Workers' Compensation: Chevron's Fall: Medicare Set-Asides Face Legal Shake-Up

The recent U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo (2024), which overturned the Chevron doctrine established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., is likely to have significant impacts on how the Centers for Medicare & Medicaid Services (CMS) operates regarding the Medicare Secondary Payer (MSP) Act, including conditional payments and Medicare Set-Aside (MSA) agreements.

Here's an analysis of the potential impacts:

Reduced Deference to CMS Interpretations:

   Courts will no longer automatically defer to CMS's interpretation of ambiguous statutes. CMS policies may be subject to more rigorous judicial scrutiny, particularly those in the WCMSA Reference Guide.
   The agency may have to provide more robust justifications for its policies, directly tying them to the statutory language, 42 USC 1395y.
   This change could lead to challenges to long-standing CMS policies based on the agency's interpretation of the MSP Act, including the body of regulations, 42 CFR 411.

Potential Challenges to MSA Policies:

The voluntary nature of the WCMSA review process may be questioned, as courts may now interpret the MSP Act's requirements differently.
CMS's stance on denying payment for medical services if an MSA is not CMS-approved could be challenged as overreaching.

Conditional Payments:

CMS's procedures for identifying and recovering conditional payments may face increased scrutiny.
Courts may interpret the statutory authority for conditional payment recovery more narrowly, potentially limiting CMS's recovery rights.

Future Medical Care and MSAs:

The lack of explicit statutory or regulatory provisions requiring MSAs may lead to more flexible approaches in accounting for Medicare's future interests.
Courts may be more inclined to consider alternative methods of protecting Medicare's interests that align more closely with state workers' compensation laws.

Increased Role of State Laws:

There may be more significant consideration of state workers' compensation laws in determining appropriate allocations for future medical expenses.
This could lead to more variance in how Medicare's interests are protected across different states.

Potential for New Regulations:

To maintain its current policies, CMS may need to engage in more formal rulemaking processes to establish regulations that carry the force of law.
This could lead to a period of uncertainty as new regulations are developed and challenged.

Case-by-Case Determinations:

Without the Chevron deference, courts may make more case-by-case determinations on the reasonableness of MSAs and other MSP compliance measures.
This could lead to less predictability in MSP compliance but more flexibility in individual cases.

The Burden on CMS:

CMS may face an increased burden in justifying its policies and decisions in court.
This could lower response times or change CMS's approach to compliance reviews.

Potential Legislative Action:

If CMS finds its authority significantly curtailed by court decisions, there may be pressure for Congress to clarify the MSP Act through new legislation.

The overturning of the Chevron deference will likely lead to uncertainty and potential change in how the MSP Act is interpreted and enforced. Workers' compensation and liability settlement stakeholders must be reminded about evolving interpretations and potentially revisit compliance strategies. More flexible, case-specific approaches to protecting Medicare's interests may emerge, but this will likely unfold through legal challenges and potential regulatory or legislative responses.

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US Supreme Court Asked to Review MSP Preemption Issue 8/22/2013

State Law Does Not Preempt State Medical Authorization Criteria 5/16/2013

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Industry Coalition Wants to Cut CMS Conditional Payments 3/18/2011

Congress Told CMS Must Continue to Stop Work Comp Cost Shifting 6/22/2011

Federal Court Enjoins CMS From MSP Recovery Procedures 5/18/2011

CMS Has 6 Year Statute of Limitations-Court Dismisses MSP Recovery Claim 10/1/2010

CMS Announced Status Update and Future Changes 9/30/2011

Case Advances Challenging MSP Reimbursement Procedures 4/17/2010

Recommended Citation: Gelman, Jon L., Chevron's Fall: Medicare Set-Asides Face Legal Shake-Up, www.gelmans.com (09/27/2024) https://workers-compensation.blogspot.com/2024/09/chevrons-fall-medicare-set-asides-face.html

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.