Medicare Set-Asides
A Medicare Set-Aside (MSA) is a tool that allows injury victims to preserve Medicare benefits by setting aside a portion of the settlement money in a segregated account to pay for future Medicare covered services. The funds in the set aside can only be used for Medicare covered expenses for injury related care. Once the set aside account is exhausted, an injury victim gets full Medicare coverage without Medicare ever looking to the remaining settlement dollars to provide for any Medicare covered future health care. Medicare may approve the amount to be set aside in writing and agree to be responsible for all future expenses once the set aside funds are depleted if the parties choose to submit the allocation to CMS for review and it a reviewable MSA. Advising injury victims about Medicare compliance and set asides are an integral part of the responsibilities of a trial lawyer at settlement.
Below are our Synergy InSights on all things related to MSAs, written by our industry leading Medicare compliance experts.
July 8, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
Most attorneys are well aware of the need to resolve Medicare’s conditional payments in connection with a client’s settlement. This obligation stems from the Medicare Secondary Payer (MSP) Act, 42 U.S.C. § 1395y(b)(2)(A)(ii), which prohibits Medicare from making payment for medical services when “payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” 42 U.S.C. § 1395y(b)(2)(B)(ii). When a primary plan has not made or cannot reasonably be expected to make prompt payment for the service, Medicare may make a payment conditioned upon reimbursement of the payment to the appropriate Medicare Trust Fund. A failure to reimburse the Medicare Trust Fund may result in Medicare filing suit directly for double damages against any or all entities that were responsible for reimbursement of the conditional payments. 42 U.S.C. § 1395y(b)(2)(B)(iii); 42 U.S.C. § 1395y(b)(3). Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Mandatory Insurer Reporting obligations require the primary plan’s Responsible Reporting Entity to report any liability physical trauma settlement involving a Medicare beneficiary that exceeds $750.00. This reporting requirement puts Medicare on notice of the settlement.
Once Medicare is notified of the settlement, a final conditional payment sweep will be completed, and a conditional payment demand will be issued. This demand will only address payments that were made under traditional Medicare Parts A and B. If the Plaintiff was enrolled in a Medicare Advantage Plan, conditional payment information must be requested directly from the plan. This step should not be overlooked since Medicare Advantage Plans have the same recovery rights under the MSP Act as traditional Medicare.
The MSP Act and supporting regulations set out limits on the conditional payment amounts that must be reimbursed to Medicare. If Medicare does not have to take legal action to recover, Medicare is only able to recover the lesser of either “the amount of the Medicare primary payment” or “the full primary payment amount that the primary payer is obligated to pay without regard to any payment, other than a full primary payment that the primary payer has paid or will make, or in the case of a primary payment beneficiary, the amount of the primary payment.” 42 C.F.R. 411.24(c)(1). Section 411.37(d) of the regulations provides: “If Medicare payments equal or exceed the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the total procurement costs.” If no procurement costs or attorney’s fees are reflected on the final settlement detail documentation provided to Medicare at the time of settlement, Medicare will not reduce the amount of their conditional payment demand. Attorneys should be aware of this should they seek to reduce or waive their fees.
Addressing Conditional Payments in Liability Cases
As a starting point, it is very important to understand that if the Final Demand is not paid timely, interest begins to accrue regardless of appeals or requests to reduce the amount owed to Medicare. There is no tolling of the interest meter while you dispute the amount due. Therefore, it is prudent to make sure that the conditional payment Final Demand is paid timely regardless of how you attempt to reduce the amount owed to Medicare.
The most common method of disputing conditional payments involves a request to remove unrelated charges from the conditional payment demand. The unrelated charges may appear on Medicare’s Payment Summary Form due to a “grouper” error within Medicare’s data collection system. They may also come from comingled billing from the service providers. In cases where the conditional payments are related to the injuries that are being settled, the Plaintiff may end up with very little of a net recovery.
