LMSA rule changes on Horizon

"Major" "Economically Significant" Federal Rule Making could affect virtually all forms of Injury-Related Recoveries to Medicare beneficiaries. 

Twice per year, the Centers for Medicare and Medicaid Services issue a "united agenda" which lists regulations under development.

The Fall 2018 United Agenda from CMS states that CMS is proposing a “Major" "economically significant” rule which will “ensure that beneficiaries are making the best healthcare choices possible by providing them … with the opportunity to select an option for meeting future medical obligations …  while also protecting the Medicare Trust Fund.” 

While the proposed rule remains unclear, it appears to encompass an extremely broad scope of injury-related recoveries.  The proposed rule will address problems arising from the fact that CMS “does not provide its beneficiaries with guidance to help them make choices regarding their future medical care expenses when they receive automobile and liability insurance (including self-insurance), no-fault insurance, workers' compensation settlements, judgments, awards, or payments, and need to satisfy their Medicare Secondary Payer (MSP) obligations.

What does it mean? Until the draft regulation is published it is unclear. However, things to note:

1. In one of the most significant potential changes, enforcement of violations is likely to be focused on the denial of services; this seems to indicate that CMS is going to focus responsibility on the plaintiff instead of the defendant and their carriers.

2. The statutory responsibility of plaintiffs and their counsel will remain unchanged.

3. Perhaps most important to an active PI practice is that the Medicare Advantage Plans (MAOs) are likely to be included - since they are gaining ground in the courts with their position that an MAO has the same rights under the SPA and CMS with regard to tort recoveries.

4. The proposed regulation provides more evidence that the $54 million increase in the annual CMS contract budget for the secondary payer contractor will lead to actual changes in the SPA in the near term. 

5. The ICD-10 codes reported by the liability carrier at the time of settlement will be a base “injury”.

6. The new regulation will have “options” for meeting the obligations under the SPA that apply to both workers' comp and personal injury claims/settlements.  Despite its established history and practice, the MSA approval system in place for WC claims is a voluntary review program with deference given to the WCMSA reference guide - but not governed by regulatory mandates.  That seems to be about to change.

7. No advance reviews/approvals -LMSA’s will be reviewed only after settlement has been reported.

8. CMS will publish some sort of reference guide.

9. Some monetary thresholds will be in play. Expect to see multiple tiers.  For example, below a gross settlement amount (maybe $250K) – no requirement for an LMSA. In the middle tier, CMS will apply some sort of formula to determine set-aside amounts.  In the highest tier (possible $750K +) - full LMSA along the lines of those done currently in the workers' compensation setting.

Lien Reduction and Practical Guidance - Not Just Processing  

For ten plus years I have felt like the boy crying wolf concerning liability set asides – you know, the pesky responsibility to protect Medicare’s future interest when you settle a PI case? In 2012 CMS issued a proposed rulemaking for set-asides in the personal injury context but then withdrew it abruptly when they got buried in comments that made clear a lot more work was needed before the set-asides could be made to work in the personal injury context. The six years since have been a no man's land, with advice and opinions ranging from doing formal set aside to doing basically nothing. CMS has issued guidelines making clear that plaintiffs and their lawyers have a clear duty to protect CMS interest and assure any future care related to the PI claim/settlement not be ever billed to CMS on penalty of the Feds…….while providing no guidance on how to meet this duty. Well, Bow Wow!


Liens and reimbursement demands can be complicated. Each case/claim presents unique circumstances. As experienced trial lawyers, we can help put the lien issues into context to help you maximize your case valuations and recovery efforts. Don’t hesitate to call us to discuss your case circumstances.