Q&A: The Effect of CMS’ Withdrawn NPRM on Workers’ Comp MSA Requirements

Question: In reading your Client Alert about CMS pulling the rule on MSA’s, is this only applicable for tort type suits and the requirement of MSA’s in workers comp still applies OR is it withdrawn for all types, including workers compensation?

Answer: Thanks for your question. The Notice of Proposed Rulemaking (NPRM) CMS submitted for review on August 1, 2013 likely was a comprehensive one which covered Workers’ Compensation, Automobile, Liability Insurance (including Self-Insurance) and No-Fault, just as the Advanced Notice of Proposed Rulemaking (ANPRM) had in summer 2012. If enacted, this would have been the first regulation which (likely) addressed MSAs specifically.

Current regulations are on the books, however, which address future medicals in workers’ compensation settlements. I direct you to 42 C.F.R. Sec. 411.46 and 47. 42 C.F.R. Sec. 411.46(b) says: “If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of the work-related condition, the settlement will not be recognized. For example, … Medicare will not pay for treatment of that condition.” 42 C.F.R. Sec. 411.47(d) says: “1) Basic Rule. Medicare pays for future injury-related care. 2) Exception. If WC award contains dollars for future medicals, that amount must be spent down and exhausted before Medicare pays.” 42 C.F.R. Sec. 411.47(a)(1) says: “If a compromise settlement allocates a portion of the payment for medical expenses and also gives reasonable recognition to the income replacement element, that apportionment may be accepted as a basis for determining Medicare payments.” Though CMS withdrew the NPRM for future medicals under the MSP, these regulations remain.

While these regulations do not mention MSAs, they do contemplate that Medicare has a right, under certain circumstances, to not pay certain future medicals related to a WC award when proceeds have been paid by a primary plan or payer for those expenses. As such, those regulations continue to exist, separate and apart from the NPRM recently withdrawn by CMS. So, the way future medicals issues are addressed today should be the same they were addressed before the NPRM was withdrawn, regardless of whether the claim is a liability claim or a workers’ compensation claim. Therefore, the process remains the same:

1. figure out if you need to fund an MSA in order to comply with the MSP Act;
2. if needed, then determine the proper amount with which to fund the MSA out of the settlement proceeds being paid for future medicals;
3. determine whether it makes sense to ask CMS to review and approve the MSA; and 4) educate the claimant how to set up and administer the MSA.