By Nathaniel F. Wienecke
It’s a scenario every senior citizen fears—getting seriously injured in an accident. Whether it’s a slip and fall at the grocery store or getting hit by a car crossing the street, the question of “who pays?” often isn’t far from anyone’s mind. Luckily for most Medicare beneficiaries, there is a process in place to make sure they receive the care they need in a timely matter.
Still, Medicare is not necessarily responsible for paying for care in cases where another party is liable for a beneficiary’s healthcare expenses resulting from an accident. The Medicare Secondary Payer (MSP) system, as it is called, was created by Congress in 1980 to allow Medicare to pay for health care costs and then get repaid after the beneficiary received a settlement, judgement, or other award where medical expenses are involved for the same injury.
By requiring settling parties to cover healthcare costs in these situations, Congress intended for the MSP system to help guard against inefficient and unnecessary spending that would waste taxpayer dollars. Crucially, in both statute and intention, Congress made clear that the Centers for Medicare & Medicaid Services (CMS) is prohibited from paying for future medical care that is the subject of a settlement or judgment.
Despite lacking the statutory authority to address future medical care under the MSP system, CMS is planning to release a proposed rule that would create a new “voluntary” Liability Medicare Set Aside (LMSA) program for liability and no-fault claims. CMS’s idea is to have the government approve liability settlement amounts set aside in special accounts managed by Medicare beneficiaries to pay for future medical care. The fact that CMS would implement an allegedly voluntary LMSA rule runs directly contrary to the Administration’s explicit commitment to reduce burdensome regulations. And, it’s guaranteed to be a lose-lose-lose situation for beneficiaries, settling parties, and ultimately, the Medicare Trust Fund. CMS must reverse course.
Currently, CMS has many alternatives available to it to protect the Trust Fund in liability and no-fault cases beyond shifting a massive regulatory burden onto beneficiaries and settling parties. By improving the flow of communication between parties in the settlement process and CMS, all would stand to gain by ensuring that liability claims are processed in a more transparent, efficient, and rational manner. LMSAs are not the solution.
Not only would the creation of an LMSA approval process go far beyond CMS’s statutory authority, it is also bad policy. That is why virtually all MSP stakeholders, including beneficiaries, plaintiffs’ lawyers, defense lawyers, insurers, claims adjusters, and self-insured entities like large retailers, oppose the anticipated LMSA rule. By functionally requiring an undisclosed percentage of a patient’s settlement to pay for future medical services related to their claim before Medicare pays anything, the proposed approach would actually result in delayed and fewer settlements, potentially cutting off medical treatment for senior citizens until CMS believes Medicare’s “secondary payer” interests have been satisfied. This would harm not only beneficiaries and parties that want to settle, but also Medicare, which is forced to cover claims unless a settlement can be reached.
And, don’t be fooled by the allegedly “voluntary” nature of LMSAs. In the absence of CMS signing off on an LMSA, there will be grave uncertainty for the settling parties that CMS may simply disrupt long-settled claims sometime in the future. That will leave settling parties with a Hobson’s choice of getting CMS’s blessing for an LMSA before settling or facing the potential attachment of taxes for payors or the termination of benefits for claimants down the line.
The anticipated LMSA program is likely to exponentially multiply many of the problems that currently exist with Worker’s Compensation Medicare Set Asides (WCMSAs). For instance, CMS dramatically inflates its financial demands by including the costs of long-term prescriptions of opioids and drugs used for off-label treatment that are medically unnecessary and dangerous to patients.
Furthermore, the process for “zero dollar” requests, in which claims are submitted asking CMS to confirm no submission is required, needlessly consumes CMS resources and delays settlements from being finalized. The longer the process is drawn out, the longer Medicare – and, therefore, taxpayers – must step in to cover the patient’s care. As a result, Medicare would be forced to continue incurring significant financial burdens for care where it is explicitly not supposed to be the primary payer, generating wasteful spending and greater uncertainty as to when—or if—Medicare will be reimbursed at all. How will Medicare manage 100,000 or more cases a year seeking confirmation that no future medicals are owed, and how many settlements will be held up (or be forced into litigation) while beneficiaries wait for Medicare’s answer? And, how many other beneficiaries will lose their settlements because of the CMS LMSA process?
Getting seriously injured in an accident is already traumatic for a senior citizen. LMSAs would only exacerbate the trauma by slowing or stopping settlements, and potentially cutting off medical treatment. We hope Congress will look closely at this and take steps to protect seniors.
About Nathaniel F. Wienecke
Nathaniel F. Wienecke is senior vice president for federal government Relations for the American Property Casualty Insurance Association, a national trade association for home, auto, and business insurers.