CMS Takes First Steps on LMSAs

February 26, 2017

Last week CMS released a change request to modify Medicare’s Common Working File (CWF) to address a new Liability Medicare Set-Aside (LMSA) policy. The announcement establishes a timeline for back-end technical changes and provides clues to Medicare’s new policy. A copy of the notice can be found here.

What does the change request say?

To coordinate benefits properly, Medicare and its processing contractors must be able to rely upon information that establishes what entity is responsible for payment, and when. The CWF and other Medicare systems govern these rules, and changes must be made to ready the system for the forthcoming policies. The change request outlines the technical process whereby CMS, its contractors, providers and beneficiaries will identify an LMSA (or No-Fault MSA) available to use to pay for injury-related medical care. Testing is scheduled to begin on October 2, 2017.

What does this change request tell us about CMS’ LMSA policy?

The announcement ties a future LMSA policy announcement directly to the Medicare Secondary Payer statute, citing 42 U.S.C. §1395y(b)(2).

This change request explains the policy as follows:

“Pursuant to 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment ‘has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.’ Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment ‘has been made’ for such items or services through use of LMSA or NFMSA funds. However, Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

The change request provides additional background on what motivated CMS to make these changes. The Government Accountability Office (GAO) released a report in April 2012 outlining a variety of steps that CMS had taken already or planned on taking to improve its non-Group Health Plan (NGHP) coordination of benefits and recovery. This change request explains that CMS will establish LMSA (and NFMSA) programs “to comply with” the GAO’s report.

The GAO report contained little information regarding LMSAs and noted CMS’ lack of a policy in this area. However, the report did contain additional insight on CMS’ long term plans. 

“Regarding developing policies and procedures for liability MSAs, CMS officials report that the agency is working to operationalize policy regarding the reporting of future medical expenses in liability insurance situations, including an option to allow for an immediate payment to Medicare for future medical costs. This would provide an additional option for taking Medicare’s interests into account rather than the option of establishing an MSA. CMS officials did not report that they were taking any steps to address regional office variation in liability MSA review.” GAO-12-333, at page 33.

Five years after the release of this report, CMS is taking definitive steps towards the unveiling of a large-scale LMSA program.

ExamWorks Comopliance Solutions will continue to follow any announcements from CMS on this important topic. Should you have any questions about this announcement or CMS’ policy regarding LMSAs, please contact your ExamWorks representative.

Annie M. Davidson

Annie M. Davidson

Annie M. Davidson is the Senior MSP Compliance Counsel and Policy Strategist for ECS. In her role, Annie provides legal analysis to ensure the integrity and quality of ECS’ Medicare Secondary Payer (MSP) compliance services and related products. Prior to joining ECS, Annie practiced as an insurance defense attorney in her native Minnesota where she litigated workers’ compensation and liability insurance cases, particularly those involving MSP issues. She is admitted to practice law in the State of Minnesota and the United States District Court for Minnesota, and is a graduate of William Mitchell College of Law. Annie can be reached at or at 651-262-9618.