[Federal Register Volume 77, Number 116 (Friday, June 15, 2012)]
[Proposed Rules]
[Pages 35917-35921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14678]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405 and 411

[CMS-6047-ANPRM]
RIN 0938-AR43


Medicare Program; Medicare Secondary Payer and ``Future 
Medicals''

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

[[Page 35918]]


ACTION: Advance notice of proposed rulemaking.

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SUMMARY: This advance notice of proposed rulemaking solicits comment on 
standardized options that we are considering making available to 
beneficiaries and their representatives to clarify how they can meet 
their obligations to protect Medicare's interest with respect to 
Medicare Secondary Payer (MSP) claims involving automobile and 
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.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on August 14, 2012.

ADDRESSES: In commenting, please refer to file code CMS-6047-ANPRM. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed).
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-6047-ANPRM P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-6047-ANPRM, 
Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses: a. For delivery in Washington, 
DC--Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-1066 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Suzanne Kalwa, (410) 786-2536.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following Web site as soon as possible after they have been 
received: http://regulations.gov. Follow the search instructions on 
that Web site to view public comments.
    Comments received timely will be also available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
please phone 1-800-743-3951.

I. Overview and Background

    We are issuing this advance notice of proposed rulemaking (ANPRM) 
to solicit public comments on standardized options that beneficiaries 
and their attorneys or other representatives will be able to use to 
resolve MSP obligations related to settlements, judgments, awards, or 
other payments (hereinafter, for ease of reference in this document and 
unless otherwise indicated, ``settlement(s)'') involving future medical 
care while protecting Medicare's interest.
    When the Medicare program was enacted in 1965, Medicare was the 
primary payer for all services, with the exception of those covered and 
payable by workers' compensation. In 1980, the Congress enacted the 
first of a series of provisions that made Medicare the secondary payer 
to certain additional primary plans. These provisions are known as the 
Medicare Secondary Payer (MSP) provisions and are found in section 
1862(b) of the Social Security Act (the Act).
    When specific conditions are met, these provisions in part prohibit 
Medicare from making payment if payment has been made or can reasonably 
be expected to be made by a workers' compensation law or plan, 
automobile and liability insurance (including self-insurance), or no-
fault insurance. If payment has not been made or cannot reasonably be 
expected to be made promptly, Medicare is permitted to make conditional 
payments (that is, Medicare pays for medical claims with the 
expectation that it will be repaid if the beneficiary obtains a 
``settlement''). This is because, if Medicare makes conditional 
payments, the MSP statute imposes an obligation on the Secretary to 
recover those conditional payments, once it is established that another 
individual or entity is responsible for primary payment.
    Primary payment responsibility on the part of workers' 
compensation, liability insurance (including self-insurance), and no-
fault insurance is generally demonstrated by settlements, judgments, 
awards, or other payments. When a ``settlement'' occurs, the 
``settlement'' is subject to the MSP statute because a ``payment has 
been made'' with respect to medical care related to that 
``settlement.'' By law, 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. Moreover, section 1862(b)(2)(B)(iii) of the Act 
provides a direct right of action to recover Medicare's conditional 
payments. This direct right of action, which is separate and 
independent from Medicare's statutory subrogation rights, may be 
brought to recover conditional payments

[[Page 35919]]

against any or all entities that are or were responsible for making 
payment for the items and services under a primary plan. The government 
may also recover under the direct right of action from any entity that 
has received payment from a primary plan or the proceeds of a primary 
plan's payment to any entity.
    Under its rights of subrogation and direct right of action, 
Medicare recovers for conditional payments related to the 
``settlement,'' regardless of when the items and services are provided. 
Further, Medicare is prohibited from making payment when payment has 
been made (that is, if the beneficiary obtains a ``settlement''). 
Medicare remains the secondary payer until the ``settlement'' proceeds 
are appropriately exhausted. It is important to note that the 
designation future medical care (``future medicals'') is a term 
specifically used to reference medical items and services provided 
after the date of ``settlement.''

