Richard L. Gilbert
Judge of the Superior Court (Retired)

Managing Medicare's Interests in Third Party Liability Cases


In connection 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 appropriate cases.

 The updated article can be found here: Meeting the Obligation to "Consider Medicare's Interests" in Third-party Liability Cases - Set-asides and Beyond

 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


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 Websites:


·         CMS Medicare Main Page (


·         CMS "Secondary Payer" -  Good overview. (


·         CMS Workers' Compensation Set-asides (


·         CMS "Coordination of Benefits Overview (


·         CMS "Medicare Secondary Recovery Portal" (


·         CMS "Coordination of Benefits (