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Ten Years Later – Medicare and Liability Medicare Set Asides
On March 2, 2022, the Centers for Medicare and Medicaid Services (“CMS”) submitted a proposed rule on Medicare Secondary Payer and Future Medicals (CMS-6047) to the White House Office of Information and Regulatory Affairs (OIRA), which if adopted could have a game-changing impact on liability, and perhaps other types of cases throughout the country.
Almost ten years ago, on June 15, 2012, the CMS first submitted advance notice of proposed rulemaking addressing future medicals in liability insurance situations. After the public comment period, the CMS failed to submit notice of a proposed rule.
In the fall of 2018, the OIRA issued notice that CMS planned to issue notice of a proposed rule addressing future medicals in liability insurance, no-fault, and workers’ compensation cases by September 2019. The latest version of the abstract for the notice of proposed rule states: “This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.” Now, 3½ years after OIRA issued notice, the CMS appears to have finally drafted the long-awaited proposed rule.
The widely held belief in the Medicare Secondary Payer stakeholder community is that the proposed rule will create a Medicare Set-Aside (MSA) process for personal injury, liability, and no-fault cases similar to the current process for workers’ compensation cases.
Many stakeholders in the MSP community have long taken the position that CMS does not have the legal authority to regulate future medicals in liability insurance, no-fault, and workers’ compensation cases. However, because nearly every jurisdiction provides for lifetime medical benefits in workers’ compensation cases, the long-standing Workers’ Compensation Medicare Set-Aside (WCMSA) program has been generally accepted. Although far from perfect, the WCMSA process essentially provides a safe harbor for all parties. In exchange for funding a CMS approved WCMSA, the employer can close future medical rights and the injured worker is assured lifetime coverage for work-related treatment assuming proper administration of the MSA funds.
There are issues in liability cases that do not exist in worker’s compensation cases, including comparative negligence and policy limits. Many posit that any effort by the CMS to regulate future medicals in liability cases will unduly complicate resolution of liability cases to the extent they are pursued and could be potentially disastrous to the American tort system.
The proposed rule CMS recently submitted to the OIRA has been almost a decade in the making. The scope of the proposed rule and to what extent liability insurance regulations will be proposed has all concerned waiting with bated breath for its release. Attorneys, insurance companies, and self-insureds be forewarned. Big changes to the status quo could be imminent. Once the rule opens for public comment, interested parties will have sixty days to make their voices heard. All hands on deck!