CMS Withdraws Proposed MSP Regulation for Liability Medicare Set Asides (LMSA)
Roy Franco
October 13, 2014

Last week the Centers for Medicare & Medicaid Services (CMS) withdrew its proposed regulation for future medicals with respect to liability claim settlements. The Notice of Proposed Rulemaking (NPRRM) was submitted to the Office of Management & Budget over a year ago on August 1, 2013. The CMS submission can be found here. The NPRM was expected to cover how Medicare’s interest were to be protected under the Medicare Secondary Payer law in liability situations where future medicals are effectively claimed and or released. The industry was concerned about the NPRM and the unintended consequences that would result from its implementation. The Industry is therefore thankful for the CMS action and its reconsideration of the public comments on file.

Today and for the foreseeable future there are no requirements on when to establish a Liability Medicare Set Aside. Unlike workers’ compensation for which CMS has established a recommended policy, the Parties to a liability claim will continue to be left on their own to determine within the bounds of reasonableness how best to protect Medicare’s interest. The task is not easy as Medicare beneficiaries continue to experience benefit interruption because of MMSEA Section 111 data reporting. CMS must coordinate when a liability plan’s responsibility is demonstrated under the law. However, with no clear rules, Providers and MACs that process their payments are not able to properly interpret the data in the CMS common working file. A short term fix will be necessary while CMS considers a new approach to the LMSA because even if Parties take steps to protect Medicare’s interest, there is no method to communicate the steps taken.

CMS will redraft the regulation. The public comments submitted should prove helpful in that endeavor. In the interim, we recommend Parties act reasonably in approaching settlements. We will continue to monitor as developments occur. Contact us if you have any questions about your liability settlement situation.