US Attorney's Office Issues Medicare Secondary Payer Protocol for Liability MSAs

On May 6, 2011, Assistant U.S. Attorney Robert Trusiak signed the Medicare Secondary Payor Protocol for the Western District of New York. This one page document, titled Western District of New York Medicare Secondary Payor Protocol, describes the voluntary application process for settling parties to seek review of a Liability Medicare Set-aside Arrangement (“LMSA”) proposal. While not an official policy of the Centers for Medicare and Medicaid Services (“CMS”), the process sets forth a roadmap for the review of LMSA proposals. This protocol also serves as one of the federal government’s first attempts at addressing the questions surrounding LMSAs.

Resolution Prerequisites: The application for MSP compromise concerning payment for future medical expenses/services related to resolution of the tort claim may be made to the U.S. Attorney’s Office for the Western District of New York only under the following specified circumstances:

• First, CMS must have been notified of the pending liability claim;
• Second, CMS must have been notified of the resolution of that liability claim; and
• Third, the Medicare Secondary Payer Recovery Contractor (“MSPRC”) must have issued a letter regarding conditional payment reimbursement obligations, indicating those have been resolved or provide adequate assurance to that effect.

Application for MSP Compromise Requirements: If a case/claim meets the prerequisites for filing the application for MSP compromise for future medicals/services related to resolution of the tort claim as set forth above, the application must contain the following information:

• First, a copy of the MSPRC letter stating the matter concerning repayment for historical medical items and service related to the tort was reviewed and resolved or provide adequate assurances to that effect;
• Second, the LMSA proposal;
• Third, an agreed copy of the settlement agreement subject to completion of the MSP obligations; and
• Fourth, a joint statement from the applicants that warrants the following:
  • The value of the agreed settlement equals or exceeds $350,000;
  • The claimant is a Medicare beneficiary as defined under 42 C.F.R. §400.202;
  • CMS had been requested to approve the LMSA, but the applicants had not received any substantive response for at least sixty (60) days from the date of the letter to CMS; and
  • An affidavit from the preparer of the LMSA that it is true and correct based on the Medicare beneficiary’s medical records and the injuries being released as well as in conformance with the WCMSA submission checklist as published by CMS.

Once submitted to the U.S. Attorney’s Office for the Western District of New York, the U.S. Attorney may seek additional information from the applicants. This may include, but not be limited to, a request for an additional LMSA. Upon receipt of all required information, the U.S. Attorney will issue a release, compromising the LMSA obligations related to the claim resolution.

This Medicare Secondary Payer Protocol is available for single event liability cases, but not mass tort liability cases. Importantly, this is a voluntary process and not CMS policy at this time. This protocol can provide additional reasonable assurances that settlements have properly taken into account Medicare’s status as a secondary payer. But the parties must have taken some initial action, including ensuring that past payments made have been properly addressed, as well as providing proof that the parties requested CMS approval of the LMSA but have not received any response. In those circumstances, the U.S. Attorney’s Office for the Western District of New York is willing to assist.

This development will help the settlement community employ the Garretson Resolution Group’s position that after we have determined an LMSA is appropriate (following a damages / recovery evaluation to determine future costs of care), we validate the propriety of the obligation regardless of existing CMS workload thresholds. Our position recognizes that in the absence of express direction from CMS, that any MSA compliance program should have a validation component. We continue to monitor LMSA developments, and will report any future developments to the settlement community.