Forthcoming Guidance in the Gray Area of Medicare Set-Asides

In the legal world, a common answer to some nuanced questions is, “that’s a gray area.” It’s not a copout; it’s just a faster way to say that the subject matter in question is “not clear or does not fit into a particular group and is therefore difficult to define or deal with.”

“Difficult to deal with” is a great way to describe Medicare Set-Asides (MSAs). That’s because the government requires Medicare beneficiaries to “protect Medicare’s interests when resolving cases that include future medical expenses.” But, at the same time, the government hasn’t offered any statutory or regulatory direction on how to protect Medicare’s interests in this regard. To be clear, any perceived obligation to protect Medicare’s interest by creating an MSA results not from a statute or regulation, but rather from less-than-authoritative publications by the Centers for Medicare and Medicaid Services (CMS) (like this handout and this reference guide).

Making things even more unclear, from a practical and functional standpoint, MSAs appear to be reserved and designed only for use in workers’ compensation cases. Indeed, there’s only one MSA review process in place, and it applies only to workers’ compensation cases. But Medicare beneficiaries resolve claims for future medical expenses in other types of cases all the time – for example, in personal injury cases based on third-party liability (a.k.a. “liability cases”). So do Medicare beneficiaries have an equal perceived obligation to create MSAs upon resolving their liability cases too?

Luckily, in the near(ish) future, answering this question won’t involve as much guesswork. CMS recently offered a sneak peek into forthcoming guidance when it issued a notice of proposed rulemaking in 2018. The proposed rule was set to follow in 2019, but it never came. Instead, in early 2020, CMS issued a second notice of proposed rulemaking and updated the description as follows:

This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments.

The proposed rule was set to follow in August, but, again, it never came. (To be fair, CMS may have found its hands full responding to a certain pandemic in the interim.) Regardless, even after CMS publishes the proposed rule, it will still have to go through the administrative process before it can become a final rule that has the force of law.

Ultimately, it may take several years before we have authoritative guidance on MSAs. Until that happens, Medicare beneficiaries and their attorneys, especially those involved in liability cases, will have to continue wading through this gray area of the law.

If you’re one of those attorneys, and you could use a little help, contact us today. Our professionals have over 10 years of experience in establishing and administering MSAs. You can also tune into our next post, where we’ll clear up some age-old misconceptions that continue to muddy the MSA waters.

Disclaimer: The information provided through these blog posts does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available through these blog posts are for general informational purposes only.

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