There are two additional conditional payment calculation methods that may be available in certain liability cases. Both the “Self-Calculated Conditional Payment Amount” process and the “Fixed Percentage Option” have specific conditions that must be met before they may be used. The “Self-Calculated Conditional Payment Amount” process is available under the following circumstances: the claim involves an injury caused by physical trauma; the medical treatment was completed at least 90 days before and no further treatment is expected; the total settlement/judgment/award or other payment must be less than $25,000; and the date of the incident must have occurred more than six months prior to the submission of the self-calculated final conditional payment amount. Although the use of this process requires the plaintiff to give up the right to appeal the debt, the plaintiff retains the right to request a waiver of recovery.
The “Fixed Percentage Option” is available for smaller liability settlements. In order to be eligible for this, the following conditions must be met: the liability settlement/judgment/award or other payment must be related to a physical trauma; the total settlement must equal or be less than $5,000; the election of the option must be made within Medicare’s timeframe and prior to the issuance of any conditional payment reimbursement request from Medicare; and there are no other pending settlements, judgments, awards or other payments related to the incident. Additional details regarding the exact processes for both the “Self-Calculated Conditional Payment Amount” and “Fixed Percentage Option” methodologies may be found at the Benefits Coordination and Recovery Center website.
Other options to consider involve payment of the final demand in order to stop the interest on the demand from running (as noted at the start of this section). Once this occurs, the plaintiff may seek a compromise or waiver of the conditional payment debt in order to get Medicare to reduce their conditional payment claim and issue a full or partial refund of the payment. The three statutory provisions that may be used for this are: §1870(c) of the Social Security Act (financial hardship waiver); §1862(b) of the Social Security Act (best interest of the program waiver); and the Federal Claims Collection Act (FCCA) (compromise). The authority to consider beneficiary requests for waivers under §1870(c) of the Act sits with the Benefits Coordination & Recovery Contractor (BCRC), while the authority to waive Medicare claims under §1862(b) and to compromise claims under FCCA, is reserved exclusively to the Center for Medicare and Medicaid Services (CMS). The basis for any waiver request comes from the regulations that provide:
“There shall be no recovery if such recovery would defeat the purposes of this chapter or would be against equity and good conscience.” See 42 U.S.C. § 1395gg(c); 42 C.F.R. 405.355-356; 42 C.F.R. 405.358; 20 C.F.R. 404.506-512; Medicare Secondary Payer Manual, Chapter 7 § 50.
To apply for the “Financial Hardship” waiver, the Medicare beneficiary must file form SSA-632-BK with the BCRC which documents their financial situation. Arguments that may be made in support of this position include showing that the repayment of the conditional payments would deprive the beneficiary of income required for ordinary and necessary living expenses. If someone is dual eligible, meaning they get both Medicaid and Medicare, it is great evidence of financial hardship since people who qualify for Medicaid have very little in the way of assets. That being said, even a 7-figure settlement could still be approved for a financial hardship waiver of the amount owed to Medicare.
The “Best Interest of the Program” waiver request under § 1870(b) of the Social Security Act is made to CMS. This rather vague criteria is nowhere further defined and lies completely at the discretion of CMS. Although this request is separate and distinct from a request for a Compromise under the Federal Claims Collection Act (FCCA), it is beneficial to seek both a request for this waiver and a request for a compromise when seeking a refund from CMS of the amounts the beneficiary has already paid to satisfy the “Final Demand.”
The third and final method for obtaining a refund from Medicare is a Compromise request made to CMS. Authority to grant a Compromise is granted to CMS under the Federal Claims Collection Act (FCCA). 31 U.S.C. § 3711. This section allows Federal agencies the authority to compromise where: the cost of collection does not justify the enforced collection of the full amount of the claim; there is an inability to pay within a reasonable time on the part of the individual against whom the claim is made; or the chances of successful litigation are questionable, making it advisable to seek a compromise settlement.” Medicare Secondary Payer Manual, Chapter 7 § 50.
Conclusion
The resolution of conditional payment reimbursement claims is a time-consuming process. To maximize the plaintiff’s net recovery, it is important to be familiar with the various options for calculating, disputing, and seeking a refund of conditional payments. When addressing conditional payment issues, consider the following best practice tips:
- Confirm the type of Medicare coverage your client was enrolled in from the date of the accident to the date of settlement.
- Make sure the Final Demand is paid within the time period specified in the recovery demand letter.
- Determine if the Self-Calculated Conditional Payment Amount is available in the case.
