Frank C. Kilcoyne, CSSC
Volume 23/June 2011

Protocols for Liability Medicare Set-Asides?

Prior Articles

Does anyone know how to secure a level of certainty when settling cases that involve a Medicare-eligible plaintiff wherein future medical treatment causally related to the settling tort is anticipated? Not only is the answer elusive, it is difficult even to phrase the question.

Most of us have been reading about the new reporting rules concerning future medical treatment of a Medicare-eligible plaintiff. Let me say here and now that the only actual rules that have been published concern the reporting of cases to the Centers for Medicare and Medicaid Services (CMS) and have no specific bearing on how to actually handle a liability claim settlement. Unfortunately, this knowledge is not at all helpful in trying to determine just how to comply with the Medicare Secondary Payor statute (MSP) with regard to settling claims involving future medical treatment.


Amid this vacuum of direction from CMS, on May 6, 2011, Assistant U.S. Attorney Robert Trusiak issued protocols for Liability Medicare Set Asides for the Western District of New York. Here is the substance of the protocols:


“Application for Medicare Secondary Payor (MSP) compromise with regard to Medicare concerning future medical treatment must be made jointly by the Medicare beneficiary, or his representative, and the primary plan. Medicare must have been notified of the pending liability claim and the settlement of same. The application for MSP compromise concerning payment for the future medical items and services related to the tort shall include:


1. A copy of a letter from the Medicare Secondary Payor Regional Contractor stating the matter concerning repayment for historical medical items and services related to the tort was reviewed and resolved or provide adequate assurance to that effect.


2. Proposed Liability Medicare Set-aside Arrangement concerning payment for the future medical items and services related to the tort (LMSA).


3. An agreed copy of the settlement agreement subject to completion of the MSP obligations.


4. A joint statement from the applicants that warrants the following:


a. The value of the agreed settlement equals or exceeds $350,000.00.


b. The plaintiff is a Medicare beneficiary as that term is defined under 42 C.F.R. §400.202.


c. CMS was requested to approve the LMSA, but no substantive response has been received for at least 60 days from the date of the letter to CMS; and


d. An affidavit from the preparer of the LMSA that it is true and correct based on the Medicare beneficiary’s medical records and the injuries being released as well as in conformance with the WCMSA submission checklist as published by CMS.


The protocols outlined above are not CMS policy and according to the release “confers no substantive rights and may be used or withdrawn at the unilateral discretion of the United States Attorney’s Office of the Western District of New York.”


So what does all of that mean? Very little if your venue is not the Western District of New York. However, it does seem to indicate an increasing desire to ensure that settlements are MSP compliant. For that reason, we must all keep MSP compliance in mind.


In this regard, if you are dealing with a current Medicare beneficiary keep these two things in mind:


1. The conditional payment obligation concerning repayment for historical medical items and services related to the tort must be resolved and adequate assurance to that effect should be provided.

2. Per the Medicare Secondary Payer Statute of 1980 42 U.S.C. 1395y, settling parties must take Medicare’s interests “into account” when settling a claim. If a current Medicare beneficiary has anticipated future medical expenses causally related to the settling tort, you should address the LMSA (“Liability MSA”) issue in some manner.


Furthermore, given the current climate, I believe it good practice to address the LMSA issue in some manner if the plaintiff is:


a. not currently a Medicare beneficiary but expected to receive Medicare benefits within 30 months and;

b. the value of the agreed settlement is greater than $ 250,000.


The protocols put forth by the WDNY are a start toward some guidance regarding this issue but they are not rules or even guidelines sanctioned by CMS. In the absence of such guidance I reiterate the position stated in my July 2010 issue of this newsletter that you all be aware of the issue and at least begin preparing to deal with it. If you need copies of my July 2010 issue, just let me know. In the mean time I will do my best to keep you informed as anything substantive develops.

Do you have a case involving future medical expenses that you are concerned about? Call Frank C. Kilcoyne CSSC at 800 544 5533, I am here to help.