Liability Medicare Set Asides (LMSAs): October is here! Now what?

By B. Josh Pettingill, MBA, MS, MSCC & Jason D. Lazarus, J.D., LL.M., MSCC

The debate regarding addressing Medicare’s future interest in liability settlements is filled with nuance and subtleties. An essential step in understanding the big picture is starting with the genesis of set asides, the Medicare Secondary Payer (MSP) Statute. Although, the finer points of this issue may leave room for interpretation, the MSP is express and clear. It precludes Medicare from paying for any item or service when payment has been made by a liability insurance policy, self-insured or no fault plan.

The debate is limited to the fashion in which we address a statue that has not been enforced up until this point as it relates to payments made by Medicare after settlement. The fact that a law has not been enforced in this way in the past does not mean it is irrelevant, especially when recent steps by the Centers for Medicare and Medicaid Services (CMS) begin to do just that. This article will examine the form, function and attempts at regulation surrounding set asides in liability cases.

A Medicare Set Aside (MSA) is currently not required by any regulation or statute, even in workers’ compensation cases. However, an MSA, according to CMS, is Medicare’s preferred method for protecting its future interests when the settlement funds future medical care. Starting October 1st, CMS is purportedly going to deny making payments for accident related care post-settlement of a liability or no-fault claim on the basis they should be paid for out of an MSA…

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