Richard L. Gilbert
Managing Medicare's Interests in Third Party Liability Cases
with the 2007, extension of the State Children's Health Insurance Program
("SCHIP"). Congress enacted Section 111 of the law mandating that
insurance companies and other payers of third party liability claims report
claims and settlements to Medicare through CMS. The reporting obligations are
now in effect and claim and settlement reports are being made.
A “side effect”
of the claims and settlement reporting provision and CMS’ subsequent tightening
and expansion of its conditional payment reimbursement programs was to raise
the question whether “Set-Aside” accounts were necessary in connection with the
settlement of third-party claims involving payments for claimed future medical
services. To date, CMS has given no definitive policy guidance on this topic,
though that appears to be changing as of this writing (July, 2016).
In 2009, we posted and
circulated an article concerning the effect of the law and addressed the
question whether set-aside accounts were required. With the passage of time and
some additional "intelligence" from Medicare, we have some better
insights into the issue. The article has
been updated to include recent highlights of CMS action on the topic.
The real challenge that
participants in the management of third-party liability cases face is not the
question of whether set-asides are required but the broader question of how to
appropriately "consider Medicare's interests" in connection with
third-party liability settlements, and even trials, where payments relate in
some part to compensation for future medical expenses. The requirement that Medicare's interests be
considered in connection with settlements has been part of the law for many
years. In the past, assuring that Medicare's interests were considered in
settlements involving payments for future care has not been addressed by Medicare
and typically was not a factor for the participants in the resolution of cases.
With the advent of mandatory reporting of claims and settlements to Medicare,
the need to "consider Medicare's interests" is a practical necessity
and the use of set-aside account needs to be seriously considered in
The updated article can
be found here: Meeting the Obligation to
"Consider Medicare's Interests" in Third-party Liability Cases - Set-asides
We hope this article
will be of benefit to practitioners in preparing for and in specifically
addressing the need to consider Medicare's interests. This is an evolving area
of law and administrative procedure. The purpose of this article is provided
the reader with general background on the problem and some suggestions on how
to approach and resolve the issue in particular cases. The discussion is not
endorsed, approved or reviewed by Medicare. There is no "magic
formula". The best we can do is to be thoughtful and creative in
addressing the issue. There is no reason that the need to consider Medicare's
interests should derail the settlement process.
Your comments and
suggestions on the article would be welcome. Please email them to firstname.lastname@example.org.
Also, please check this
site for updates to include suggested settlement agreement language.
Recent Developments and Helpful Links:
Recent CMS Policy
Statements regarding Set-Aside accounts and related issues. (Click Here)
The "Sipler" case - One
judge's take on "requiring" MSAs in third party cases.
CMS Medicare Main Page (http://www.cms.gov/Medicare/Medicare.html)
Payer" - Good overview. (http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-Payer.html)
Compensation Set-asides (http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Overview.html)
of Benefits Overview (http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Overview.html)
Secondary Recovery Portal" (http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/MSPRP/Medicare-Secondary-Payer-Recovery-Portal.html)
of Benefits (http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Coordination-of-Benefits/Coordination-of-Benefits.html)