CMS issues Medicare Secondary Payer process guidance

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October 20, 2011

CMS issues Medicare Secondary Payer process guidance 

The Centers for Medicare & Medicaid Services (CMS) has issued guidance on plaintiffs’ obligations regarding Medicare liens against settlements in Medicare secondary payer (MSP) claims. CMS has also further delayed implementation of its MSP §111 reporting requirements for certain claims involving liability insurance. Because the MSP process can be confusing and can complicate reaching settlements, lawyers have been waiting for further guidance from CMS.

Matthew Malamud

The Centers for Medicare & Medicaid Services (CMS) has issued guidance on plaintiffs’ obligations regarding Medicare liens against settlements in Medicare secondary payer (MSP) claims and has further delayed implementation of its MSP §111 reporting requirements for certain claims involving liability insurance. Because the MSP process can be confusing and can complicate reaching settlements, lawyers have been waiting for further guidance from CMS.

Under the MSP statute, CMS will pay for an injured plaintiff’s medical care if he or she is a Medicare beneficiary. However, if another payer is deemed responsible, such as the defendant’s liability insurance provider, CMS is entitled to reimbursement and can assert a lien against a settlement.

To clarify plaintiffs’ obligations regarding Medicare liens against liability settlements, CMS announced it would neither seek reimbursement nor require claims reporting in cases of continued exposure (including exposure from an implanted medical device) or ingestion of a toxic substance such as asbestos if the last incident occurred before December 5, 1980, and the plaintiff neither made a claim nor specifically released the defendant from liability after that date.

CMS also announced it would not require a Medicare beneficiary to reimburse a portion of his or her liability settlement for future medical expenses if a physician certifies that no future medical care is needed. It also said it would not require claims reporting involving payments made to qualified settlement funds before October 1, 2011, that are connected to a state or federal bankruptcy proceeding and don’t involve ongoing medical expenses.

In addition, the agency announced that the MSP Recovery Contractor has added self-service features to its customer service line, 800-999-1118, giving plaintiffs the ability to get up-to-date information on multiple cases at once.

The MSP statute requires defendants’ insurers to periodically report information about claims involving plaintiffs who are Medicare beneficiaries. This requirement was supposed to take effect last January but was postponed until this month. CMS has again postponed implementation, which should provide more time to settle cases easily, plaintiff lawyers say.

The reporting requirements have made settling liability cases a “nightmare,” according to Jay Vaughn of Florence, Kentucky. But, he said, further postponement is a “good decision that may help. Then again, just because Medicare has postponed [implementation] doesn’t mean insurers understand their responsibilities any better. There’s still a lot of confusion.”

The Strengthening Medicare and Repaying Taxpayers Act of 2011, recently introduced as H.R. 1063, would require CMS to timely notify plaintiffs of their reimbursement obligations before settlement. AAJ has prepared a primer detailing the history of the MSP statute, the problems with the reimbursement system, and how H.R. 1063 would help address those problems.

AAJ President Gary Paul said the association continues to work with CMS for more clarity. “While we are pleased with guidance that further delays the reporting requirements and also provides quicker access to conditional payment information, many stakeholders in the MSP process are still left confused over how to handle exposure cases, the threshold amounts for paying a fixed settlement amount, and the potential future medical requirements.”


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