OMB Rejects CMS’ Liability MSA Rule

Last week, the Centers for Medicare and Medicaid Services (CMS) withdrew its recently submitted Notice of Proposed Rulemaking (NPRM) related to protecting Medicare’s interests as a secondary payer with respect to future medical obligations in liability settlements, because it failed to gain approval from the Office of Management and Budget (OMB).

Although the exact reasons for the OMB’s disapproval are not known, the OMB can reject a proposed rule for a variety of reasons, including costs v. benefits, conflict with other agencies or other rules, economic impact, etc.

In June of 2012, CMS took the first step in this process by releasing an Advanced Notice of Proposed Rulemaking (CMS-6047-ANPRM) to solicit public comment on how to implement an MSP process for liability settlements. This ANPRM received many public comments, including one from Medivest, where we strongly encouraged CMS that it is a “practical necessity” that CMS allow an equitable reduction of a liability Medicare Set-Aside (MSA) whenever a liability claim settled for less than full value.

On August 1, 2013, CMS took the next step by sending a Notice of Proposed Rule Making (NPRM) to OMB for their approval. The NPRM was never made public because OMB did not approve it, and on 10/8/2014, CMS withdrew it.  So unfortunately, we do not know what CMS’ specific plan was regarding liability MSAs. However, we fully anticipate that CMS will submit another NPRM to the OMB in the near future.

So while it seems we came very close, nothing has changed regarding how settling parties should consider and protect Medicare’s interests as a secondary payer in liability claims.  We still have a 1980 Medicare Secondary Payer (MSP) statute to deal with, and the existing best practice of analyzing each case to determine if a liability MSA is the best risk assessment decision should still continue.

To view Medivest’s blog announcing the June 2012 CMS-6047-ANPRM click here.

To view Medivest’s response to CMS-6047-ANPRM click here.

To view official OMB notification of withdrawn the NPRM click here.



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