Kentucky is Second State to Propose Bill Requiring CMS approval of MSAs

Medicare Set-Aside Blog on February 25, 2011
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And so the slippery slope begins. Throwing administrative caution to the wind, Kentucky has followed Maryland’s lead and recently proposed legislation that would require MSAs be approved by the Centers for Medicare and Medicaid Services prior to approving a workers’ compensation settlement involving future medicals. And in a fashion similar to Maryland, the language of the amendment demonstrates a less than robust comprehension of what is proposed. The proposed addition to KRS 342.265 states:

(6) Following a settlement agreement or an award of income benefits in an original claim, a subsequent settlement of future medical expenses shall not be approved unless the settlement is approved by the federal Medicare Secondary Payer Act.

Even though we know what they want, is that really their best legislative effort? How does one obtain approval by the “MSP”? More importantly, what happens when CMS approval isn’t available due to lack of entitlement or when a claim is below the review threshold? According to the wording of the amendment, a whole lot of nothing.

Now while Maryland did make an effort to address the more complicated issues imposed by the federal legislation, neither state has really accepted that they are adopting into state law a voluntary federal agency program not governed by statute or regulation but by agency interpretation. Review is administered by a contractor with rather subjective and inconsistent (note my diplomacy on this point) criteria for approval. Worse, there is no appeal of a determination that is out of alignment with the reality of the claim.

No one has never accused me of being a great constitutional scholar. But I still don’t get it. Why have state law at all if the lower 48 are just going to skip down road with the feds? The good news? MSA companies doing business in KY are going to start making a lot more money which I am sure is great comfort to all of the payers out there.

Full text of the bill available at: