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MSA Updates: CMS Renews Interest
in Liability Medicare Set-Asides and the
Latest on Workers’ Compensation MSA
Reform Legislation


By Steve Chapman and Gregg Chapman, Esq.

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Steve Chapman and Gregg Chapman, Esq. specialize in structured settlements of workers’ compensation cases. In this article they discuss the new Medicare memorandum on liability MSAs and MSA reform legislation.

For more information on structured settlements and the structure broker’s role, see:

 
 
Liability MSA Memo

The Centers for Medicare & Medicaid Services (CMS) released a Memo dated 9/29/2011 that addressed Medicare Set-Asides (MSA’s) for Liability claims. This was the first time that a MSA memo focused solely on liability. This had long been awaited by many in the MSA vendor industry. Ever since 2001 when the first workers’ compensation Medicare Set-Aside (WCMSA) memo was released, representatives from CMS had been saying they planned to move onto liability claims next.

The Medicare Secondary Payer (MSP) statute 42 USC 1395y(b)(2)(A)(ii) applies to “…a workmen's 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.” While this statute only applies to Medicare conditional payments (payments made by Medicare prior to settlement of a claim), it has often been cited as the basis for Medicare Set-Asides (to protect Medicare’s interests for future medical expenses post settlement) even though there is no independent statutory basis for MSAs. Up until this point, CMS has issued no guidelines regarding Liability MSAs (LMSAs). Although some in the industry consider this memo to be the first serious step CMS is taking to expand MSAs beyond workers’ compensation, an unbiased reading shows there is very little substance provided.

The memo first states: “The purpose of this memorandum is to provide information regarding proposed Liability Medicare Set-Aside Arrangement (LMSA) amounts related to liability insurance (including self-insurance) settlements, judgments, awards, or other payments (“settlements”). However, upon reading the entire memo, CMS did
not provide any information about LMSA WCMSAs, where CMS has provided specific dollar thresholds ($25,000; $250,000; etc.).
 
Although some in the industry consider this memo to be the first serious step CMS is taking to expand MSAs beyond workers’ compensation, an unbiased reading shows there is very little substance provided.

CMS did not provide any information about LMSA amounts. This is unlike WCMSAs, where CMS has provided specific dollar thresholds ($25,000; $250,000; etc.).
The rest of the memo goes on to say that there is no need to submit a LMSA if “…the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) “settlement” has been completed as of the date of the “settlement”, and that future medical items and/or services for that injury will not be required…”. This is hardly groundbreaking information since the only time a MSA is necessary is if there are going to be future medical expenses. If this is CMS’ first step toward LMSA guidelines, then it must be considered a baby step.

There is much debate as to whether MSAs should apply to liability settlements. The American Association for Justice (formerly the Association of Trial Lawyers of America) has taken the position that MSAs are not appropriate for liability settlements. Not surprisingly, MSA vendors now are offering LMSA and encouraging their use. Now that CMS has finally released its first LMSA memo, the debate is sure to heat up.
 
If this is CMS’ first step toward LMSA guidelines, then it must be considered a baby step

MSA Reform Legislation

An update regarding the MSA reform legislation was provided at the National Alliance of Medicare Set-Aside Professionals (NAMSAP) annual meeting in September. The name of the bill is the Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2011. It would amend the Social Security Act by adding a new subsection (n) to the Medicare Secondary Payer (MSP) Act, Section 1862(b) of the Social Security Act (42 USC 1395y(b)).

Some of the key provisions of the bill include:

Settlement Thresholds for which MSAs would not be necessary

The following workers’ compensation (WC) settlements would be below the threshold for consideration as primary plans under the MSP Act:

(A) Settlement is $25,000 or less (includes both current and future Medicare beneficiaries.
(B) Claimant is not eligible for Medicare and is unlikely to become eligible in 30 months.
(C) Claimant is not eligible for payments of future medical expenses under the workers’ compensation law of the jurisdiction.
(D) The settlement does not limit future medical expenses.

Approval of MSAs

A much needed limit is placed on the time allowed for CMS review.

(A) Optional to Submit MSAs for approval
(B) CMS must approve or disapprove a submission within 60 days after submission. A determination of disapproval is not valid if it does not explain any deficiencies of the submission with specificity.

Appeal Process for MSAs

The lack of a formal appeals process for MSAs reviewed by CMS has long been a critical roadblock. This bill allows that a submitter may appeal a denial within 60 days. The steps are reconsideration by CMS, appeal to ALJ, and then appeal to federal district court.

Optional Direct Payment of Set-Aside funds to CMS.

If the parties to the settlement agree, the MSP Act obligation may be satisfied by paying the set-aside amount directly to CMS, which thereafter will be responsible for its administration.

Unfortunately, this bill has not yet been introduced in Congress. The authors are still working on scoring it. Additionally, the supporters are trying to line up congressmen on the Ways & Means and on the Finance Committees to sponsor the bill. Similar MSA reform legislation has made it to the hill in the past, however the bills have died in committee. The strategy this time is to get sponsors on the key committees so it will have an easier time.

For additional information regarding this legislation, you can contact:

Peter R. Foley
Vice President Claims Administration
American Insurance Association
2101 L St. N.W., Suite 400
Washington D.C. 20037
202-828-7154
pfoley@aiadc.org

Douglas J. Holmes
President
UWC – Strategic Services on Unemployment & Workers’ Compensation
910 17th Street, NW, Suite 315
Washington DC 20006
202-223-8904
holmesd@uwcstrategy.org

 

 
Steve Chapman strives to remain current on all issues affecting the settlement of the case, including Medicare set-aside allocations, life care plans, medical cost trends, Long Term Disability, and Social Security issues.

To contact Steve Chapman:
Steven F. Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Cell: 310-480-5742
Email: SettleMan@aol.com
 
 
Gregg Chapman has been a member of the State Bar of California for twenty years. Over the last eight years, he has worked for two of the largest national MSA vendors in various positions including General Counsel, National Sales Manager and Director of MSA Education. He has provided hundreds of presentations on all topics regarding Medicare Set-Asides to the insurance industry and attorney associations across the country.

To contact Gregg Chapman:
Gregg Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Email: greggchap@aol.com