CMS Attempts to Clarify Methods of Reimbursing Future Medical Expenses
Think having to report settlements with Medicare beneficiaries was bad? Just wait for Rules coming that require consideration of Medicare’s interest in reimbursement of future medical expenses. CMS has issued an Advance Notice of Proposed Rulemaking soliciting comments on seven methods of ensuring protection of Medicare’s interest for current and prospective Medicare beneficiaries.
The Medicare Secondary Payer (MSP) provisions of the Social Security Act require that individuals who have made certain legal claims for personal injuries protect Medicare’s interest with regard to payment of future medical expenses. For instance, Medicare beneficiaries claiming physical injuries arising from a motor vehicle accident or medical professional liability must ensure that any settlement or claim for damages address the future medical expenses that Medicare may ultimately be required to pay in connection with treatment arising from the event.
Specifically with regard to health care providers, professional liability and self-insurance plans must similarly consider Medicare’s interest in future medical expenses arising from the claimed negligence. Much attention has been paid recently to § 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007, which requires that these insurers report settlements or judgments paid to Medicare beneficiaries. The purpose of that reporting is to assist Medicare in enforcing the requirement that its interests be protected, and it be reimbursed, for prior or future payments resulting from the conduct at issue.
One problem that has dogged liability insurers is how to ensure that Medicare’s interests are protected with regard to future medical expenses arising from the alleged improper conduct. Medicare currently has a plan in place for workers compensation claims to review amounts set aside to ensure that they are satisfactory to protect Medicare’s interest arising from future medical expenses; no such plan exists for liability insurers, however.
On June 15, 2012, CMS issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit input on possible methods of providing liability insurers feedback on the appropriateness of set-aside arrangements. The proposed rulemaking is significant because CMS proposes generally requiring that individuals — not just current Medicare beneficiaries — who reasonably anticipate receiving Medicare covered services after the date of their settlement satisfy Medicare’s interest in the future medical expenses using one of the methods established by the ANPRM.
CMS proposes seven options to address Medicare’s interest in future medical expenses:
- The individual pays for all related future medical care until settlement funds are exhausted;
- The settlement meets defined exclusionary criteria that will not reach a threshold at which Medicare would seek to pursue reimbursement or coverage of future medical expenses;
- The individual obtains a certification from their treating physician that the treatment arising from the claimed improper conduct has concluded. Medicare would use this date as a termination point from which to seek reimbursement of covered medical expenses;
- The individual submits a proposed Medicare Set Aside and obtains approval for the settlement amount to be used to satisfy Medicare’s interest in payment of future medical expenses;
- The settlement falls below certain monetary thresholds, allowing the individual to participate in a self-calculated conditional payment option. This is similar to option 4 but, because of the lower value thresholds, Medicare will automatically approve the amount set aside to address Medicare’s interest;
- The individual makes an upfront payment to Medicare based on a percentage of the individual’s recovery minus counsel fees and costs; or,
- The individual obtains a compromise or waiver of recovery from Medicare.
This ANPRM is significant particularly for self-insured health care providers and their attorneys. Both already have an obligation to ensure that most settlements with Medicare beneficiaries are reported to CMS. This ANPRM suggests that more is to come, however, in terms of obligations to ensure consideration of Medicare’s interest in claims where future medical care arising from the alleged improper conduct is at issue. Increasing fiscal pressures and the threat of Medicare’s insolvency have led to these increased enforcement steps that are most certainly only going to continue to develop and become increasingly complicated for insurers and their counsel.
CMS is seeking comments on this ANPRM until August 14, 2012.