By John Cattie, J.
The Andrea Gail never had a chance. The Gloucester, MA fishing boat was old and rickety. Its grizzled crew experienced but vastly overmatched. And the storm it faced was simply perfect.
One fateful decision doomed the Andrea Gail. Instead of heeding warnings about the powerful storm, it ignored all warnings and tried to push through the storm unprepared. Getting home before its cargo of swordfish spoiled was more important than protecting themselves.
The third-party liability insurance settlement community stares today at its Perfect Storm. The combination of rapidly rising Medicare enrollment rates, a longer American life expectancy and the pending repeal/replacement of the Patient Protection and Affordable Care Act (ACA aka Obamacare) leaves government officials seeking alternate means to maintain the solvency of the Medicare Trust Funds.
Meanwhile, the Medicare
Secondary Payer (MSP) Act sits by, ready and waiting. While Medicare has considered active enforcement of the MSP Act's future medical provisions previously for liability insurance settlements, no final indication has been given to that occurring until now. Late in 2017, Medicare will begin rejecting certain repayment requests from medical providers, advising providers to seek repayment from the patient's Liability Medicare Set-aside Arrangement (LMSA) or No Fault Medicare Set-aside Arrangement (NFMSA).
The Perfect Storm is set to hit third-party liability insurance settlements. Parties settling these cases need to heed the warnings and be prepared. Addressing LMSA exposure on all cases involving future medicals is now your best chance to ride out the storm.
The storm brewing: how we got here
After World War II, birth rates in the United States skyrocketed. The resulting Baby Boomer generation came of age in the 1970s. Understanding the potential strain this generation may later place on a Medicare program in its infancy, Congress passed and President Carter signed into law the MSP Act on December 5,1980.
Act provides a broad prohibition on Medicare paying certain
medical expenses. In part (and relevant to our discussion),
is the following provision: Medicare will not pay for a
beneficiary's medical expenses where payment has been
made under a liability insurance plan (including
payments represent the only exception to this broad statutory
prohibition. Medic are may make a conditional payment on
behalf of its beneficiary when an entity has not yet accepted
responsibility to make payment.
For years, most stakeholders in the liability insurance settlement community ignored these future medical statutory provisions. Settling parties rarely addressed them and Medicare never said one word about them. Only after the Centers for Medicare & Medicaid Services (CMS) provided guidance about future medicals for the workers' compensation community did parties in the liability insurance community begin asking questions.
CMS began to address the LMSA issue publicly. In 2011, CMS
released its only LMSA policy memorandum addressing use of a
treating physician's letter to conclude that no LMSA was
needed. In 2012, CMS released an Advanced Notice of Proposed
Rulemaking (ANPRM) about LMSAs.
Many lobbying groups took the opportunity to congratulate each other when CMS...