare Set Asides (LMSAs). Over the past several months, The Centers for Medicare and Medicaid Services (CMS) has met with key stakeholders from the insurance industry, the plaintiff’s bar and the Medicare set aside community. These meetings were not held in a public forum like they have done in the past when soliciting feedback from key stakeholders. At this point, nothing is set in stone as far as LMSA policy. However, on August 8^th, 2018, the National Alliance of Medicare Set Aside Professionals (NAMSAP) released a special bulletin highlighting what was discussed in their meeting with CMS[1]. Below are the key points:

• CMS stated they have an 18-month timeframe (from April 2018) before it rolls out a LMSA Review program. 
• The program would be voluntary.
• CMS has indicated that their enforcement mechanism is the denial of services.
• CMS felt strongly that the injured party must receive something (free and clear) through settlement.
• CMS would not review an LMSA until Settlement has been reached.
• CMS feels a LMSA is exclusively the responsibility of the plaintiff.
• Regarding LMSA’s, CMS made it clear that the defendant(s), and their insurers, are not a target.
• CMS would publish a LMSA Reference Guide.
• Eligibility remains the same as the current WCMSA system – Medicare beneficiaries or injured parties who have a reasonable expectation of Medicare eligibility within 30 months.  Medicare’s interest must be considered in every claim.
• A workload threshold of $250,000 is anticipated – “NO SAFE HARBOR”.  This level mirrors the $25,000 workload threshold for WCMSA’s.
• For settlements between $250,000 and $750,000 threshold, CMS approval is available and encouraged by CMS.  CMS would apply “a formula” to determine the LMSA amount.  Starting with the total settlement amount, CMS would subtract certain expenses and apply the discount factor to total settlement.
• Above $750,000 level is a full commutation. A traditional MSA would be prepared and, if submitted to CMS, evaluated by CMS for adequacy.

You can read the announcement in its entirety here:

https://namsap.site-ym.com/news/412493/SPECIAL-EDITION-BULLETIN-Liability-Medicare-Set-Asides.htm

Takeaways for Plaintiff Attorneys

This simply could be another false alarm in a long line of prior false alarms from CMS in regards to LMSAs. However, it may be different this time. CMS has already spent a tremendous amount of time and resources through the Advanced Notice of Proposed Rule Making on developing a LMSA program.  They have the Medicare beneficiary tracking mechanism already in place in the form of Section 111 Reporting Requirements. Finally, they just hired a new Workers’ compensation Review Contractor at a cost of more than $60 million with the understanding that they would also review LMSAs.

The bulletin indicates that CMS reiterated the MSA issue is a plaintiff issue, not a defense issue. Given where we are now, we believe it is imperative for trial lawyers to get up to speed in developing a Medicare Compliance protocol in their offices to address this issue. A starting point for developing such a protocol would be to view the Total Medicare Secondary Payer Summit that was held recently. The webinar addressed Liability Medicare Set-Asides (LMSAs), best practices for handling Medicare plaintiffs, public benefit protection, hospital lien resolution strategies, advanced Medicare lien reduction techniques and Medicare Advantage Plan lien resolution. It can be viewed here:

https://www.youtube.com/watch?v=uEsBLYInQdM&t=175s

[1] NAMSAP is the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements.