Last week, the National Alliance of Medicare Set-Aside Professionals (NAMSAP) released a bulletin by Tom Stanley, co-chair of NAMSAP’s Liability MSP Advisory Committee, describing what he learned in a private meeting with the Centers for Medicare & Medicaid Services (CMS) in April 2018. In the meeting, which focused solely on liability Medicare Set-Asides (LMSAs), CMS representatives indicated that there will be an 18-month timeframe before rolling out a LMSA review program. Also, similar to the choice of whether to submit a Workers’ Compensation Medicare Set-Aside allocation report (WCMSA) for review by CMS for Workers’ Compensation claim resolutions that meet CMS established monetary and Medicare eligibility thresholds, the choice of whether to submit a LMSA to CMS for review under the new program would also be voluntary.
Other points brought up by CMS for LMSAs are paraphrased below:
• Denial of services for the affected body parts/injury is considered a “primary enforcement mechanism.”
• The injured party must receive something free and clear through judgment, settlement, award, or other payment (“Settlement”).
• Review of a LMSA would not occur until a Settlement has been reached.
• That a LMSA (and presumably the administration of the money set aside) is exclusively the responsibility of the plaintiff and that defendants, and their insurers, are not a “target” of CMS with respect to LMSAs.
• CMS would publish a LMSA Reference Guide.
• Individuals meeting the “eligibility” threshold for LMSAs would remain the same as the current WCMSA system – those Medicare beneficiaries or injured parties who have a reasonable expectation of Medicare enrollment within 30 months.
• There is no projected change in the law and pursuant to the Medicare Secondary Payer statute (MSP), Medicare’s interest must be considered in every claim.
• A workload threshold of above $250,000 is anticipated – “NO SAFE HARBOR”. This level is analogous to the above $25,000 workload threshold for WCMSAs.
• For Settlements above $250,000 and up to $750,000, CMS review/approval would be available and encouraged by CMS. CMS would apply “a formula” to determine the LMSA amount. Starting with the total Settlement amount, CMS would subtract certain expenses and apply a discount factor to the total Settlement.
• Settlements above $750,000 would be presumed to fund all future medicals (considered full commutations) and for those cases, CMS would recommend the preparation of traditional LMSAs.
We have explained in the past that the creation of a Medicare Set-Aside (MSA) is not required by law for any type of case. However, in the Stalcup Memo, CMS provided its interpretation of the MSP by saying “[t]he law requires that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or liability case. There is no distinction in the law.” Furthermore, while clarifying that a MSA allocation report is not mandated by CMS, the Stalcup memo announced that “[s]et aside is our method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary. The long-awaited LMSA review process may have been delayed (prior hints from CMS were that LMSA reviews might start as early as July 2018) due to a realization by CMS that reviewing LMSAs will be a huge undertaking with many factors to consider.
Take Aways from Meeting on LMSAs:
• When the injured party receives something (free and clear) through Settlement etc., that payment triggers the need to evaluate and protect Medicare’s interests.
• If you don’t consider and protect Medicare’s future interests at the time of Settlement and take steps to not prematurely bill Medicare, Medicare can deny payment for those body parts claimed and/or released by Settlement.
• Plaintiff counsel should take steps to educate themselves and their clients on all aspects of MSP compliance and formulate strategies to reasonably consider Medicare’s interests when Settlements fund future medicals and injured clients fall within the Medicare eligibility “window”.
• CMS should seek help from stakeholders in the MSP compliance community, the judiciary, and financial analysts to examine historical data to consider developing more than one formula to be able to reasonably address varying liability case types and differing legal and factual scenarios.
• The percentage of the net Settlement proceeds a beneficiary will receive as a ratio to the full value of the case after deducting procurement costs, attorney’s fees, and Medicare liens etc. can vary greatly and should be taken into consideration.
• There are many reasons liability cases may settle for less than full value including questions of causation, policy limits in place, and percentages of fault that can vary by state, under theories of applicable comparative negligence, contributory negligence or some hybrid thereof.
• The idea that CMS may now consider evaluating apportioned LMSA allocations and taking some of the factors leading to reduced Settlement values into consideration when reviewing LMSAs seems to be a step in the right direction.
 The current WCMSA threshold is for Workers’ Compensation claims with a judgment, settlement, award, or other payment (“Settlement”) above $25,000 for current Medicare beneficiaries and above $250,000 and for those with a reasonable expectation of becoming enrolled in Medicare within 30 months of the Settlement.
 42 U.S.C. §1395y(b)(2) et seq.
 Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout).