The Legal Examiner Mark The Legal Examiner Mark The Legal Examiner Mark search twitter facebook feed linkedin instagram google-plus avvo phone envelope checkmark mail-reply spinner error close
Skip to main content

The Medicare, Medicaid and SCHIP Extension Act of 2007, or MMSEA, affects judgments and settlements involving Medicare liens. Plaintiffs and Defendant attorneys should be aware of the changes. The AAJ released a clarification about the MMSEA:

In cases involving Medicare beneficiaries, attorneys for both the plaintiff and defendant are required to report certain information to the Centers for Medicare and Medicaid Services (CMS). In addition, any case settlement or judgment must reimburse Medicare where the Trust Fund has made conditional payments for medical costs. Under the Medicare Secondary Payer Act, attorneys have been settling cases involving liability claims without completing a Medicare Set Aside (MSAs) to account for future medical costs. However, attorneys representing claimants in workers’ compensation cases have been preparing MSAs on a case-by-case basis.

It has come to our attention that some defense firms and insurance providers are now claiming that CMS requires MSAs in liability cases pursuant to Section 111 reporting requirements included in the Medicare, Medicaid & SCHIP Act of 2007 (MMSEA), Public Law No. 110-173. This is false.

Section 111 contains reporting requirements for responsible reporting entities (RREs) only. Section 111 does not impact or change the requirements for plaintiffs’ attorneys.

Moreover, statements from CMS, and other federal entities, make clear that the agency does not require set-asides for liability claims. Since the MMSEA’s passage, CMS has held several Town Hall teleconferences to discuss the Section 111 requirements. During the March 24, 2009 call, Barbara Wright, CMS’ Acting Director of the Division of Medicare Debt Management, made several statements reiterating that Section 111 has no impact on liability MSAs. For example:
– In response to a question as to whether liability set-asides will be required under Section 111, she said "the point is the set-aside process is totally separate from the Section 111 reporting process. As we’ve said in more than one call we don’t anticipate changing our routine recovery process." (Transcript, pg. 24)
– When explaining that worker’s compensation agreements use a formal review process which makes set-asides recommended, she said that was in contrast to liability agreements. Liability "does not have the same formal review process although our regional offices will consider review of proposed liability set-aside amounts depending on their particular work load and whether or not they believe significant dollars are at issue." (Transcript, pg. 24).

In addition, CMS also has released several Alerts explaining Section 111, which do not indicate any intent to require MSAs for liability claims. For example:
– "Unless you are a business entity which qualifies as [a required reporting entity (RRE) for purposes of Section 111, you do not need to initiate any specific actions in connection with Section 111." (CMS Alert, 2/23/09).
– "The new Section 111 requirements do not change or eliminate any existing obligations under the MSP statutory provisions or regulations." (CMS Alert, 2/23/09).

Moreover, the Congressional Research Service (CRS) provided Congress with an "objective and non-partisan analysis" analysis of the MMSEA. As there was no legislative history regarding the bill, the CRS research report is the most reliable analysis of the MMSEA, including the Section 111 reporting requirements.

CRS’ analysis of the Section 111 reiterates that it is a reporting requirement, and makes no mention of the need for set-asides in liability cases. The Section 111 analysis states, in part: This provision requires an insurer or third-party administrator for a group health plan (and in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary) to (1) secure from the plan sponsor and participants information required by the Secretary for the purpose of identifying situations where the group health plan is or has been a primary plan to Medicare, and (2) submit information specified by the Secretary. If an insurer or third-party administrator for a group health plan fails to comply, then a $1,000 per day civil monetary penalty will be imposed for each individual for which information should have been submitted.

If CRS believed that the legislative language implies any Congressional endorsement of liability setasides, it would have been included in this analysis.

More information on the MMSEA can be found at the Centers for Medicaid and Medicare website

One Comment

  1. Gravatar for Brad

    I don't see anywhere that the Regs mandate a formal MSA approval process for liability cases (but then I didn't see the Regs mandating a formal MSA prior approval process for worker's compensation either).

    The importance is in the designation of future medical expense money received (an allocation) so that CMS knows how much it can claim as an exclusion to Medicare coverage for possible injury related future medical expenses.

    The MSA approval process developed in workers comp as the only avenue for workers compensation insurance carriers to be sure that CMS was satisfied that they "adequately considered" Medicare's interests in a settlement to prevent the threat of subsequent reimbursement litigation.

    For liability settlements there is no MSA review process presently required or anticipated (except by voluntary submission only) but, "[T]he new Section 111 requirements do not change or eliminate any existing obligations under the MSP statutory provisions or regulations."

    Therefore, it is my interpretation that a liability settlement that does not designate a specific allocation of money received for future medical expense may be seen by CMS as not protecting or considering Medicare's interests. If so, then the whole entire amount of the liability settlement could become Medicare's credit against future payment of any injury related medical expense.

    The real person harmed by failing to allocate an amount in the Release Agreement for future medical money received in liability settlements will be the injured plaintiff himself if Medicare eventually denies all his future medical expense as claimed by Medicare to be excluded from coverage as injury related.

    As I see it, in liability settlements, the Regs only require reimbursement of "conditional payments" and "considering Medicare's interests" which I read as repayment of lien and a specific allocation of medical expense money received in settlement so that CMS can accurately determine their future credit.

    Brad Bleakney-- Chicago

Comments are closed.

Of Interest