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Advocates have long awaited clarification from the Centers for Medicare & Medicaid Services (CMS) about its rules and procedures for the treatment of future medical expenses related to an accident or injury for which there is third party liability and Medicare has made a conditional payment.  This is because there has been very little guidance from CMS over the years, and much of that guidance has been contradictory.  This lack of guidance, pressure from insurers, and attorneys' concerns about their liability to CMS for paying out settlement proceeds to clients that may later be challenged by CMS, has led to much confusion resulting in claimants experiencing long delays for receipt of settlement awards.

Finally, on June 15, 2012, CMS issued advance notice of its proposed rule for the treatment of funds set aside for future medical expenses related to an accident or injury. The proposed rule is applicable to liability insurance (including self-insurance), no-fault insurance, and workers' compensation when future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care.[1]

Advocates have an opportunity to respond to the proposed rule.  Comments are due, however, no later than 5 p.m. (Eastern Time), August 14, 2012.   Advocates can find the proposed rule on the web at

In addition, the Center for Medicare Advocacy has written several articles on the Medicare Secondary Payer program, which can be found at  


The Medicare Secondary Payer (MSP) program dates to 1980 when Congress enacted the first of a series of provisions that made Medicare the Secondary payer to certain additional primary plans.[2]  Generally, Medicare is prohibited from making payment if payment has been made or can reasonably be expected to be made by a workers' compensation law or plan, by automobile and liability insurance (including self-insurance), or by no-fault insurance.[3]  If payment has not been made or cannot reasonably be expected to be made promptly, Medicare is permitted to make conditional payments with the expectation that it will be repaid if the beneficiary obtains a settlement.[4]  In addition, Medicare is subrogated to any right of an individual or any other entity to payment for items or services under a primary plan, to the extent of Medicare's payments for such medical items and services.[5]  Separate from its subrogation rights, the Secretary has a direct right of action to recover Medicare's conditional payments against any or all entities that are or were responsible for making payment or that received payment for the items and services for which Medicare made a conditional payment.[6]

The Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA),[7] established mandatory MSP reporting obligations for liability insurance (including self-insurance), no-fault insurance, and workers' compensation laws or plans.[8] Covered entities must submit information, as specified by the Secretary, related to claims resolved through settlements, regardless of whether there is a determination or admission of liability.[9]  In addition, an entity serving as an insurer or third party administrator for a group health plan must provide to the Secretary information from the plan sponsor and plan participants to assist the Secretary in identifying situations where the group health plan is or has been a primary plan to the Medicare program.[10]

Currently, individuals involved in certain workers' compensation situations are able to use Medicare's formal, yet voluntary, "Medicare Set- Aside" arrangement (MSA) review process in order to determine if a proposed set-aside meets MSP requirements related to 'future medicals.'[11]  CMS is now considering developing a similar system for liability cases.

The CMS Proposed Rule for Liability Cases

1.         Proposed Definitions

In developing its proposed regulations, CMS seeks input on the utility and viability of proposed definitions that it will use in evaluating whether its interests are being protected in how payments for "future medicals" are defined and set aside.  The terms to be defined are:  Chronic Illness/Condition; Use of the Injury Severity Score (ISS); Future Medical Care; Physical Trauma; and Major Trauma.  Read the proposed definitions in the full proposal at (beginning at the bottom of the right hand column).

2.         Proposed Options for Future Medical Expenses

In the proposed rule, CMS offers the public seven options.  It is requesting comment on the feasibility and usability of each of these options.  The first four options in its proposal would be available to Medicare beneficiaries as well as to individuals who are not yet beneficiaries. Options 5 through 7 would be available to beneficiaries only.  To read about each of the proposed options, once again see:


The proposed rule for the treatment of future medicals is long awaited.  To alleviate confusion and thus hasten the settlement process for Medicare beneficiaries after accident or injury, advocates should file comments with CMS.  The comments, as stated earlier, are due by no later than 5 p.m. on August 14, 2012.  They can be submitted electronically, by regular mail, by overnight mail, or by hand or courier.[12]   


[1] See 77 Federal Register 35917 (June 15, 2012), [CMS–6047–ANPRM]. 
[2] See section 1862(b) of the Social Security Act (the Act), 42 U.S.C. §1395y(b)(2)(Medicare Secondary Payer Program)
[3] 42 U.S.C. §1395y(b)(2)(B).
[4] 42 U.S.C. §1395y(b)(2)(B)(i).
[5] 42 U.S.C. §1395y(b)(2)(B)(iv).
[6] 42 U.S.C. §1395y(b)(2)(B)(iii).
[7] For information about CMS activity related to MMSEA, see
[8] See §111, 42 U.S.C. §1395y(b)(8).
[9]  See 42 U.S.C. §1395y(b)(8)(B).
[10]  See 42 U.S.C. §1395y(b)(7).
[11] See, Reporting Workers Compensation case information:; set-aside arrangements:; coordination of benefits:
[12] In commenting, please refer to file code CMS–6047–ANPRM. CMS will not accept comments sent via FAX. Comments may be submitted electronically to; via regular mail (Attention: CMS–6047–ANPRM P.O. Box 8013, Baltimore, MD 21244–8013); express or overnight mail (Attention: CMS-6047-ANPRM, Mail Stop C4-26—5, 7500 Security Boulevard, Baltimore, MD 21244-1850; or by hand or currier (Room 445– G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201., telephone (410)-786-1066 in advance of delivery by hand or currier.)


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