- Determine if the Fixed Percent Option process is available in the case.
- Determine if the final conditional payment demand should be disputed.
- Provide Medicare with the Final Settlement Details to secure a procurement cost reduction.
- Consider whether a full or partial conditional payment refund may be secured in the case.
April 8, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
The nature of the Workers’ Compensation Medicare Set-Aside (WCMSA) has evolved over the years since the 2001 Patel Memo. That evolution has seen us move from every WCMSA that met the Center for Medicare and Medicaid Services (CMS) internal workload review threshold being submitted to CMS for review, to now a practitioner may be offered an evidence-based medicine WCMSA, a “certified” WCMSA or a compromise WCMSA. An understanding of the differences between these various types of proposed WCMSAs and their projection methodology is important when it comes to settlement discussions.
The WCMSA that most practitioners are familiar with is the “traditional” WCMSA. This type of WCMSA is submitted to CMS for review when CMS’ internal workload review threshold is met. Although CMS recommends that parties seek Agency (CMS) review of the WCMSA, the WCMSA Reference Guide (Guide) specifically states: “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review.” The Guide further states that “if you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.”
The Guide includes the general frequency schedules for various diagnostic studies, implants, and drugs used by the Workers Compensation Review Contractor (WCRC) in determining future treatment costs. Given the “cookie-cutter” projection methodology that is used by the WCRC, the CMS-determined WCMSA may, at times, overfund the future treatment. The benefit to CMS review, however, is the assurance that CMS will become the primary payer upon review/approval of the allocation and proper exhaustion of the WCMSA funds.
A second type of WCMSA is the evidence-based medicine WCMSA. This may or may not be submitted to CMS for review. Rather than projecting future treatment based on the Guide’s frequency schedules, the projections instead focus on evidence-based medicine guidelines, such as those that may be found in the Official Disability Guidelines (ODG) or American College of Occupational and Environmental Medicine (ACOEM) guidelines. It is generally lower than a “traditional” WCMSA and will also limit projections based on state law arguments. If the evidence-based medicine WCMSA is submitted to CMS for review and approved by CMS, the WCMSA may more accurately allocate funds for the future treatment.
A practitioner may also be presented with a “certified” WCMSA that is not submitted to CMS for review. The “certified” WCMSA projection methodology looks to evidence-based medicine guidelines. It also comes with an assurance that the reasonableness of the certified WCMSA projections will be defended against any challenges by CMS. The WCMSA funds, however, must be either professionally administered or “self-administered with support” in order to extend the life of the funds. Since this type of WCMSA is not submitted to CMS for review, CMS is not bound by it.
The compromise WCMSA is used in disputed settlements and is never submitted to CMS for review. It is based on the calculation methodology that is outlined in 42 C.F.R. § 411.47. Although this provision discusses conditional payments, it should equally apply to the apportionment of future medical damages in a compromise settlement.
Conclusion
Although the majority of WCMSAs are prepared by the defense, it is important that the practitioner scrutinize the methodology used in the WCMSA projections. If the WCMSA is not going to be submitted to CMS for review, an evidence-based medicine projection methodology is more appropriate than the “cookie cutter” projections used in the traditional WCMSA. This difference is particularly significant when the WCMSA is to be carved out from the settlement rather than added to the settlement. When in doubt as to the best approach, Synergy’s team is available to guide you through your Medicare Secondary Payer compliance options.
February 11, 2021
Rasa Fumagalli, JD, MSCC, CMSP-F
Securing CMS review of a Workers’ Compensation Medicare Set-Aside (WCMSA) proposal can, at times, be cumbersome. Once the CMS WCMSA determination letter is received, parties may often just close their files after the settlement funds are disbursed. This brief article will address the frequently overlooked CMS determination finalization process.
Parties that seek CMS review of a WCMSA should follow the guidelines that are set forth in CMS’ WCMSA Reference Guide (Guide). The most current version of the Guide, Version 3.2 was released on October 5, 2020, and outlines the process used by CMS in reviewing WCMSA proposals.
