On June 15, 2012 the Center for Medicare and Medicaid Services (CMS) published Advanced Notice of Proposed Rulemaking in the Federal Register seeking comment on several proposed options under consideration to protect Medicare’s interest under Medicare Secondary Payer (MSP) claims that involve automobile and liability insurance (including self insurance) and no-fault insurance. Citing to the formal, yet voluntary, Medicare set-aside arrangement currently being used in worker’s compensation cases, CMS contemplates establishing a similar process to be used to meet MSP obligations with respect to “future medicals” in liability insurance cases.
In general the notice sets forth several options that call into play factors such as the severity of the condition treated. The options have different criteria depending on whether or not the individual is a current Medicare beneficiary.
Options 1- A self administered option where the individual or Medicare beneficiary chooses to pay for all related future medical care until his/her settlement is exhausted thereby eliminating any regulation by Medicare
Option 2 – Medicare would not pursue any “future medical” if the individual/beneficiary fits all of the considerations under either (a) or (b) below:
(a) the settlement amount falls below a defined number (yet undetermined) and all of the following criteria are met:
1. the subject incident occurred at least one year before the date of settlement
2. the underlying claim did not involve a “chronic illness/condition” or “major trauma”
3. the beneficiary does not receive additional settlements and
4. there is no corresponding workers’ compensation or no-fault insurance claim
(b) the settlement amount falls below a defined number (yet undetermined) and all of the following criteria are met:
1. the individual is not a beneficiary as of the date of settlement
2. the individual does not expect to become a beneficiary within 30 months of the date of settlement
3. the underlying claim did not involve a “chronic illness/condition” or “major trauma”
4. the individual does not receive additional settlements and
5. there is no corresponding workers’ compensation or no-fault insurance claim
Option 3 – The individual /beneficiary acquires a “Date of Care Completion” from his/her treating physician attesting to no additional care related to the settlement.
(a) Before settlement – when obtained before settlement, Medicare’s claim is limited to conditional payments made before settlement date.
(b) After settlement – if attestation is obtained after settlement, Medicare would pursue recovery for not only conditional payments made before settlement but would be limited to futures services from the date of settlement up through and including the Date of Care Completion.
Option 4 – The Individual/Beneficiary submits a Proposed Medicare Set- Aside Arrangement for CMS Review and obtains approval. Comments are solicited as to how this should be structured for liability claims,
Option 5 – The beneficiary participates in one of Medicare’s recovery options to obtain Medicare’s final conditional payment amount before settlement.
(a) $300 threshold – settlements of less than $300, Medicare will not pursue recovery against the settlement.
(c) Fixed payment option- Settlements of $5,000 or less, a beneficiary may elect to resolve Medicare’s recovery claim by paying 25% of the gross settlement amount.
(d) Self-Calculated Conditional Payment option – If at least 6 months after incident beneficiary anticipates settlement of $25,000 or less and can demonstrate care is completed the beneficiary may “self-calculate.”. Medicare would review and confirm final conditional payment amount.
Option 6 – The beneficiary makes an Upfront payment. Two variations:
(a) If Ongoing Responsibility for Medicals is “imposed, demonstrated or accepted” and for medicals through life expectancy are calculated, Medicare may review and approve an upfront lump sum payment for the full amount of the calculated cost. This option would generally apply in workers’ compensation, no-fault insurance or when life-time medicals are imposed by law. This option presents an alternative to the MSA.
(b) If ongoing responsibility for medicals was not “imposed, demonstrated or accepted“, the beneficiary may elect to make an upfront payment to Medicare for a specified percentage of the “beneficiary proceeds”. CMS suggest this option would apply in liability insurance situations where policy caps are in play. “Beneficiary proceeds” would be net after attorney’s fees, costs of procurement, Medicare’s demand amount for conditional payments and beneficiaries out of pocket medical expenses as defined by statue. Specifically excluded from the “beneficiary proceeds” are medical expenses paid by or the responsibility of other sources.
Options 7 – The beneficiary obtains a compromise or waiver of recovery. This option gives Medicare the discretion to not pursue future medical related to the specific settlement. If additional settlements were made, Medicare would review and adjust its claim for past and future medicals accordingly.
These proposed rules are subject to comment until August 14, 2012. The language incorporates proposals for MSAs like those seen in workers’ compensation but also seeks to carve out certain exceptions for the unique situations present under liability claims. Look for further developments on this website.
Debra M. Metzler, J.D., MSCC
Barr, Murman & Tonelli, P.A.