CMS, Liability Set Asides, and the New Reality for Plaintiff Firms
Reasonableness Is No Longer Assumed. It Has to Be Shown.
***NEWSLETTER***
Most plaintiff firms have a clear process for handling Medicare’s past interest. Conditional payments are identified, disputes are raised when appropriate, and final demands are resolved before disbursement. That part of the workflow is familiar and, for the most part, predictable.
Where things remain less predictable is in how Medicare’s potential future interest is being evaluated. This is not because the law has fundamentally changed. It is because the environment around how CMS is handling them has changed.
There is still no statute or regulation that requires a liability Medicare set aside. The standard remains whether counsel acted reasonably under the circumstances to protect CMS’s interest -past, present and future. What is changing is how that reasonableness is being viewed. It is no longer something that can be assumed based on outcome alone. It is something that must be supported by the record.
Based on observed patterns in lien resolution practice, Medicare appears to be relying more heavily on AI driven data comparison across claims, payments, and reporting. We are seeing final demand amounts that differ from earlier conditional payment summaries in ways that were less common in the past. Charges are being added, removed, or reclassified after the fact. If that level of review is happening on the past side, it is reasonable to expect that similar scrutiny will begin to show up in how future exposure is viewed.
That shift puts pressure on the integrity of the file, not just the result.
Future Medical Exposure Is About What Your File Says
When Medicare looks back at a case, it is not applying a rigid formula. It is looking at whether the decisions that were made can be understood and supported. That comes down to what is in the file.
If the medical records suggest future care, if the injuries are significant, or if treatment recommendations extend beyond the date of settlement, those facts exist whether they are addressed or not. When the file does not reflect that those issues were considered, the exposure is created by omission, not by the failure to perform a specific requirement.
This is where many firms unintentionally create risk. The issue is not whether a set aside should have been created. The issue is whether anyone can look at the file later and understand how the issues were considered, decisions made and the file documented.
A Case Where the Issue Was Missed
Consider a case involving a Medicare beneficiary with a documented spinal injury. The claimant completes a course of conservative care and receives a recommendation for surgery, but the case resolves before that surgery takes place. The settlement is limited by policy constraints, and the focus is placed on resolving Medicare’s conditional payments, which is done properly.
The file closes without addressing the surgical recommendation. There is no discussion of future care, no client advisory, and no documentation explaining how Medicare’s future interest was evaluated.
Later, the claimant pursues additional treatment and Medicare is billed. At that point, the file contains a clear record that future care was contemplated before settlement, but no indication that it was ever analyzed.
The problem is not that a set aside was not created. The problem is that the file is silent on an issue that was plainly present.
A Case That Holds Up
Now consider a similar case. The injuries are comparable, and the settlement is also limited. This time, however, the treating physician clarifies that surgery is contingent and not reasonably certain. [the standard required in the jurisdiction for a Plaintiff to recovery future care]. The settlement value is documented as insufficient to support future care allocation, and that analysis is included in the file. The client is advised in writing about Medicare’s position, and the reasoning behind the decision is clearly stated.
The outcome is the same. No set aside is created.
The difference is that the file tells a story that makes sense.
That is what protects the firm.
Where Things Typically Break Down
Most of the issues we see are not complicated. They tend to come from the same patterns. Future care appears in the record but is never addressed. The settlement is low, and it is assumed that no further analysis is needed. The absence of a formal CMS requirement is treated as a complete answer. The client is not advised in writing, and the file closes without explaining how the issue was evaluated.
None of these decisions are made with the intention of creating exposure. They happen because the issue sits in a gray area. That gray area is exactly where documentation matters most.
Not Every Case Needs the Same Level of Work
It is important to recognize that not every case requires the same level of analysis. Some files are straightforward. There is a clear medical endpoint, no ongoing treatment, and no basis to consider future care. In those situations, the analysis is simple and the conclusion is clear.
Other cases fall somewhere in the middle. Future care may be possible, but the recovery is limited, and the economics do not support any allocation. These cases require a closer look, but they do not require overcorrection.
Then there are cases where future care is significant and well supported. Those files require a more detailed evaluation, and the time and cost associated with that analysis increase accordingly.
The key is not to treat every case the same. It is to treat each case appropriately and to make sure the file reflects that.
What This Means in Practice
This is not about adding unnecessary steps to your workflow. It is about recognizing when the issue is present and making sure it is addressed in a way that can be understood later.
As Medicare continues to refine how it reviews claims and reconciles information, files that lack clarity will become easier to question. The firms that are best positioned are not the ones that avoided the issue. They are the ones that addressed it and documented their reasoning.
How We Approach It
At The Lien Project, PC, we work with plaintiff firms on individual cases where Medicare’s future interest may be implicated. The goal is not to impose a one size approach. It is to evaluate the facts of the case and produce a record that supports how it was handled.
That work results in two core pieces of documentation. The first is a client advisory letter that explains how Medicare’s interests have been addressed and what the client needs to understand going forward. The second is an opinion letter to the firm confirming that reasonable steps were taken under the Medicare Secondary Payer framework.
The level of analysis depends on the level of exposure. In some cases, the review is straightforward. In others, it requires a more detailed evaluation. Either way, the objective is the same, which is to make sure the file reflects a clear and defensible process.
If There Is a Question, It Is Worth Addressing
If a case raises a question about future medical exposure, that question does not resolve itself. Ignoring it does not eliminate it. Overcomplicating it is not necessary either.
The most effective approach is to evaluate the issue, document the reasoning, and move forward with clarity.
That is what demonstrates reasonableness.
Final Thought
The standard has not changed.
The way it is evaluated has.
Reasonableness is no longer something that can be assumed based on outcome. It has to be shown through the record.
If you have a case where Medicare’s future interest may be implicated, we can help you evaluate the exposure and provide the documentation needed to close the file with confidence.