According to the Guide, the main benefit of seeking CMS review of a WCMSA proposal is the certainty that CMS will become the primary payer for injury-related, Medicare-covered services upon proper exhaustion of a CMS-determined WCMSA. This benefit, however, requires that the parties properly finalize the CMS determination. Section 15.3 of the Guide addresses this requirement in a “note,” which states: “the case will not be considered final until CMS receives the final settlement with the appropriate WCMSA amount.”
CMS determination letters also remind parties of this requirement. The first two pages of a CMS determination letter include the following statement:
“Approval of this WCMSA amount is not effective until the Centers for Medicare & Medicaid Services (CMS) receive a copy of the final executed workers’ compensation settlement agreement, which must include this approved WCMSA amount. Please include the CMS Case Control Number listed at the top of this letter in any correspondence. Submit your settlement agreement via the Portal if your original submission was via the Portal. If you originally submitted outside of the Portal, submit the settlement agreement to the following address:
WCMSA Proposal/Final Settlement
P. O. Box 138899
Oklahoma City, OK 73113-8899”
This last step is an important one since it gives CMS notice that the CMS determined WCMSA has been properly funded. This funding is then reflected in Medicare’s Common Working File for the beneficiary and serves to limit the amount of the settlement that may be considered for future medicals. Failure to properly finalize the CMS determination may result in the unintended consequence of Medicare considering the entire settlement as a future medical allocation, thereby defeating the benefit of the CMS review. Since there is often a delay between the issuance of the CMS determination and the actual settlement that funds the CMS determination, it is imperative that parties not overlook the finalization requirement.
February 3, 2021
Rasa Fumagalli, JD, MSCC, CMSP-F and Jennifer L. Yu, Esq.
In stark contrast to the world of worker’s compensation, most attorneys agree that there is a dangerous amount of gray area surrounding the subject of Medicare Set-Asides for liability settlements. This is so because the Centers for Medicare and Medicaid Services (CMS) has been slow in providing any real guidance for liability settlements that include compensation for future medicals costs.
To date, the guidance consists of the May 2011 CMS Stalcup memo (one regional director’s view) and the September 2011 CMS memo regarding treating physician certifications.
In 2018, the Department of Health and Human Services issued an initial notification of proposed rulemaking related to the Medicare Secondary Payer Act. The most recent abstract of the proposed rule states:
“This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items, services related to liability insurance (including self-insurance), no-fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulation.”
Since that time, the proposed rulemaking has been continuously postponed. In light of this, it falls upon the attorney to take “reasonable efforts” to protect Medicare’s interest. Failure to do so could result in possible disruption of a client’s benefits and open the attorney up to a malpractice claim. One of the most effective ways to protect against this is by calling in a Medicare expert for an MSP case evaluation.
The absence of formal regulation by CMS does not mean that the MSP Act does not apply to liability settlements. The MSP Act clearly prohibits Medicare from making payment when “payment has been made or can reasonably be expected to be made under a…liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.”[1] The exception to this occurs when payment is not reasonably expected to be made “promptly” or within 120 days of receipt of the claim by the primary payer.
If Medicare makes payment in this situation, the payment is conditioned upon the reimbursement of the payment to the Medicare Trust Fund. A primary payer’s reimbursement obligation to Medicare may be demonstrated by: “a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items included in a claim against the primary payer or by other means.”[2]
The above provisions may impact a plaintiff’s settlement in the following way: If the plaintiff is a Medicare beneficiary and accepts a settlement that provides funds intended to compensate her for future medicals, this is a payment that has been made under a liability plan. Should the plaintiff require future injury-related Medicare-covered treatment, Medicare is prohibited from making payment for these services. Should an inadvertent payment be made, the Medicare Trust Fund could demand reimbursement.
Assessing next steps for your client when it comes to the MSP comes down to your client’s risk tolerance. There is no requirement that any moneys be set aside for future care covered by Medicare, but it is important to keep in mind that Medicare is on notice of any settlement as it has the benefit of the Section 111 mandatory insurer reporting requirement for any physical trauma liability settlement over $750.00. The Section 111 Total Payment Obligation to Claimant (TPOC) report must include the injury-related diagnosis codes, since the codes are added to the plaintiff beneficiary’s Medicare Common Working File. This can easily trigger a future denial of injury related care by Medicare. An MSA is the easiest way to protect against this issue. It will ensure that the proper amount of money is apportioned and also acts as a type of deductible; meaning that once those funds are depleted Medicare will pick up the payments from that point.
