Update on Medicare Secondary Payer Policy and Ahlborn Decision

Posted 9/11/2017
American Association for Justice

Medicare Secondary Payer Issues
Beginning October 1, 2017, the Centers for Medicare and Medicaid (CMS) will implement a new policy regarding Medicare Secondary Payer (MSP) reimbursements—specifically, liability Medicare set-asides (LMSAs) . At the request of CMS, the Medicare Administrative Contractor will begin to track the existence of any LMSAs related to a claim and deny payment for items or services that it deems should be paid from that LMSA rather than being paid for by Medicare. According to CMS, “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

It is important to note that Medicare’s authority in this area has not changed, nor has there been any statutory or regulatory change. We do expect, however, that Medicare’s new policy will generate additional issues when parties settle claims with a Medicare component.

This instruction does not affirmatively create a new mandate for Medicare beneficiaries to create a liability set-aside. Despite that AAJ recommends that you evaluate and begin to resolve any lien early in the settlement process if your case has a Medicare component. AAJ also recommends that all attorneys have a general understanding of the MSP statute, even if you contract out for your lien resolution.
AAJ is concerned that CMS is once again attempting to shift towards a mandatory LMSA regime. AAJ is pursuing all available legislative, regulatory, and legal options to ensure CMS only implements a legally sound, fair, and efficient process for collecting reimbursements.

Statutory Provision Overturning Arkansas Department of Health and Human Services et al. v. Ahlborn

In 2013, the Bipartisan Budget Act (BBA) passed and became law. The BBA included a provision that overturned the Supreme Court decision Arkansas Department of Health and Human Services et al. v. Ahlborn (Ahlborn). Under Ahlborn, Medicaid could only seek reimbursement for medical care received by a Medicaid enrolled plaintiff from the portion of a settlement that was attributable to medical costs. The new provision in the BBA allowed Medicaid to seek full reimbursement for all related medical costs it covered before the Medicaid enrollee could receive any recovery for lost wages, non-economic damages, or any other type of recovery.

AAJ worked hard to delay implementation of the BBA provision and, as a result, the provision has yet to become effective. It was initially delayed until October 2016. A second extension runs through October 1, 2017.

Working towards an additional delay in implementation—and thus ensuring the Ahlborn decision remains the law of the land—is a top AAJ priority. We are hopeful there will be a vote on a package that will further delay implementation of the BBA provision before October 1. However, any further delay in implementation is subject to the time constraints of the congressional schedule. If the extension does not occur before October, AAJ will continue to push for additional delay in implementation to be enacted before the end of the year. In that case, AAJ would advocate for the delay to apply retroactively. As this important issue continues to unfold we will provide additional information as we receive it.

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