Additional Hurdles to Closed-Medical Settlements—Updated Guidance from Centers for Medicare & Medicaid Services May Limit the Use of Evidence-Based Medicare Set-Aside Products

On January 10, 2022, the Centers for Medicare & Medicaid Services (CMS) issued updates on Medicare Set-Aside guidance. Specifically, the utilization of “evidenced-based” Medicare Set-Aside products was addressed.  

In short, CMS has interpreted the use of evidence-based Medicare Set-Aside products as a tool to shift future medical liability to Medicare. To that end, CMS was clear in its guidance that, unless a Medicare Set-Aside is submitted and approved by CMS, Medicare will not concede that its future interests are protected. 

If an evidenced-based Medicare Set-Aside product is used in lieu of securing CMS’s approval of a proposed Medicare Set-Aside, Medicare will refuse to pay Claimant’s future medical costs until the Claimant can demonstrate 100% exhaustion of the prior claim settlement proceeds. 

While this CMS guidance may limit evidence-based Medicare Set-Aside products offered by various vendors, this guidance still does not mandate submission of a proposed Medicare Set-Aside to CMS to resolve the medical aspect of the claim.  

Submission of a proposed Medicare Set-Aside to CMS is the safest option for Claimants, Employers, and Insurers, though it may result in increased costs for the Employer and Insurer. Alternatively, parties can close the medical aspect of the claim via a medical cost projection, but we recommend consulting with your defense counsel first to discuss the benefits and disadvantages of the same. 

Jason Heller