Conclusion
The MSP Act and the language used in the abstract of the proposed rule regarding “existing” MSP obligations should be considered by plaintiffs’ attorneys that are handling liability if Medicare is involved. If the settlement funds future medicals, then a decision to apportion some of the settlement funds as an LMSA may prevent your client from experiencing future issues with Medicare. The MSP compliance strategy however should always be driven by the circumstances of the case. If the area of MSP compliance is outside of your legal expertise, protect your firm and your client by partnering with an expert in the field. Until CMS provides additional guidance, the safest and easiest way to navigate the gray area is to work with an outside MSP compliance expert to assess your clients’ future need and provide supporting documentation for your file.
[1] 42 U.S.C. § 1395y(b)(2)(a).
[2] 42 C.F.R. § 411.22.
November 12, 2020
By: Rasa Fumagalli, JD, MSCC, CMSP-F
The Centers for Medicare and Medicaid Services (CMS) has been slow in providing detailed guidance in the area of liability settlements that include compensation for future medicals. To date, the guidance consists of the May 2011 CMS Stalcup memo and the September 2011 CMS memo regarding treating physician certifications. Although CMS issued Notice of Proposed Rulemaking regarding Liability Medicare Set-Asides (LMSA) and settlement of future medicals in 2013, it was withdrawn in October of 2014.
In the fall of 2018, the Department of Health and Human Services issued an initial notification of proposed rulemaking related to the Medicare Secondary Payer Act. The most recent abstract of the proposed rule states:
“This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items, services related to liability insurance (including self-insurance), no-fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulation.”
Since the initial notification in the fall of 2018, the target date for the notice of proposed rulemaking has been continuously postponed. The most recent target date of August 2020 has now come and gone. In light of this, it is unlikely that the notice of proposed rulemaking will occur in 2020.
The absence of formal regulation by CMS does not mean that the MSP Act does not apply to liability settlements that close out future medicals. The MSP Act clearly prohibits Medicare from making payment when “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.”[1] The exception to this occurs when payment is not reasonably expected to be made “promptly” or within 120 days of receipt of the claim by the primary payer. If Medicare makes payment in this situation, the payment is conditioned upon the reimbursement of the payment to the Medicare Trust Fund. A primary payer’s reimbursement obligation to Medicare may be demonstrated by: “a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items included in a claim against the primary payer or by other means.”[2]
The above provisions may impact a plaintiff’s settlement in the following way. If the plaintiff, a Medicare beneficiary, accepts a settlement that provides funds intended to compensate the plaintiff for future medicals, this is a payment that has been made under a liability plan. Should the plaintiff require future injury-related, Medicare-covered treatment, Medicare is prohibited from making payment for these services. Should an inadvertent payment be made, the Medicare Trust Fund would expect reimbursement. Medicare will be aware of the settlement due to the Section 111 mandatory insurer reporting requirement for any physical trauma liability settlement over $750.00. The Section 111 Total Payment Obligation to Claimant (TPOC) report must also include the injury-related diagnosis codes, since the codes are added to the plaintiff beneficiary’s Medicare Common Working File. This data is used to prevent Medicare from making payments when Medicare is the secondary payer.
The MSP Act and the language used in the abstract of the proposed rule regarding “existing” MSP obligations should be considered by plaintiffs’ attorneys that are handling liability claims for Medicare beneficiaries. If the settlement funds future medicals, then a decision to apportion some of the settlement funds as an LMSA may prevent your client from experiencing future issues with Medicare. A settlement that does not fund future medicals should include an analysis that provides support for the position so that Medicare does not have an interest in the settlement when it comes to future medicals. Although additional guidance by CMS when it comes to LMSAs is pending, we should be careful what we wish for.
[1] 42 U.S.C. § 1395y(b)(2)(a).
[2] 42 C.F.R. § 411.22.
