A new CMS Memorandum concerning MSA's was published. It was dated 5/20/08.  Basically, it indicates that CMS will only accept MSA calculations based upon the CDC Table 1 for purposes of calculating life expectancy.  At first glance, it appeared this might mean that CMS was no longer going to accept rated age life expectancies, but we have personally confirmed with Frank Johnson at CMS that this was not the case.  It simply meant that even when a rated age is used, the life expectancy should be calculated based on CDC Table 1.  In fact, he plans to publish another Memorandum clarifying that, due to the volume of questions it produced.  This is certainly good news that rated ages can still be used.  However, please be aware that for any MSA's which will be submitted to CMS after 7/1/08, this change will mean that your MSA should have this modification made, and you should be aware that depending on the case, including the future medicals and from what other CDC table the life expectancy was originally calculated, this could make a significant difference in the amount of the MSA. 

 

 

In 1965, the Social Security Act was passed. Section 1862(b) of the Act provided that payments by Medicare should only be secondary for work injury related medical treatment. In 1980, the Omnibus Reconciliation Act of 1980 was enacted, also referred to as the MSP Statute. It effectively extended this, so that in addition to workers compensation carriers, liability and no-fault insurers were also primary to Medicare for payments. Medicare was to be only the secondary payor.

 

Recently, Medicare's enforcement of the MSP statute has concentrated primarily on workers' compensation claims. In 2001, a study had been completed, showing enormous expenditures by Medicare on what Medicare determined should have been paid by workers' compensation carriers or employers for work injuries. That led to the publication of a series of Memorandums, starting in July of 2001, published by Medicare and Medicaid Services (CMS), addressing how primarily workers' compensation carriers could show that they had not attempted to shift the burden of payment of future medical care to Medicare in their settlement agreements. This was by way of what CMS called an "administrative mechanism," which has come to be known as a Medicare Set-Aside or MSA. It appears that the purpose of this concentration on protecting Medicare's interest was in an attempt to curb the rising cost of Medicare and preserve the program's financial integrity.

 

Another avenue that Medicare has begun concentrating on in this regard, is the area of "conditional payments."   CMS has defined conditional payments as those payments already made by Medicare for which another payer would have been responsible. Essentially, Medicare wants to prevent any payments by Medicare for what another entity should pay, and it also wishes to recover such payments it may have already made. A trend has begun where Medicare has been increasingly sending out correspondence to carriers, asserting that it has located payments it believes should be reimbursed to Medicare, particularly in workers' compensation claims. 

 

On December 29, 2007, the President signed into law Bill 2499, the "Medicare, Medicaid, and SCHIP Extension Act of 2007," which amended titles XVIII, XIX, and XXI of the Social Security Act. In pertinent part, Section 111, titled "Medicare Secondary Payor," states:

 

"(8) REQUIRED SUBMISSION OF INFORMATION BY OR ON BEHALF OF LIABILITY INSURANCE (INCLUDING SELF-INSURANCE), NO FAULT INSURANCE, AND WORKERS' COMPENSATION LAWS AND PLANS-

 

`(A) REQUIREMENT- On and after the first day of the first calendar quarter beginning after the date that is 18 months after the date of the enactment of this paragraph, an applicable plan shall--

 

`(i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this title on any basis; and

 

`(ii) if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.

 

`(B) REQUIRED INFORMATION- The information described in this subparagraph is--

 

`(i) the identity of the claimant for which the determination under subparagraph (A) was made; and

 

`(ii) such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.

 

`(C) TIMING- Information shall be submitted under subparagraph (A)(ii) within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability).

 

`(D) CLAIMANT- For purposes of subparagraph (A), the term `claimant' includes--

 

`(i) an individual filing a claim directly against the applicable plan; and

 

`(ii) an individual filing a claim against an individual or entity insured or covered by the applicable plan.

 

`(E) ENFORCEMENT-

 

`(i) IN GENERAL- An applicable plan that fails to comply with the requirements under subparagraph (A) with respect to any claimant shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. The provisions of subsections (e) and (k) of section 1128A shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual.

 

`(ii) DEPOSIT OF AMOUNTS COLLECTED- Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund.

 

`(F) APPLICABLE PLAN- In this paragraph, the term `applicable plan' means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement:

 

`(i) Liability insurance (including self-insurance).

 

`(ii) No fault insurance.

 

`(iii) Workers' compensation laws or plans.

 

`(G) SHARING OF INFORMATION- The Secretary may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits.

 

`(H) IMPLEMENTATION- Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.'.

 

(b) Rule of Construction- Nothing in the amendments made by this section shall be construed to limit the authority of the Secretary of Health and Human Services to collect information to carry out Medicare secondary payer provisions under title XVIII of the Social Security Act, including under parts C and D of such title.

 

(c) Implementation- For purposes of implementing paragraphs (7) and (8) of section 1862(b) of the Social Security Act, as added by subsection (a), to ensure appropriate payments under title XVIII of such Act, the Secretary of Health and Human Services shall provide for the transfer, from the Federal Hospital Insurance Trust Fund established under section 1817 of the Social Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of such Act (42 U.S.C. 1395t), in such proportions as the Secretary determines appropriate, of $35,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for the period of fiscal years 2008, 2009, and 2010."

 

From reviewing this section, some clarification is obviously due. However, it appears that Medicare is seeking to give more teeth (up to $1,000 per day, per claimant) to the provisions in the 1965 and 1980 statutes, dictating that Medicare only pay when all other primary payors’ funds have been exhausted. At $1,000 per day, of course, this would be well over $1 million dollars in just three years of "non-compliance." It appears that $35 million dollars will even be designated for implementing the provision.

 

It appears that as of July 1, 2009, carriers will be required to determine if a claimant is entitled to Medicare benefits. This appears to be true even in an "unresolved claim," which would appear to mean even prior to settlement. If they are determined to be a Medicare beneficiary, then this is to be reported, presumably, so that payments are not made when they should not be, and if they were made, a recovery claim (or lien) could be instituted by Medicare. It appears the inquiry portion is to take place prior to settlement and the reporting portion is to take place after settlement. It appears these steps are required even in denied claims. 

 

Again, the exact format for how, and from and to whom, this information is to be requested and reported is not yet defined, and this legislation may provoke more questions than it answers. Nonetheless, we believe that it will be crucial for every carrier to comply with this statute in every claim, beginning July 1, 2009, to the best of its ability.

 

     To Prepare Medicare Set-Asides;

      Submit MSA's to CMS;

      Conduct Social Security and Medicare Status Determinations;

     Research Medicare Liens;

     Negotiate Medicare Liens;

     Provide Protective Settlement Document Language for Medicare Issues;

      Determine If an MSA Is Necessary and if CMS Approval Is Recommended;

      For Consultation and Mediation Assistance; &

      Provide Educational Services 

 

(904) 306-9955 or email us at msa@msalawyer.com

CMS Memorandum
August 25, 2008 - Memorandum	May 20, 2008 - Memorandum	July 11, 2005 - Memorandum	May 23, 2003 - Memorandum
April 25,2006 - Memorandum	October 15, 2004 - Memorandum	April 22, 2003 - Memorandum	December 30, 2005 - Memorandum
May 7, 2004 - Memorandum	July 23, 2001 - Memorandum	MMSEA Section 111Updated Interim Record Layout	MSA Drug Pricing April 3 2009 Memorandum
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