In an Advanced Notice of Proposed Rulemaking (ANPR) published in the Federal Register on June 15, 2012, CMS is soliciting public comments on proposed standardized options for Medicare beneficiaries to resolve their obligations under the Medicare Secondary Payer (MSP) statute for settlements, judgments, awards, and other payments (settlements) for future medical care expenses (future medicals).  Although the community most directly affected by the reporting and treatment of settlements under the MSP policies are Medicare beneficiaries and the lawyers representing them, providers need to be mindful of these rules so that they can be compliant with their obligations to identify when Medicare is secondary. 

Under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), reporting entities (RREs) are obligated to notify CMS regarding settlements for medical treatment from liability insurers (including self-insurers), no fault insurers, and workers’ compensation received by or on behalf of Medicare beneficiaries.  According to CMS, the MMSEA’s reporting obligations have “sensitized affected parties to other MSP obligations, specifically reimbursement obligations that have been long overlooked.” Specifically, such affected parties have sought clarification from CMS regarding the appropriate mechanism for Medicare beneficiaries to resolve their MSP obligations for settlements involving future medical expenses.

CMS currently has a formal, but voluntary, Medicare Set-Aside Arrangement (MSA) review process to resolve future medicals in the context of workers’ compensation.  The MSA review process, however, does not apply to liability insurance situations.  Accordingly, in an effort to establish a standardized process for resolving MSP obligations involving settlements for future medical expenses in the liability insurance context, CMS is soliciting public comments regarding (i) a list of proposed standardized options to satisfy Medicare beneficiaries’ MSP obligations for settlements covering future medicals, and (ii) proposed definitions for terms that are being developed by CMS in connection with these proposed options.

The proposed options for addressing settlements for future medicals under the MSP statute include:

1. Beneficiary Funded. The Medicare beneficiary pays for all related future medical care until the settlement is exhausted.
2. Low Dollar Amount. CMS would not pursue future medicals if, among other things, the dollar amount is below an undefined threshold dollar amount and the claim does not involve a “chronic illness/condition” or “major trauma.”
3. Treating Physician Attestation. CMS would limit its recovery for future medicals if (i) the beneficiary obtains an attestation from his or treating physician that the treatment related to his or her injury concluded (i.e., the “Date of Care Completion”) prior to settlement or (ii) the beneficiary obtains an attestation from his treating physician after settlement regarding the Date of Care Completion.
4. Medicare Set-Aside. The Medicare beneficiary submits a proposal to and receives approval from CMS for Medicare Set-Aside Arrangement (MSA) amount related to the future medicals.
5. Upfront Payment. The Medicare beneficiary makes an agreed upon upfront payment to Medicare.
6. Waiver of Recovery. CMS would have the option of not pursuing future medicals related to a specific settlement if the Medicare beneficiary obtains a compromise or waiver of recovery.

CMS does not explain providers’ involvement, if any, in the implementation of these proposed options.

CMS is also soliciting comments on definitions for the following terms that would be used in connection with the above-referenced proposed options:

• Chronic Illness/Condition
• Date of Care Completion
• Future Medical Care
• Physical Trauma
• Major Trauma

Comments on the ANPR must be received by CMS no later than 5:00 on August 14, 2012. The ANPR is available here. Information regarding CMS’s workers’ compensation MSA process is available here. 

Reporter, Adam Robison, Houston, +1 713 276 7306, arobison@kslaw.com.