Liability and No-Fault Medicare Set-Aside Allocations
As of October 1, 2017, the Medicare Administrative Contractor (MACs) will deny payment for services and items that it deems should have been paid from a Liability Medicare Set-aside (LMSA) or a No-Fault Medicare Set-aside (NFMSA). CMS also now allows the parties to report the amount of the settlement attributable to future medical benefits.
What does this mean for your clients?
When a case settles, the Insurer is under an obligation to report the claim to Medicare. This report includes providing the ICD-10 or diagnostic codes associated with the claim. This will allow the MAC to later review medical bills and deny payment for those bills associated with the reported diagnostic codes until the Plaintiff can show that a LMSA or NFMSA has been properly exhausted.
Medicare has effectively set up a mechanism to deny payment of injury related care it determines should have been paid from a LMSA or NFMSA without establishing any guidelines regarding:
- How to determine the amount of the Medicare Set-aside Allocation
- How to fairly prorate the cost of future medical costs when the policy limits prevent the Plaintiff from being wholly compensated for his/her damages
- How to consider comparative fault issues
- Submission Process for CMS approval of LMSAs/NFMSAs and applicable Review Thresholds
On October 24, 2017, Medicare stated on its website that “CMS continues to consider expanding its voluntary Medicare Set-Aside Arrangements (MSA) review process to include liability insurance (including self-insurance) and no-fault insurance”.
How do you protect your clients and your practice without clear guidelines from Medicare?
The Medicare Secondary Payer Statute requires three things:
- The Insurer must report a settlement involving a liability or no-fault settlement to CMS
- All past liens must be satisfied within 60 days of settlement
- Medicare’s interests regarding future medical treatment must be protected
The first requirement rests with the Insurer. However, if the Insurer does not timely report the case to CMS all other steps may be delayed. The second requirement is also straight forward. Any bills for injury related care subject to the pending liability or no-fault case must be paid back to Medicare. The third requirement to protect Medicare’s future interests is less clear. Unlike workers’ compensation cases, Medicare has not set any review thresholds or even a review process for liability and no-fault MSAs.
We suggest that if your client is a Medicare beneficiary, you perform an analysis of your client’s future projected medical treatment. Then, considering all other factors including issues of comparative fault and policy limits, you should set aside an amount that is “reasonable” to protect Medicare’s future interests. Plaintiff Allocations, LLC can help you with this projection.
How can Plaintiff Allocations help you settle your Liability Cases while at the same time complying with the MSP Statute?
- Section 111 Reporting or review of the Carrier’s Reporting to ensure the proper codes were reported
- COBC Lien Resolution to satisfy any past bills paid by Medicare
- Medicare Set-aside Allocation to protect Medicare’s future interests
- Structured Settlement Services to maximize settlement dollars
- Professional Administration to ensure future Medicare compliance