Designations in Settlements

40.11 – Designations in Settlements (Rev. 12438; Issued: 01-04-24; Effective: 02-06-24; Implementation: 02-06-24) In general, Medicare policy requires recovering payments from liability settlements, judgments, awards, or other payments, whether the settlement arises from a personal injury action or a survivor action, and without regard to how the settlement agreement may stipulate disbursement of any proceeds. This includes situations in which a settlement, judgment, award, or other payment does not expressly include damages for medical expenses or in situations where multiple settlements have been received related to the same incident. Because liability payments are usually based on the injured or deceased individual’s medical expenses, liability payments are considered to have been made with respect to medical services related to the injury even when the settlement does not expressly include an amount for medical expenses. To the extent that Medicare has paid for such services, the MSP provisions of the Act require Medicare to seek recovery of its payments. See 42 CFR § 411.37. Medicare may, at its discretion, recognize allocations of liability payments to nonmedical losses when: a) The allocation is based on a court order; b) Issued by a court of competent jurisdiction (a court that has jurisdiction over both the dispute regarding the medical items/services at issue and the parties to the case or controversy at issue); c) That considered the merits of the case, including the medical items/services at issue in the case; and d) That considered Medicare’s interests in the liability recovery at issue. If such an order specifically designates amounts that are not related to medical items/services, Medicare may, at is discretion, accept the court’s designation. Medicare generally does not seek recovery from portions of court awards that are designated as payment for losses other than medical items/services.