By Guest Author Rasa Fumagalli, J.D., MSCC, CMSP-F – Director of MSP Compliance Services
Medicare has struggled over the years to provide rules clarifying existing Medicare Secondary Payer (MSP) compliance obligations when it comes to post-settlement injury-related care that is released in a liability settlement. Their first attempt at proposed rulemaking took place in 2012 and resulted in the notice of proposed rule being withdrawn in 2014. Their most recent attempt, which began in December of 2018, sought to provide a proposed rule that “would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items related to liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or other payments.” Although this notice of proposed rule had been delayed many times over the years, it was finally withdrawn on October 13, 2022.
Medicare’s withdrawal of the notice of proposed rule does not give settling parties a free pass when it comes to Medicare Secondary Payer compliance issues. So where does this leave parties settling liability cases involving Medicare beneficiaries? The answer, as always, lies in the Medicare Secondary Payer Act. The Act states that Medicare is prohibited from making payments for services “to the extent that payment has been made or can reasonably be expected to be made under any of the following: (i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance.” Further guidance comes from the May of 2011 CMS Region VI Stalcup memo and the CMS September of 2011 Benson memo which both provide insights into Medicare’s position when it comes to shifting the burden to Medicare post settlement. Unlike accepted workers’ compensation settlements, liability settlements have different considerations and require a more nuanced analysis of the potential impact of the MSP Act on a settlement. Although a Medicare Set-Aside allocation may be appropriate in a certain case, there are many settlements where other options are more appropriate.
The Medicare trust fund remains in dire financial straits. Medicare’s decision to withdraw the notice of proposed rule might mean that a greater focus will be placed on the Section 111 Total Payment Obligation to Claimant (TPOC) reporting resulting in increased denials of post-settlement injury-related claims. For the time being, our recommendation is as always make sure that your client is educated about the potential impact of the MSP on payment for future injury-related care post settlement. Consulting with experts and having the issues explained to an injury victim are best practices. Then ultimately, you want to document your file about what has been done to educate the client and their final decision. If a denial of care occurs in the future, you then have documentation of what was done and why.
Medicare is analogous to Medicaid at settlement meaning just like the obligation to advise a Medicaid beneficiary about the availability of a special needs trust, you need to explain to your client about the possibility of establishing a set-aside. As commentators have suggested, a lawyer must “ensure his client is informed about the options of structured settlements, trusts and the effect of the judgment or settlement on the client’s public benefits.” The same is true for Medicare beneficiaries. Making sure a client receives proper counseling about the form of settlement is required by the Rules of Professional Conduct.
We will continue to monitor this issue and keep you advised of further developments. Synergy’s team of MSP compliance experts is here to assist you in navigating the murky waters of MSP compliance.
 Miscellaneous Medicare Secondary Payer Clarifications and Updates (CMS-6047), RIN: 0938-AT85.
 42 C.F.R. § 411.20; see also 42 U.S.C. § 1395y(b)(2)(A).
 Memorandum from Sally Stalcup, MSP Regional Coordinator, CMS, Medicare Fee for Service Branch, Division of Financial Management and Fee for Service Operations (May 25, 2011), available at https://static1.squarespace.com/static/5807a480d482e9eb1f5d9c54/t/589d81823e00bea366d73d90/1486717333702/00-CMS-Sally-Stalcup-Memo-5-25-2011.pdf; Memorandum from Charlotte Benson, Acting Director, Financial Services Group, Office of Financial Management, Department of Health & Human Services, Centers for Medicare & Medicaid Services, to Consortium Administrator for Financial Management and Fee-for-Service Operations, Medicare Secondary Payer—Liability Insurance (Including Self-Insurance) Settlements, Judgments, Award, or Other Payments and Future Medicals – INFORMATION (Sep. 30, 2011), available at https://www.cms.gov/files/document/future-medicals.pdf.
 Bernard A. Krooks & Andrew H. Hook, Special Needs Trusts: The Basics, The Benefits and The Burdens, 15 ALI-ABA Est. Plan. Course Materials J., 17 (Dec 2009).
 See Model Rules of Prof’l Conduct, R. 1.0(e) and 2.1.
Jason D. Lazarus is the managing partner and founder of the Special Needs Law Firm; a Florida law firm that provides legal services related to public benefit preservation, liens and Medicare Secondary Payer compliance. He is also the founder and Chief Executive Officer of Synergy Settlement Services, which offers healthcare lien resolution, Medicare secondary payer compliance services, public benefit preservation and complex settlement consulting.
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