Medicare Set Asides Update – HHS One-Time Notice Dated 2-3-2017:
HHS issued a One-Time Notice dated 2-3-2017, effective 10-1-2017, and a related CMS Manual System Pub 100-20 One-Time Notification, dated February 3, 2017, effective 10-1-2017. These notices are available online at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017-Transmittals-Items/R1787OTN.html?DLPage=1&DLEntries=100&DLSort=1&DLSortDir=ascending
These notices essentially inform Medicare contractors of the need to update their systems to track Medicare Set Asides (MSAs) for both liability and no-fault settlements. My understanding is that this is the first time that Medicare is implementing a system to track actual established MSAs and withhold payment by Medicare when there is an actual established MSA to make the payment instead. However,
the notices do state that “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions”, meaning that accident-related claims are to be paid unless there is an established MSA to make payment instead.
Meanwhile, to my knowledge nothing has changed, and the law currently does not require Medicare Set Asides for Arizona non-worker’s compensation personal injury or medical malpractice claims. AJ/AzTLA member Frank Verderame obtained an Arizona Federal District Court Order in Aranki v Burwell, 151 F. Supp. 3d 1038 (October 16, 2015) holding essentially that there is no such thing as a Medicare Set Aside requirement in our 9th Circuit and San Francisco Medicare Region. Important quotes from Judge McNamee’s Order are set forth below: (1) "no federal law or CMS regulation requires the creation of a MSA in personal injury settlements to cover potential future medical expenses." (2) "This case is not ripe for review because no federal law mandates CMS to decide whether Plaintiff is required to create a MSA. That CMS has not responded to Plaintiff's petitions on the issue, is not reason enough for this Court to step in and determine the propriety of its actions. There may be a day when CMS requires the creation of MSA's in personal injury cases, but that day has not arrived." (3) "In 2012, CMS published an advance notice of proposed rulemaking to consider whether it should implement a similar MSA review process for personal injury settlements as it has for workers' compensation. 77 Fed. Reg. 5917-02 (June 15, 2012). However, this report was merely a solicitation of opinion, and as of today no such process exists." [Since this district court decision, HHS withdrew the proposed rulemaking entirely.]
Now anything is possible when it comes to the federal government and bureaucracy. Medicare has put the scare into defense attorneys to often require a MSA as part of a personal injury or medical malpractice settlement event though the settled law in Arizona is that (absent Medicare promulgating regulations) MSAs are simply not required in non-worker’s compensation personal injury/medical malpractice cases.
Please see my September/October 2016 “Liens Corner” article for more information regarding MSAs.