Medicare Involvement in Settlements
Will Continue to Grow

An estimated 25% of the population will become Medicare eligible by 2030.

Proposed Updates to Medicare Requirements

Since Medicare was established in 1965 by President Lyndon Johnson, the only real constant for the massive government health care program has been change. And 2021-2022 appears to continue this trend, especially for the settlement community. Here’s a rundown on the latest developments:

• Steep Reporting Penalties 
  In February 2021, the Centers for Medicare and Medicaid Service (CMS) proposed significant monetary penalties for primary payers – insurance companies, TPAs, or self-insureds – that violate the new reporting rules set out in a 70-page document. How significant?: a minimum of $30,000 per claim! At issue are discrepancies in the mandatory quarterly reporting Medicare requires of these entities on settlements that involve Medicare beneficiaries.
   
• Tracking Medicare Advantage Plans
  Previously there was some question as to whether the 1980 Secondary Payer Act covered beneficiaries in Medicare advantage plans. With passage by Congress of The PAID Act in late 2020, that ambiguity is gone and Medicare must be reimbursed for covered services in advantage plans just as it is in the federal plan. This is certainly no minor consideration as, according to the Kaiser Foundation, around 40% of all Medicare recipients choose a Medicare Advantage plan. And that number is growing.
   
  The primary thrust of the legislation directed CMS to beef up its database so that payors can more easily identify which injury claimants are covered by advantage and prescription drug plans. Taken together, these changes will mean more settlements with liens for covered services provided through a Medicare advantage plan.
   
• Requiring Liability Medicare Set-Asides 
  Rumblings from CMS have long indicated that Medicare Set-Asides will eventually be required for liability settlements as they are now for workers’ compensation cases. That rumbling grew louder in 2021, with CMS saying they would issue proposed rules on future medicals in October. Well, October came and went, as did previously announced rulemaking in 2019, twice in 2020, and earlier this year in March. Now CMS is saying it will issue its notice of proposed rulemaking in February 2022. Thus, the moving target!
   
  What is clear to all those watching these developments at CMS is that rules are coming and will most likely address Liability Medicare Set-Asides (LMSA’s) requirements. Like workers’ comp settlements, everyone involved in a personal injury settlement, from payor to injured party to plaintiff attorney, will be required to protect Medicare’s current and future interests. And that will most certainly be a game-changer for settlement planning and negotiations in liability cases. 

Don’t Let Medicare Derail Your Settlement

Over the years, we’ve seen a lot of settlements derailed by Medicare. Typically it involves surprise when numbers for the Medicare lien and/or MSA are much higher than expected. This can be particularly challenging if this information comes late in settlement negotiations. Mistakes made in Medicare payment and filing requirements can also come back to haunt a settlement.