II. Provisions of the Advanced Notice of Proposed Rulemaking

    The primary purpose of this ANPRM is to respond to affected 
parties' requests for guidance on ``future medicals'' MSP obligations, 
specifically, how individuals/beneficiaries can satisfy those 
obligations effectively and efficiently. Section 111 of the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA), established 
mandatory MSP reporting obligations. Liability insurance (including 
self-insurance), no-fault insurance, and workers' compensation laws or 
plans are required to submit information, as specified by the 
Secretary, to Medicare related to claims resolved through 
``settlements,'' regardless of whether or not there is a determination 
or admission of liability (see 42 U.S.C. 1395y(b)(8)). While the topic 
of this ANPRM does not relate to the section 111 of the MMSEA reporting 
obligations directly, Medicare's ongoing section 111 of the MMSEA 
implementation efforts, as well as industry efforts to ensure 
compliance with section 111 of the MMSEA, have sensitized affected 
parties to other MSP obligations, specifically reimbursement 
obligations that have been long ignored or overlooked. As a result, 
affected parties are requesting clarity regarding ``future medicals'' 
MSP obligations and how to resolve them.
    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 amount is sufficient to meet their MSP obligations 
related to ``future medicals.'' To date, Medicare has not established a 
similar process for individuals/beneficiaries to use to meet their MSP 
obligations with respect to ``future medicals'' in liability insurance 
(including self-insurance) situations. We are soliciting comment on 
whether and how Medicare should implement such a similar process in 
liability insurance situations, as well as comment on the proposed 
definitions and additional options outlined later in this section. We 
are further soliciting suggestions on options we have not included 
later in this section. We are most interested in the feasibility and 
usability of the outlined options and whether implementation of these 
options would provide affected parties with sufficient guidance. We 
want to ensure that the process related to ``future medicals'' is 
understandable, efficient, and reflects industry practice, while 
protecting beneficiaries and the Medicare Trust Funds.

A. CMS Proposed General Rule

    If an individual or Medicare beneficiary obtains a ``settlement'' 
and has received, reasonably anticipates receiving, or should have 
reasonably anticipated receiving Medicare covered and otherwise 
reimbursable items and services after the date of ``settlement,'' he or 
she is required to satisfy Medicare's interest with respect to ``future 
medicals'' related to his or her ``settlement'' using any one of the 
following options outlined later in this ANPRM.

B. Proposed Definitions

    Several proposed definitions have been developed for use in 
conjunction with the options Medicare is considering. All definitions 
have been considered and/or developed for the purposes of this 
document. We request comment on the definitions of ``chronic illness/
condition,'' ``physical trauma,'' and ``major trauma,'' specifically, 
whether they are accurate and usable in terms of the presumption that 
future medical care will be required.
    We also solicit specific comment on the utility of the definition 
of ``major trauma.'' The Injury Severity Score (ISS) is one of several 
methods used to measure the severity of injuries when individuals have 
sustained more than one traumatic injury. It is generally used in 
predictive modeling and risk assessments to predict and evaluate 
emergent care required by an injured individual. We are interested in 
whether this type of approach is useful in guiding a determination as 
to whether future medical care will be required and if other approaches 
are available.
     Chronic Illness/Condition: means that the illness/
condition persists over a long period of time. The term is generally 
applied when the course of a disease or condition lasts for more than 3 
months. If the individual/beneficiary alleges an injury that is a 
chronic illness/condition, it is presumed that future medical care will 
be required. Examples of chronic diseases include, but are not limited 
to: Chronic airflow limitation, including asthma and chronic 
bronchitis; cancer, diabetes; quadriplegia; and nephrogenic systemic 
fibrosis.
     Date of Care Completion: means the date the individual/
beneficiary completed treatment related to his or her ``settlement.'' 
The individual/beneficiary's treating physician must be able to attest 
that the individual/beneficiary has completed treatment and that no 
further medical care related to the ``settlement'' will be required.
     Future Medical Care (``future medicals''): means Medicare 
covered and otherwise reimbursable items and services that the 
individual/beneficiary received after the Date of ``Settlement.'' This 
definition specifically applies to items and services related to the 
individual/beneficiary's settlement, judgment, award, or other payment.
     Physical Trauma: refers to an injury (as a wound) to 
living tissue caused by an extrinsic agent. This also includes blunt 
trauma, which refers to injury caused by a blunt object or collision 
with a blunt surface (as in a vehicle accident or fall from a building)
     Major Trauma: major trauma means serious injury to two or 
more Injury Severity Score (ISS) body regions or an ISS greater than 
15. The ISS body regions include the following:
     Head or neck.
     Face.
     Chest.
     Abdomen.
     Extremities.
     External.

C. Proposed Options

    Medicare is considering the options listed in this section of the 
document for developing efficient and effective means for addressing 
``future medicals.'' Options 1 through 4 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. We 
request comment on the feasibility and usability of all of the options. 
We also request proposals for additional options for consideration.

