The Settlement Alliance

Big News for Liability Medicare Set-Asides (LMSAs)

Big News for Liability Medicare Set-Asides (LMSAs)

May 5, 2017

Over the past several years, requirements for Workers’ Compensation Medicare Set-Asides (WCMSAs) have been somewhat well-established. The Centers for Medicare and Medicaid Services (CMS) now routinely update theirWCMSA Reference Guide, providing detailed information on how to handle payment for Medicare-eligible expenses on behalf of beneficiaries who have received settlements in workers’ compensation cases.

For liability cases, however, CMS has been far less clear, making it difficult for claimants and their attorneys to ensure that Medicare won’t seek reimbursement down the road. However, it appears as though some major changes are imminent. CMS recently issued a notification directing Medicare Administrative and Recovery Contractors (MACs) to create a set-aside process for Liability Medicare Set-Asides (LMSAs), as well as for No-Fault Medicare Set-Asides (NFMSA). The new process is scheduled to go into effect as of October 1, 2017.

What This Change Means for Injured Claimants

The Medicare Secondary Payer (MSP) provision outlined in 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act do specifically reference “an automobile or liability insurance policy or plan (including a self-insured plan) or no-fault insurance,” under the umbrella of primary payers for claims related to settlements, judgments, or other payments. The direction given to the MACs should now provide some framework for claimants involved in non-workers’ compensation cases.

Because the process has not yet been detailed, it is unclear if there will be thresholds for review, as there are with WCMSAs. (i.e. the claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or the claimant expects to enroll in Medicare within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be more than $250,000). However, it is logical to assume that LMSAs will need to meet certain thresholds for CMS to review them.

The bottom line for claimants is that as of October 1, 2017, Medicare will begin denying payment for claims if it determines that those claims should have been paid by a liability insurance policy, or one of the other primary payers as indicated in the MSP provisions.

What This Change Means for Plaintiff Attorneys

Failure to comply with MSP provisions can result in severe penalties for claimants AND their attorneys. If you are an attorney with a client who currently receives Medicare or who expects to be a beneficiary in the near future, you should consider bringing in a settlement expert as early as possible to determine if an MSA is necessary and if so, how much your client should allocate to the MSA.

Contact us to learn more

The Settlement Alliance works with leading Medicare Set-Aside experts to assist claimants and their attorneys with determining the necessity for an MSA, calculating the proper allocation, selecting the best funding instrument, and reviewing options for administration. Contact us today at 800-464-2500 or to learn more.

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