CMS Updates MSP Compliance for Liability Claims
Jeff Signor
October 3, 2011

Dear Clients and Friends of Franco Signor LLC:

On September 30, 2011, the Centers for Medicare & Medicaid Services (CMS) made several important announcements that impact liability settlements involving Medicare beneficiaries.   Please read the following carefully in order to ensure your compliance with the Medicare Secondary Payer Act (MSPA).  If there are any questions, please feel free to call on us at anytime.  Our objective is to make certain you have the best  information for your MSPA compliance.

Electronic Reporting (Section 111) of Settlements/Judgments/Awards

As of 10/1/2011, CMS will require electronic reporting of  settlement/judgments/awards involving Medicare beneficiaries according to the following table:

TPOC Amount TPOC Date On or After Section 111 Reporting Required in the Quarter Beginning
TPOC’s over $100,000 October 1, 2011 January 1, 2012
TPOC’s over $50,000 April 1, 2012 July 1, 2012
TPOC’s over $25,000 July 1, 2012 October 1, 2012
All TPOC’s over min. threshold October 1, 2012 January 1, 2013

This is a change from previous reporting requirements by CMS.  The process is now graduated, to allow for better IT performance.  By next October 1, 2012, the Total Payment Obligation to Claimant (TPOC) aka settlement amount for most purposes will revert back to $5,000 and will remain at that level through 12/31/2012.  CMS will then take reports for lesser amounts for 2013 (TPOC=$2,000), 2014 (TPOC=$600) and presumably starting in 2015, the TPOC will be set at $300.  Failure to report appropriately is subject to penalties.

Medicare still expects to be repaid for liability claims that settle for $100K or less.  If Medicare should find out about a loss, it will process a conditional payment letter if the settlement is more than $300.  None of these alerts should be interpreted to mean that the MSP law does not apply to liability claims.

Delays in Section 111 reporting of certain liability claims (under $100K) should not be interpreted that Medicare won’t expect to be repaid for those claims.  If Medicare finds out about a loss it will process a conditional payment letter if the settlement is more than $300.

To view the CMS memo on this update click here:

Liability Medical Set-Aside Arrangement (LMSA)

CMS has issue its first policy memorandum on this subject for liability claims.  No LMSA is required when the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability claim “settlement” has been completed (before settlement) and that future medical items and /or services for that injury will not be required thereafter.

The memo can be found at:

This memo is consistent with our article about the LMSA and confirms the roadmap we have in place for our clients.  We are now working on a form letter to put before the treating doctor to execute.  If this letter cannot be secured, we recommend following our roadmap to make certain Medicare’s interests are properly protected.  Cooperation of the plaintiff and his/her representative will be key.   However, the memo should improve cooperation in this regard.

Notwithstanding, it is important we follow a consistent policy such as the one we lay out in our roadmap.  Not every claim requires a LMSA, and there are other factors in addition to a doctor’s letter that will exclude the use of a LMSA.  For our client’s we stand ready to guide you in this regard.

We have a team of RNs, CLCP, and MSCC personnel ready to assist you with any LMSA questions you may have.

Update guidance on Exposure, Ingestion and Implantation Issues

CMS has struggled with liability claims involving these issues.  The reason is that MSP became law on 12/5/1980 therefore, it has no authority before that date to collect conditional payments.  This update clarifies when Medicare will require electronic reporting and collection of conditional payments.  The update can be summarized quite easily.  If the exposure, ingestion or implantation occurs and ends before 12/5/1980 then there is no need to comply with MSP, but the release cannot cover a period beyond 12/5/1980.

This is most applicable in asbestos exposure claims.  MSP is not applicable if the exposure covers a period before 12/5/1980 and the release does not cover a period beyond that date.  Otherwise, the claim is subject to MSP.

To view the memo on this topic click here:

Qualified Settlement Funds

This applies to settlement funds set up under Section 468B of the Internal Revenue Code.  If payment was made to the Qualified Settlement Fund (QSF) before 10/1/2011, then no electronic reporting is required, even if the QSF will make payments after that date.  However, no further contributions can be made to the QSF after 10/1/2011 otherwise reporting will be required.

Additional CMS Announcements

In addition to these very important policy announcements, CMS made a few informational announcements about upcoming improvements to compliance with MSP.  Here is what to look forward to:

  • 10/21/2011 – Option to pay a fixed percentage to satisfy conditional payment obligation for certain physical trauma-based liability claims with settlements of $5,000 or less.  The process will be posted at
    • Important note.  Settlements for $300 or less are exempt from MSPA.  This particular informational announcement is interesting in that it may be signaling a position by CMS that claims with a settlement value between $300.01 to $5,000 will have an expedited process under the MSPA.
    • Next 3 – 9 Months
      • Implementation of a MSPRC portal for the beneficiary to secure MSPRC information
      • Implementation of an option to allow immediate payment to Medicare of future medical costs that are claimed/released/effectively released in a settlement; and
  1. Further evidence that CMS is looking to improve its policy on the LMSA.
  • Implementation of a process that provides Medicare’s conditional payment (demand?) prior to settlement in certain situations.

We will let you know immediately when further information becomes available about these announcements.  Our objective is to provide you with the best information available and our recommendations for compliance.  It is important that the front lines be informed of the new electronic reporting threshold which is now cases OVER $100,000.  It is equally important that they understand that the LMSA will begin to take on more significance.

Contact Franco Signor LLC to discuss your operation’s compliance with MSPA and its related regulations.  Please feel free to call anytime with your  questions (716.877.4677).