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Liability MSA update & implications of CMS proposed rulemaking

July 14, 2020 · Lavonya Chapman, Associate General Counsel, Optum Settlement Solutions

The Centers for Medicare & Medicaid Services (CMS) recently revised the timeline and abstract noted in the Spring 2020 Unified Agenda. Updated by the Office of Management and Budget, when published, this revision will impact workers’ compensation, liability, and no-fault claims.

 Click to view rule.

The pushback of the Spring 2020 date and change in verbiage may provide further insight into how CMS wants you to satisfy Medicare Secondary Payer obligations as it pertains to future related medical expenses otherwise reimbursable by Medicare.

While we have much experience with workers’ compensation Medicare Set-Asides, we wait for CMS guidance when it comes to how to address future medical expenses, claimed and released, involving liability claims.

Comparing the old and new language

Before we draw inferences, let’s review the language since originally published. The updated announcement clarifies the scope of the proposed rule and focuses on the individual Medicare beneficiary with less emphasis on ensuring ‘best choices to select’ as originally stated.

Fall 2018 Abstract:

“This proposed rule would ensure that beneficiaries are making the best health care choices possible by providing them and their representatives with the opportunity to select an option for meeting future medical obligations that fits their individual circumstances, while also protecting the Medicare Trust Fund.

Currently, Medicare does not provide its beneficiaries with guidance to help them make choices regarding their future medical care expenses when they receive automobile and liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or payments, and need to satisfy their Medicare Secondary Payer (MSP) obligations.”

Spring 2020 Abstract:

This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no-fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. 

Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.

In comparing and contrasting these abstracts, we see new and renewed emphasis and clarity.

This proposed rule is not only about liability and no-fault claims, but, interestingly, includes workers’ compensation settlements in which CMS guidance is detailed in the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide. The guide is used for CMS’ voluntary review program for WCMSAs – CMS’ preferred manner in avoiding payment by Medicare, post settlement. Based upon the proposed rule, we can surmise that CMS believes that the current guidance is insufficient and further clarification is needed for WCMSAs whether submitted for CMS review or not.

Proposed rule changes emphasis

Initially, it seemed that the proposed rule was announcing formal regulations for LMSAs, with or without CMS’ voluntary review and with or without a formal administrative appeals process. However, the emphasis now is on how an individual or Medicare beneficiary should comply with respect to future medical items and services otherwise reimbursable by Medicare.

Finally, the focus on future items and services seems to point toward how the funds set aside for future related medical expenses should be administered post settlement to meet MSP obligations. CMS has made it clear elsewhere that professional administration is their preference in satisfying Medicare’s interest.

Timeline for regulations prolonged

The delays have again extended the date of the proposed rule, this time from September 2019 to August 2020. This is not the first time the proposed rulemaking has stalled. At this point, we can only speculate about the substance of the proposed rule and the timeline when the promulgated regulations will eventually be published in the Federal Register.

Optum Settlement Solutions will monitor for updates about the proposed rule and any changes noticed.  For further information or if you have any questions, contact Lavonya Chapman, Associate General Counsel of Optum Settlement Solutions at lavonya.chapman@optum.com


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