CMS Issues Proposed Guidelines For Protecting Medicare's Interests When A Settlement Involves Future Medical Care

Until now, guidance as to how parties should address future medical care in liability settlements has been virtually non-existent. On June 14, 2012, the Centers for Medicare & Medicaid Services (CMS) released an Advance Notice of Proposed Rulemaking (the Proposed Rule) soliciting comments on a proposal to clarify how Medicare beneficiaries and their representatives can protect Medicare's interests and satisfy their obligations under the Medicare Secondary Payer (MSP) Act when "future medical care" is claimed or the settlement, judgment, award, or other payment releases claims for future medical care.1 The Proposed Rule represents a significant development in the MSP world because it is the first guidance from CMS on this issue. In it, CMS proposes seven options for handling future medical care in cases involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers' compensation.

BACKGROUND

Under the MSP provisions, Medicare does not pay for health care items and services to the extent that payment has been made or can be expected to be made by certain types of other insurance, including a group health plan, liability insurance, no-fault insurance, or workers' compensation. However, Medicare can make "conditional payments" for those items and services if the other insurance does not pay promptly. The conditional payments are then subject to repayment when the Medicare beneficiary receives a settlement, judgment, award, or other payment with respect to the injury for which Medicare paid conditional benefits.

If the insurer fails to appropriately repay these conditional payments, Medicare has a direct cause of action for double damages against the insurer.

FUTURE MEDICAL EXPENSES

In addition to the seven options for facilitating compliance with the MSP provisions, CMS proposes the general rule that if "an individual or Medicare beneficiary obtains a 'settlement' and has received, reasonably anticipates receiving, or should have reasonably anticipated receiving Medicare covered and otherwise reimbursable items and services after the date of 'settlement,' he or she is required to satisfy Medicare's interest with respect to 'future medicals' related to his or her 'settlement'" using one of the proposed options. In addition, CMS provides that Medicare can recover for conditional payments related to the settlement "regardless of when the items and services are provided" under its rights of subrogation and...