CMS Continues to Lay the Groundwork for Review of LMSAs and NFMSAs

The MSP Act clearly states that Medicare may not make a payment with respect to any item or service to the extent that “payment has been made or can reasonably be expected to be made under a workers compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” 42 U.S.C. §1395y (b)(2).  A primary plan’s responsibility for such payment may be “demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan, or the primary plan’s insured or by other means.” 42 U.S.C. §1395y (b)(2)(B)(ii).  Given these provisions, many liability settlements allocate a portion of the settlement towards future injury related Medicare covered treatment in order to avoid a future cost shift of these expenses to Medicare. The apportioned funds are used to pay for injury related Medicare covered treatment with bills being submitted to Medicare upon exhaustion of the allocation.

CMS has provided limited guidance on the establishment of liability or no-fault MSAs in settlements focusing instead on Workers’ Compensation MSAs. CMS did however express interest in a liability MSA review process in 2012 when it posted an Advance Notice of Proposed Rulemaking for such review. After soliciting industry comment, CMS withdrew their Notice of Proposed Rulemaking on this issue.

 CMS renewed its interest in expanding the voluntary review process to include liability and no-fault MSAs in June of 2016 when it issued an Alert advising of its plan to work closely with stakeholders on this issue. In CMS’ latest search for a new Workers’ Compensation Review Contractor, CMS included a request that the contractor also be able to review liability and no-fault MSAs.  The Request for Proposal noted that the review process for the liability and no-fault MSAs may begin as of July 1, 2018.  A recent CMS Manual System update that was issued on February 3, 2017 confirms that as of October 1, 2017, CMS’ Common Working File will reflect the existence of a liability MSA or no-fault MSA in its system. Medicare Administrative Contractors will be instructed to deny payment of any submitted claims that pertain to the liability or no-fault MSA.

Given CMS’ Manual System Update of February 3, 2017, it is clear that CMS is laying the groundwork for greater involvement in liability and no-fault MSA review.   We expect CMS review of the liability and no-fault MSA to be voluntary.  As with workers’ compensation claims, we recommend that parties look to the unique facts of their liability and no fault settlements to identify the best MSP compliance approach that may or may not involve CMS review.

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