July 9, 2020
By Jason D. Lazarus
Medicare Secondary Payer Compliance for law firms when it comes to “futures” is all about risk mitigation. How do you properly and compliantly close a file when you represent a Medicare beneficiary? The biggest risk a trial lawyer faces when dealing with settlements for a Medicare beneficiary is the denial of future care as a result of Mandatory Insurer Reporting (MIR). If a client does not understand that risk and has a problem with Medicare paying for future injury-related care, then the law firm is exposed to malpractice risks. So how do you protect your law firm and make sure your client can make an informed decision about Medicare compliance issues? The answer is to educate yourself and the client by turning to an expert Medicare compliance partner.
Medicare Futures: The Problem & Risk
Today, there is a very real threat of Medicare denying future injury-related care after the personal injury case is resolved. This can be very easily triggered by the MIR and reporting of injury-related ICD codes which happens automatically now with any settlement of one thousand dollars or greater. Once a denial of care is triggered, a Medicare beneficiary has to go through the four levels of internal Medicare appeals plus a federal district court before ever getting the denial of care addressed by a federal appeals court. This is why it must be of primary concern for the personal injury practitioner to address these issues, particularly in catastrophic injury cases where denial of care could be devastating to the injury victim’s medical quality of life.
Consider this scenario: You represent a current Medicare beneficiary in a third-party liability case. As part of the workup of the case, you determine the client will need future medical care related to the injuries suffered. This could be determined by either deposing the treating physician or by the creation of a life care plan for litigation purposes. Ultimately, you settle the case. Since the client is a Medicare beneficiary, the defendant will report the settlement under the Mandatory Insurer Reporting law as it is greater than $750.00 in gross settlement proceeds. The defendant puts some language into the release about a Medicare Set-Aside being the injury victim’s responsibility and that they can’t shift the burden. Everyone signs the release and settlement dollars are paid. The file is closed, then forgotten. What happens though if that course of action triggers a denial of future care by Medicare?
Unfortunately, there is no cookie-cutter answer for what to do about Medicare compliance. It is a case-by-case analysis. In some instances, there may be an argument that future medicals aren’t funded at all by the settlement. In other cases, there might be an argument that a reduced amount of future medicals should be set aside to satisfy obligations under the MSP because the case settled for less than full value. There are just too many possibilities to give a simple one size fits all answer. However, what is clear is that doing nothing has its risks. For example, the client who received the denial of care likely will face a lengthy appeal process within Medicare that must be exhausted before having the issue addressed by a federal district court. In that scenario, the client is going to have to decide between paying out of their own pocket for future care or waiting for the care until exhausting all appeals in anticipation of prevailing over Medicare.
While the problem created for the client is a serious one if they are denied care, an equally scary proposition for the trial lawyer is their exposure for malpractice claims in this scenario. Let’s assume that the injury victim who got this denial letter was not properly advised of the risks of failing to set aside money. Would the trial lawyer potentially face a suit for legal malpractice? The answer is most likely they would. There could be all sorts of arguments made about whether they fell below the standard of care, but in the end, this is a known issue and one that is of the law. Worse yet, a trial lawyer and his/her firm could have Medicare breathing down their necks. While we haven’t seen any instances of Medicare pursuing a law firm over failing to set up a Medicare Set-Aside, as discussed earlier, there are recent examples of law firms being pursued by the Department Of Justice (DOJ) related to other aspects of the MSP and failing to have a process internally to ensure compliance with the MSP.
How to be Compliant
If you represent a Medicare beneficiary, you must determine if future medicals have been funded and, if so, advise the client regarding the legal implications of the MSP related to futures. The easiest way to remember the process once you have identified someone as a Medicare beneficiary or someone with the reasonable expectation is by the acronym “CAD”. The “C” stands for consult with competent experts who can help deal with these complicated issues. The “A” stands for advise/educate the client about the MSP implications related to future medical. The “D” stands for document what you did in relation to the MSP. If the client decides that they don’t want an MSA or to set aside anything, a choice they may make, then document the education they received about the issue with them signing an acknowledgment. If they elect to do an MSA analysis, hire a company to do the analysis so that they can help you document your file properly and close it compliantly.
