Top 10 MSP-Related Events of 2011 – Number 1
CMS’ First Official LMSA Policy Published
While of little significance to someone like myself who always read the express terms of the MSP to include “workers’ compensation, liability, auto, no-fault and self-insurance,” CMS has finally acknowledged the existence of Liability Medicare Set-Asides in writing. The acceptance of the need for MSAs in liability settlements has been fought since the inception of WCMSAs. Whether the lack of CMS policy memorandum specific to liability settlements or the lack of regulations similar to 42 CFR 411.46 and 411.47 that specifically address a Medicare exclusion in the event of an insurance payment for future medical expenses, organizations such as the AAJ and most recently the ABA TIPS section at the 2011 annual meeting have taken the position that LMSAs are not “required” by the MSP.
With regard to the reasons against, it is important to understand a few basic facts about the MSP to understand why reliance upon CMS memos was shaky at best. First, the CMS policy memoranda are merely agency interpretations of the governing statutes and regulations and do not carry the force or effect of law. While generally granted deference by the courts, CMS policy is not infallible nor is it the only means by which to comply with the underlying legal obligations. It is simply the agency’s recommendation in light of what it believes it can do to pursue recovery under the MSP. The WCMSA review program is not governed specifically by any law or regulations and is voluntary, a fact finally openly admitted by CMS itself in its May 2011 memo. Those who have followed the issue since the beginning will recall CMS’ liberal use of the word “must” in the early memos, and the idea that an MSA must be approved by CMS when the settlement meets the established thresholds continues to erroneously linger today. The reason we have not had any detailed memos for liability is that tort law is not as uniform as workers’ compensation, thus it would be impossible to render unilateral policies across all jurisdictions as was possible for workers’ compensation which is fundamentally the same throughout the country. I am not saying that all states are exactly the same, only that the differences are more the exception, whereas in liability, the only common thread is generally the common law elements of negligence. Pretty much everything after that will be determined on a case by case basis due to a unique limiting feature specific to state law or governed by an insurance contract. To even expect such policies to be issued by CMS is unreasonable in and of itself, but to rely upon the absence as a means to avoid a statutory obligation borders upon negligence.
With regard to the Code of Federal Regulations, note that there is a valid issue. If, in fact, the courts want to infer Congressional intent where there is obviously none as they have been prone to do in 2011, this argument could have merit. Unfortunately, for those hoping to use it, think through the issue before you do. The MSP statute in essence forbids Medicare from making payments where other insurance is available to pay first. The sections of the CFR in question merely state that if an allocation is made from a workers’ compensation settlement specifically to compensate for future medical expenses, then Medicare will exclude payments only until it has been demonstrated that the allocation was exhausted on related medical expenses, upon which Medicare would resume coverage. So, absent this limiting factor to the exclusion, aren’t liability settlements subject to the exclusion in perpetuity because the statute prohibits Medicare from making payments? However, there is no point in debating the issue as both arguments have their merits and resolution will only come from Congress or the Supreme Court, whichever gets there first, which brings me to my final significant 2011 moment.
On September 30, 2011, CMS issued its first official policy regarding MSAs in liability settlements. In it, CMS outlined a situation in which an LMSA would not be necessary, that being when written certification by the treating physician stating that no further treatment was anticipated could be obtained. It didn’t say that one has an obligation to do an LMSA, but the question remains, what if no written certification stating that no further treatment is needed exists? What if there is foreseeable future anticipated related medical care? I think it was a brilliant move on CMS’ part to not have to publish LMSA policy, yet leave the inference that absent such a statement, then what? Clearly CMS believes that the MSP allows for secondary payer exclusions and reimbursement rights in liability situations. Whether you elect to read into the omission or continue to ignore any possible obligation, 2012 may finally provide resolution to this debate once and for all. CMS has finally started to capture liability settlement data and it must have a plan for what to do with it.