Future Medicals in Liability Cases (LMSAs)
The Center for Medicare and Medicaid Services (CMS) has incorrectly stated on numerous occasions that there is an obligation to protect Medicare’s interest in the payment of future medical costs arising from liability (and other) claim settlements. CMS, however, has neither defined this obligation, nor demonstrated a legal basis for such position. The MSP statute is clear that it is Medicare’s obligation to protect its own interests, and Congress has prohibited CMS from any role in addressing “future medical” issues.
Although CMS is prohibited from recovering amounts allocated to non-medical loss in liability settlements,1 in 2012 CMS published in the Federal Register an Advanced Notice of Proposed Rulemaking (ANPRM) seeking input on how to address MSP future medicals in liability cases. 77 Fed. Reg. 35917 (June 15, 2012).
MARC submitted comments on the Advanced Notice of Proposed Rulemaking in August 2012 – before the SMART Act was enacted. In September 2013, CMS submitted to the Office of Management and Budget (OMB) a draft proposed rule for review and approval prior to publication in the Federal Register. In response, MARC, along with several other stakeholders, met with the Office of Management and Budget (OMB) urging a delay or elimination of the Rule. Among other arguments, MARC advised OMB that it was premature for CMS to pursue such a vast rulemaking until the SMART Act was implemented. In October 2014, CMS withdrew its proposed rule.
Although it has not pursued a rulemaking, CMS has continued to attempt to introduce the Liability set aside concept through sub regulatory guidance. For example, in September 2018 CMS issued, and quickly withdrew, a “MedLearn” article on the subject. CMS also continues to list a potential future rulemaking on the issue in the HHS Regulatory Agenda.
When Congress enacted the MSP statute in 1980, it explicitly prohibited Medicare from paying for future medical care that was the subject of a settlement or judgment: “Payment under this title may not be made . . . with respect to any item or service to the extent that payments has been made, or can reasonably be expected to be made, with respect to the item or service . . . “ 42 U.S.C. § 1395y(b)(2)(A). The statutory language is clear — if funds are available from a settlement to cover a future medical payment, then CMS is prohibited from paying for the health care. There is no provision of the MSP statute that allows CMS to govern or regulate future medicals, even by a voluntary policy guidance. In contrast, CMS has the authority to accept allocations of liability settlements between medical and non-medical claims (as Agency guidance has already done for court-ordered allocations). Such allocations are particularly important given the nature of liability cases, which typically involve compromise and allocation of fault related to both bodily injury and property damage claims.
CMS has no statutory authority to regulate future medicals in liability cases, and any such effort will negatively impact the ability of litigants to settle cases. For these reasons, MARC opposes any such regulation, either by rulemaking or as a matter of Agency policy. MARC does, however urge CMS to take immediate action to recognize settling parties’ fair voluntary allocation of personal injury and other liability action settlement funds between medical and non-medical losses to provide certainty for beneficiaries as to the amount that must be exhausted before Medicare may resume payment of medical benefits for illness and/or injuries related to the claim.
Viewpoint Viewpoint: CMS’ Liability Medical Set Asides Proposal is Bad Policy
August 6, 2019
HHS Regulatory Agenda Liability Future Medicals Rulemaking
MARC Comment to CMS ANPRM: MSP and “Future Medicals”
August 14, 2012
U.S. v. Hadden, 661 F.3d 298 (6th Cir. 2012)
Bradley v. Sebelius, 621 F.3d 1330 (11th Circuit. 2010)