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DO WE STILL NEED TO WORRY ABOUT MEDICARE SET-ASIDE ARRANGEMENTS?

by Thomas D. Begley, Jr., CELA

For many years a debate has raged as to whether Medicare’s interests must be considered with respect to future medical payments in the context of a third party liability settlement (“TPLS”). The issue is simple. If a plaintiff in a TPLS receives money to pay for future medical care, is he free to pocket that money and send the bill for the future medical care to Medicare? Under the Medicare Secondary Payer Act (“MSPA”), Medicare is prohibited from making a payment for future medicals to the extent that such payment has been made under liability insurance. Therefore, if a liability insurance company or self-insured defendant pays money to a plaintiff for future medical care, the argument goes that Medicare cannot pay for that care.

In 2013, the Centers for Medicare and Medicaid Services (“CMS”) issued a Notice of Proposed Rulemaking (“NPRM”), but then voluntarily withdrew it in 2014. As a result, parties have been left to their own devices in determining how to address this issue. Some commentators believe that absent enforceable regulations that identify the standards by which future medicals are to be measured in the liability context, the federal government has no right to claim an interest in future medicals as part of the settlement. On the opposite end of the spectrum, commentators observe that CMS interprets the MSPA so that it is applicable to TPLS as well as Worker’s Compensation claims. The correct position may lie somewhere in between. The real answer may be to develop an analysis of how much of the TPLS was for future medicals and how much was for other elements of damages. Then set aside only the amount received for future medicals, not the total anticipated costs of what the future medicals will actually be.

 

 

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