[[Page 35920]]

    Option 1. The individual/beneficiary pays for all related future 
medical care until his/her settlement is exhausted and documents it 
accordingly.
    The beneficiary may choose to govern his/her use of his/her 
settlement proceeds himself/herself. Under this option, he/she would be 
required to pay for all related care out of his/her settlement 
proceeds, until those proceeds are appropriately exhausted. As a 
routine matter, Medicare would not review documentation in conjunction 
with this option, but may occasionally request documentation from 
beneficiaries selected at random as part of Medicare's program 
integrity efforts.
    Option 2. Medicare would not pursue ``future medicals'' if the 
individual/beneficiary's case fits all of the conditions under either 
of the following headings:
    a. The amount of liability insurance (including self-insurance) 
``settlement'' is a defined amount or less and the following criteria 
are met:
     The accident, incident, illness, or injury occurred one 
year or more before the date of ``settlement;''
     The underlying claim did not involve a chronic illness/
condition or major trauma;
     The beneficiary does not receive additional 
``settlements;'' and
     There is no corresponding workers' compensation or no-
fault insurance claim.
    b. The amount of liability insurance (including self-insurance) 
``settlement'' is a defined amount or less and all of the following 
criteria are met:
     The individual is not a beneficiary as of the date of 
``settlement;''
     The individual does not expect to become a beneficiary 
within 30 months of the date of ``settlement;''
     The underlying claim did not involve a chronic illness/
condition or major trauma;
     The beneficiary does not receive additional 
``settlements;'' and
     There is no corresponding workers' compensation or no-
fault insurance claim.
    We request comment on the appropriate defined amounts to use in 
Options 2a and 2b, as well as comment on the efficacy of this approach.
    Option 3. The individual/beneficiary acquires/provides an 
attestation regarding the Date of Care Completion from his/her treating 
physician.
    a. Before Settlement--When the individual/beneficiary obtains a 
physician attestation regarding the Date of Care Completion from his or 
her treating physician, and the Date of Care Completion is before the 
``settlement,'' Medicare's recovery claim would be limited to 
conditional payments it made for Medicare covered and otherwise 
reimbursable items and services provided from the Date of Incident 
through and including the Date of Care Completion. As a result, 
Medicare's interest with respect to ``future medicals'' would be 
satisfied. The physician must attest to the Date of Care Completion and 
attest that the individual/beneficiary would not require additional 
care related to his/her ``settlement.''
    b. After Settlement--When the individual/beneficiary obtains a 
physician attestation from his or her treating physician after 
settlement regarding the Date of Care Completion, Medicare would pursue 
recovery for related conditional payments it made from the date of 
incident through and including the date of ``settlement.'' Further, 
Medicare's interest with respect to future medical care would be 
limited to Medicare covered and otherwise reimbursable items and/or 
services provided from the date of ``settlement'' through and including 
the Date of Care Completion. The physician must attest to the Date of 
Care Completion and attest that the individual/beneficiary would not 
require additional care related to his/her ``settlement.'' We request 
comment on the efficacy and feasibility of this option.
    Option 4. The Individual/Beneficiary Submits Proposed Medicare Set-
Aside Arrangement (MSA) Amounts for CMS' Review and Obtains Approval.
    Currently, we have a formal process to review proposed MSA amounts 
in certain workers' compensation situations. Recently we have received 
a high volume of requests for official review of proposed liability 
insurance (including self-insurance) MSA amounts. This has prompted us 
to consider whether we should implement a formal review process for 
proposed liability insurance (including self-insurance) MSA amounts. 
For more information related to workers' compensation MSA process, 
please visit http://www.cms.hhs.gov/Medicare/Coordination-of-Benefits/WorkersCompAgencyServices/wcsetaside.html. We specifically solicit 
comment on how a liability MSA amount review process could be 
structured, including whether it should be the same as or similar to 
the process used in the workers' compensation arena, whether review 
thresholds should be imposed, etc.
    Option 5. The beneficiary participates in one of Medicare's 
recovery options.
    Recently, we implemented three options with respect to resolving 
Medicare's recovery claim in more streamlined and efficient manners. 
Before we issue a demand letter, the beneficiary or his/her 
representative may participate in one of three recovery options, which 
allows the beneficiary to obtain Medicare's final conditional payment 
amount before settlement. The three recovery options are as follows:
     $300 Threshold--If a beneficiary alleges a physical 
trauma-based injury, obtains a liability insurance (including self-
insurance) ``settlement'' of $300 or less, and does not receive or 
expect to receive additional ``settlements'' related to the incident, 
Medicare will not pursue recovery against that particular 
``settlement.''
     Fixed Payment Option--When a beneficiary alleges a 
physical trauma-based injury, obtains a liability insurance (including 
self-insurance) ``settlement'' of $5,000 or less, and does not receive 
or expect to receive additional ``settlements'' related to the 
incident, the beneficiary may elect to resolve Medicare's recovery 
claim by paying 25 percent of the gross ``settlement'' amount.
     Self-Calculated Conditional Payment Option--When a 
beneficiary alleges a physical trauma-based injury that occurred at 
least 6 months prior to electing the option, anticipates obtaining a 
liability insurance (including self-insurance) ``settlement'' of 
$25,000 or less, demonstrates that care has been completed, and has not 
received nor expects to receive additional ``settlements'' related to 
the incident, the beneficiary may self-calculate Medicare's recovery 
claim. Medicare would review the beneficiary's self-calculated amount 
and provide confirmation of Medicare's final conditional payment 
amount.
    Each of the options is employed in such a way that Medicare's 
interest with respect to future medicals is, in effect, satisfied for 
the specified ``settlement.'' Therefore, when a beneficiary 
participates in any one of these recovery options, the beneficiary has 
also met his/her obligation with respect to future medicals. We solicit 
comment on proposed expansions of these options and the justification 
for that proposed expansion, as well as any suggestions about how to 
improve the three options we recently implemented.
    Option 6. The Beneficiary Makes an Upfront Payment.
    We are currently considering two variations of an ``upfront payment 
option.''
    a. If Ongoing Responsibility For Medicals was imposed, demonstrated 
or accepted and medicals are calculated through the life of the 
beneficiary or the life of the injury.

