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Birmingham Bar Association Bulletin Winter 2015

Medicare Jennifer W. Pickett, Smith, Spires & Peddy P.C. UPDATES TO FUTURE MEDICALS AND MEDICARE SET-ASIDES By now, most everyone is familiar with the Medicare law, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (“the Act”), which law imposes reporting and reimbursement requirements to ensure that Medicare recovers monies paid for medical damages to plaintiff s who are Medicare benefi ciaries. Since the Act was put in place, the Centers for Medicare and Medicaid Services (CMS) have adjusted and updated (albeit not nearly as quickly or effi ciently as we would like) the reimbursement process. Below are some recent changes to bring you up to date. A. FUTURE MEDICALS Regarding future medical payments in non-workers’ compensation cases, there is no set requirement that a Medicare Set-Aside (MSA) be established. In fact, Medicare is not set up at this time to review MSAs in liability cases. Medicare, however, has the right under this new law to challenge settlement agreements that do not adequately consider whether Medicare will be required to pay future medicals arising out of the claim. Consider that in workers’ compensation cases, an MSA is required when the claimant is a Medicare benefi ciary and the settlement is greater than $25,000. An MSA is also required when the claimant is expected to be a Medicare benefi ciary within 30 months and the total settlement is greater than $250,000. In liability cases, obviously, the more extensive the future medicals, such as with a life care plan, the greater the need for some form of MSA. As an alternative to the formal MSA, the parties to a settlement may agree to an informal Claims Settlement Allocation that is not specifi cally approved by Medicare but sets aside specifi c monies to be used for future medical expenses. An MSA, whether formal or informal, is not necessary when (1) the facts demonstrate that the claimant is only being compensated for past medicals; (2) there is no evidence that the parties are trying to skirt around Medicare’s interests; and (3) there is some evidence in the medical records and/or doctors’ testimony that the claimant is not expected to incur future medical expenses. CMS originally intended to issue a Notice of Proposed Rulemaking (NPRM) in September 2013 to address concerns with the Medicare Secondary Payor (MSP) requirements and future medicals.1 Th e proposal was intended to provide some guidance from CMS concerning future medicals in liability cases. Not surprisingly, CMS did not take any such action at the end of 2013, and in October of 2014, CMS withdrew the rulemaking proposal with no public comment. Examples of some of the options that were being considered for the proposal are as follows: • Medicare benefi ciary or individual pays for all related future medicals until the settlement is exhausted and is documented accordingly. CMS would not review documentation in conjunction with this option but may request documentation from benefi - ciaries at random. • Medicare would not pursue future medicals in liability settlements that contain no workers’ compensation/ no-fault claim element and the settlement is below a defi ned amount. • MSP recovery is limited to conditional payments only if the benefi - ciary acquires a physician attestation that no future treatment is anticipated. If the date of completion is after settlement, future medicals would be limited through that date. • Implement a formal MSA and CMS approval process for liability insurance MSA amounts, similar to what is currently in place for workers’ 26 Birmingham Bar Association


Birmingham Bar Association Bulletin Winter 2015
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