New MSP Protocol in New York

Although no statutory or regulatory authority requires Medicare set-aside arrangements (MSAs) in third party liability settlements, confusion continues as to whether and when MSAs are necessary and/or appropriate for such cases.

CMS (the responsible Federal agency) has established certain basic requirements for workers compensation MSAs (WCMSA) in a series of memoranda beginning in 2001. CMS, however, has not offered any definitive statements about whether or when MSAs are needed to account for future medical expenses in liability settlements.

On May 6, 2011, the United States Attorney's Office for the Western District of New York (USAOWDNY) released a one page "Medicare Secondary Payor Protocol" (MSP Protocol) establishing a voluntary process by which that U.S. Attorney's Office will review MSA proposals for liability cases provided certain conditions are met.

The MSP Protocol issued by USAOWDNY specifically:

• Excludes liability cases involving mass torts;
• Confers no substantive rights;
• May be used or withdrawn at the unilateral discretion of the USAOWDNY;
• Provides a voluntary process; and
• Does not represent a CMS policy.

The MSP Protocol defines an MSA as: "An administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A set-aside arrangement may be in the form of a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA)."

The MSP Protocol requires applications for MSAs in liability cases to be made jointly by the Medicare beneficiary, or his representative, and "the primary plan", presumably meaning the liability insurer or self-insurer, and additionally requires:

• A copy of the MSPRC letter stating the matter concerning repayment for historical medical items and services related to the tort was reviewed and resolved or provide adequate assurance to that effect;
• The proposed LMSA related to the tort;
• An agreed copy of the settlement agreement subject to completion of the MSP obligations;
• A joint statement from the applicants that warrants:
  • The value of the agreed settlement equals or exceeds $350,000.00;
  • The plaintiff is a Medicare beneficiary as defined under 42 C.F.R. §400.202.
  • CMS was requested to approve the LMSA, but no substantive response has been received for at least 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; and
    • In conformance with the WCMSA submission checklist as published by CMS

Subsequent to the application, the USAOWDNY may request additional information from the parties, including a request for an additional LMSA(s). Upon receipt of all required information, the USAOWDNY will issue a Release which will compromise the LMSA obligations related to the settlement, judgment, award or other payment.

For additional S2KM reporting about MSAs and liability cases, see:

• MSAs and Liability Cases - summarizing recent recommendations for MSAs in liability cases issued by NAELA and the ABA.
• MSAs and Liability Cases - 2 - reviewing a new article by Peter Wayne which offers advice to plaintiff attorneys about Medicare compliance in liability cases.

For more detailed information about MSAs and structured settlements, see Section 15.03 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).