[[Page 35921]]

    If ongoing responsibility for medicals was imposed, demonstrated or 
accepted from the date of ``settlement'' through the life of the 
beneficiary or life of the injury, we may review and approve a proposed 
amount to be paid as an upfront lump sum payment for the full amount of 
the calculated cost for all related future medical care. This option 
would generally apply in workers' compensation, no-fault insurance 
situations or when life-time medicals are imposed by law. In effect, 
this option may be used in place of administering a MSA if we have 
reviewed and approved a proposed MSA amount. We solicit comment on how 
to develop this process, the efficacy of it, and whether it would be 
utilized.
    b. If Ongoing Responsibility for Medicals was Not Imposed, 
Demonstrated or Accepted.
    If a beneficiary obtains a ``settlement,'' our general rule stated 
previously applies to the ``settlement,'' and ongoing responsibility 
for medicals has not been imposed on, demonstrated by or accepted by 
the defendant, the beneficiary may elect to make an upfront payment to 
Medicare in the amount of a specified percentage of ``beneficiary 
proceeds.'' This option would most often apply in liability insurance 
(including self-insurance situations, primarily due to policy caps. For 
the purposes of this option, the term ``beneficiary proceeds'' would be 
calculated by subtracting from the total ``settlement'' amount attorney 
fees and procurement costs borne by the beneficiary, Medicare's demand 
amount (for conditional payments made by Medicare), and certain 
additional medical expenses the beneficiary paid out of pocket. Such 
additional medical expenses are specifically limited to items and 
services listed in 26 U.S.C. 213(d)(1)(A) through (C) and 26 U.S.C. 
213(d)(2). The calculation of beneficiary proceeds does not include 
medical expenses paid by, or that are the responsibility of, a source 
other than the beneficiary. We specifically solicit comment on how to 
develop this process, its efficacy, and whether it would be utilized. 
We further request comment on the calculation of beneficiary proceeds, 
the appropriate percentage(s) to be used, and how the percentage(s) is/
are justified.
    Option 7. The Beneficiary Obtains a Compromise or Waiver of 
Recovery.
    If the beneficiary obtains either a compromise or a waiver of 
recovery, Medicare would have the discretion to not pursue future 
medicals related to the specific ``settlement'' where the compromise or 
waiver of recovery was granted. If the beneficiary obtains additional 
``settlements,'' Medicare would review the conditional payments it made 
and adjust its claim for past and future medicals accordingly. We 
specifically solicit comment on whether this approach is practical and 
usable, as it relates to ``future medicals.''
    Again, we also solicit comment on additional options we may 
consider in order to provide workable solutions for beneficiaries with 
respect to resolving ``future medicals'' obligations.

IV. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

V. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: April 24, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: May 8, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-14678 Filed 6-14-12; 8:45 am]
BILLING CODE 4120-01-P