It is happening: LMSAs (and NFMSAs) are almost here


For the past several years, the Centers for Medicare & Medicaid Services (CMS) has been providing the industry with vague hints about liability Medicare set-aside arrangements (LMSAs). The absence of clarity left the liability community unable to know how Medicare set-aside arrangements (MSAs) would apply in a liability setting.

Earlier this month, CMS released a communication to providers, physicians and suppliers indicating that LMSAs and no-fault Medicare set-aside arrangements (NFMSAs) will be implemented October 2, 2017. Aside from learning a new acronym, the communication did not contain any particulars about how this process is going to work, only that new processes and procedures would be forth coming. Until CMS provides more details, stakeholders are left wondering how this is going to affect their liability and no-fault claims. With promised details forthcoming, here are my primary questions and concerns:

  1. How are we going to address liability cases with grave injuries, but low liability? Will CMS see these cases as zero LMSA situations because clearly there was no future medical taken into consideration for the settlement? Or (more likely) is CMS going to price out an extremely high MSA on a low dollar settlement and force the parties to figure it out?
  2. How is CMS going to price MSAs? Is it going to assume that the parties have accepted the responsibility for lifetime medical expense, as in workers’ compensation? Will CMS recognize there is nothing in the law that indicates that the defendant is responsible for lifetime medical expenses when litigating or settling a liability case?
  3. What medical records is CMS going to require? Unlike workers’ compensation, there are no payment histories in liability, so how is CMS going to verify what drugs and treatments are related to the liability case?
  4. How will CMS determine the relevant body parts in a liability setting? In workers’ compensation, there are forms and processes for only litigating a relatively narrow list of body parts. In liability, we have broad injury allegations coupled with medical records that are alleged to relate to the incident. But who and how are these medical records going to be interpreted to determine the reality from the plaintiff’s claims? Will CMS accept deposition testimony, expert witness testimony, interrogatories, etc. to disprove some of the medical treatment?

This is a first list of questions that will grow as Sedgwick continues to evaluate the requirements and create best practices to drive optimal outcomes for our clients and consumers. We will continue to monitor the situation and work with our industry partners (MARC, carriers, clients and CMS contacts) in order to provide additional analysis and revise our best practices. We will watch CMS for additional details and we will continue to share information and recommendations in this area.

Michael R. Merlino II, ESQ, SVP, Medicare Compliance

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