In addition, release language is critical when it comes to the question of documentation of considering Medicare’s future interests. Release language I have seen prepared by defendant/insurers is typically overbearing. Frequently the language cites regulations that are related to workers’ compensation settlements and typically will specifically identify a figure to be set aside. The latter can potentially cause a loss of itemized deductions for the client. Not only is release language an important consideration, so is the method of calculation of the set-aside, potential reduction methodologies, and funding alternatives (lump sum vs. annuity funding). These issues do impact how the release is crafted as well as considerations of whether to submit to CMS for review and approval (which is rarely a good idea). Submission of a liability set aside isn’t required and a settlement should never be made contingent upon CMS review and approval. Some regional offices will not review a liability set aside whiles others will. Since review/approval is voluntary, I typically don’t recommend submission given the lack of appeal process should CMS come back with an unfavorable decision. Furthermore, making a settlement contingent upon CMS review/approval could create an impossible contingency if the settlement is in a jurisdiction where the regional office will not review.
The key to compliance is to start early and not let the defendant-insurer control the Medicare compliance process. At the outset of your case you have to confirm disability eligibility with Social Security and get copies of all insurance as well as government assistance cards. Make sure you understand who is potentially Medicare eligible such as those who are on SSDI, those turning 65, someone with end-stage renal disease (ESRD), Lou Gehrig’s disease (ALS), or a child disabled before age 22 with a parent drawing Social Security benefits. Collaborate with the other side regarding what is being reported under MIR. Be active in mandating the proper ICD codes to be included in the release.
Medicare beneficiaries must understand the risk of losing their Medicare coverage should they decide to set aside nothing from their personal injury settlement for future Medicare-covered expenses related to the injury. It is about educating the client to make sure they can make an informed decision relative to these issues. Beyond education of the client, the most critical issue becomes how to properly document your file about what was done and why. This part is where the experts come into play. For most practitioners, it is nearly impossible to know all the nuances and issues that arise with the Medicare Secondary Payer Act. From identifying liens, resolving conditional payments, deciding to set money aside, the creation of the allocation to the release language, and the funding/administration of a set-aside, there are issues that can be daunting for even the most well-informed personal injury practitioner. Without proper consultation and guidance, mistakes can lead to unhappy clients or, worse yet, a legal malpractice claim.
The lesson to take away regarding Medicare compliance is to strategically deal with these issues pre-settlement. If a client is a Medicare beneficiary, then make sure you know which ICD codes will be reported under the Mandatory Insurer Reporting law and evaluate with the client the possibility of a set-aside. Discuss with competent experts the proper steps for MSP compliance. Potentially use the set aside as an element of damages to help improve settlement value. Properly word the release if a set aside is being used to make sure the client doesn’t get saddled with inappropriate language or lose itemized deductions.
Synergy’s Medicare Expert Case Evaluation Service: Mitigating the MSP Risk
If you represent a client who is Medicare-eligible and is treating for their injuries, I recommend a Medicare Expert Case Evaluation (MECE) when you resolve the case. As part of the MECE, a Synergy Medicare Compliance expert will consult with your client regarding Medicare future interest protection mechanisms and the risk of doing nothing. After being advised, your client can make an informed decision about what they would like to do, and you can document your file accordingly.
For $1,000.00, the MECE service includes:
- Unlimited client consultation
- Template communications to your client
- Customized acknowledgment form to document your file
- Settlement documentation consultation for MSP compliance
If an MSA allocation report is desired after consultation with the client, the cost of the MECE is applied towards the $2,500 charge for a Medicare Set Aside allocation report.
Conclusion
The whole system is flawed when it comes to Medicare. You take all the risks, you do all the work, you bear all the costs and, after you win, you must address the Medicare Secondary Payer Act. Synergy flips that paradigm on its head and fixes the broken system. Our team will create a comprehensive plan to allow you to close your file compliantly by addressing Medicare’s “future interest,” freeing you up to take on the next battle. You can focus on what you do best and everyone wins.
If you have a client who is Medicare eligible that is going to require future accident-related care, a Medicare Set-Aside should be considered and a MECE completed. There are numerous ways to deal with Medicare Secondary Payer compliance (without a set-aside) to ensure both your firm as well as your clients are protected. It just requires expert analysis with Synergy’s help.
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