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CMS backs away from proposed rule on Medicare set-asides

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The Centers for Medicare and Medicaid Services recently withdrew an advance notice of proposed rulemaking that would have created an approval process for Medicare set-asides used to pay future medical costs in liability cases.

Under the Medicare Secondary Payer system, self-insured employers, insurers and others must notify CMS of workers compensation and liability settlements or payments that involve Medicare recipients. CMS encourages insurers, employers and other settlement parties to “set aside” funds to pay for future medical costs related to a beneficiary's injury.

In workers comp settlements, parties can use a “formal, yet voluntary” process" to have CMS review their proposed settlement agreements and determine how much money should be set aside for future medical costs. However, that approval process does not exist for liability settlements.

CMS issued an advanced notice of proposed rulemaking in June 2012 that would have established such a rule for liability settlements. However, that notice was withdrawn on Oct. 8, according to the U.S. Office of Management and Budget.

While the proposal centered on liability settlements, some workers comp experts were concerned that the rule's wording potentially could have made the Medicare set-aside review process mandatory for workers comp settlements, rather than voluntary.