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.
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of Proposed Rulemaking regarding Liability Medicare Set-Asides (LMSA) and settlement of future medicals in 2013, it was withdrawn in October of 2014.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.
March 25, 2020
B. Josh Pettingill
We are oftentimes asked about injured workers who have a Medicare Advantage Plan (MAP) and if they still need to use their Workers’ Compensation Medicare Set-Aside (WCMSA) funds if the MAP will cover all their medical care. This brief post will explain Medicare’s position on this issue and then provide real-world analysis. There has been a surge of case law over the last several years regarding MAPs and their ability to assert the same rights as Medicare under the MSP statute. However, there is no case law in existence regarding MSAs or where a MAP has denied paying for accident-related care. Over the years, whenever the injured worker has an MAP, the plan covers everything the MSA normally would (and then some).
Medicare Advantage Plan – Part C
Medicare Advantage Plans also referred to as “Part C” Plans, were established under the Social Security Act as an alternative to traditional Medicare. Medicare Advantage Plans are a type of Medicare health plan offered by a private company that contracts with Medicare to provide all Part A and Part B benefits.
Part C Coverage
Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Account Plans. If your client is enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and are not paid for under original Medicare. Most Medicare Advantage Plans include prescription drug coverage (Part D) as well. In order to be eligible for an MAP, you must be eligible for Medicare Part A and Part B.[1] Part C plans can also cover things that traditional Medicare does not pay for such as gym memberships or dental benefits.
Part C Statistics
As of 2018, more than one-third of all Medicare beneficiaries were enrolled in some type of Medicare Advantage Plan. One in every five (20%) of these enrollees were in group plans offered by employers and unions.[2] What this means for Workers’ Compensation cases is that we are seeing a lot of injured workers who have these types of plans.
Medicare’s Position
From Medicare’s standpoint and per the WCMSA reference guide, section 4.1.3:
“A WCMSA is still recommended when you have coverage through other private health insurance, the Veterans Administration, or Medicare Advantage (Part C). Other coverage could be canceled, or you could elect not to use such a plan. A WCMSA is primary to Medicare Advantage and must be exhausted before using Part C benefits to cover your WC claim-related expenses.”[3]
In other words, they don’t care if there are other forms of private health insurance because the claimant’s circumstances may change and there could be a shift in burden for Medicare to pay. However, by including MAPs in the category of “other coverage”, one could interpret that CMS is also admitting that these plans will likely pay if presented with a bill. That is exactly what we have been seeing.
Real-World Implications
As it stands today, these plans are not rejecting claims on the basis they should be paid for out of a Medicare Set-Aside. There have been rumblings from Medicare that they are sharing Section 111 reporting data with the MAPs which could give them the ammunition to reject claims if they were related to the work-related injury. [4] However, they simply do not have the resources or the wherewithal to do this. It is not to say that it won’t happen in the future. That day is not yet upon us.
Conclusion
You cannot proactively advise your clients to go out and purchase a Medicare Advantage Plan in an effort to circumvent the MSA obligation. Medicare’s position is that the WCMSA exists to protect the Medicare Trust Fund which would mean the injured worker proactively spends money from the MSA account as they treat. Along with that, you cannot control how the providers bill and who they bill.
The practical takeaway is that if your client has a Medicare Advantage Plan, there is a very high likelihood they may never spend a dime of their WCMSA funds. That is the way it stands today. Is it possible that CMS could start to share pertinent data with their MAP partners which would give them the chance to potentially deny paying for accident-related care on the basis they have the same rights under the MSP statute? Yes, but not highly likely.
WCMSAs come from Medicare’s interpretation of the MSP and not from any regulation or case law. Accordingly, it would be a significant stretch to say that a Part C plan could insist upon a set-aside when Medicare itself does not even have a specific regulation or statute requiring them. But, do not be surprised if you see Humana, Cigna or any other MAP provider, at least try to do it someday.
[1] Source: www.Medicare.gov
[2] Source: Kaiser Family Foundation analysis of CMS’s Landscape Files and March Enrollment files for 2010-2018
[3] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-3_0.pdf
[4] Unsubstantiated rumors. The passage of the PAID Act would validate this happening.
March 2, 2020
The 11th Circuit Court of Appeals weighed in on the question of whether the Medicare statute, which provides a three-year timeline to the government to request repayment, applies to a private entity providing Medicare benefits (Medicare Advantage plans). The Court’s answer is that the claims filing provision does not bar a claim and that the timeline is not a precondition to filing suit.
Basic primer on Medicare. When Medicare pays for accident-related treatment, it is entitled to be paid by the primary payor. Its payment is made as a conditional payment, conditioned on repayment when other funds become available. In the case of an accident, that could be medical payments coverage, bodily injury coverage or an uninsured/underinsured coverage. If Medicare seeks reimbursement and is denied, the United States can sue the primary plan to recover its payment. If the cause of action is successful, Medicare can be awarded double damages.
Section 1395y(b)(2)(B)(iii) contains a three-year statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay.
(iii) Action by United States
… An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.
(vi) Claims-filing period
Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.
A few sections down lies § 1395y(b)(3)(A), which provides a private cause of action available to Medicare beneficiaries and other private entities if a primary plan fails to provide primary payment or reimbursement. This section does not contain a statute of limitations.
(A) Private cause of action
There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).
This is where the Medicare Advantage plan enters. In 1997, Congress enacted Medicare Part C or “Medicare Advantage” program (also known as MAP, Med A, MA, MAO). These plans are administered by private insurance companies that provide Medicare benefits for fixed fees from the Center for Medicare and Medicaid Services. 42 U.S.C. § 1395w-22(a)(4) states that a Medicare Advantage plan may charge a primary plan when a payment “is made secondary pursuant to section 1395y(b)(2).” This established that Medicare Advantage plans can sue under the MSPA to recover from primary plans if they do not pay. These plans must use the MSPA’s private cause of action versus the government cause of action.
In the MSPA Claims v. Kingsway Amigo, 2020 U.S. App. LEXIS 4554 (February 13, 2020), the Court found that there is nothing within the statutory language or structure to suggest the Medicare Advantage plan must comply with the claims filing provision as a prerequisite to seeking reimbursement. The decision starts with a warning as the second sentence of the opinion acknowledges that the case “turns on a careful examination of the often-convoluted rules governing the federal Medicare program.” The court painstakingly reviews the statutory structure of the Medicare statute even with a little levity; the opinion states “Okay, time for a deep breath and a summary.”
The Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that Medicare Advantage plans are not required to bring suit as a prerequisite in the 3-year period. Specifically stating, “[w]ords in a statute must be interpreted according to their ordinary meaning and “may” cannot, by any rendering, mean “must.” The Court finds that when a statute uses the word “may,” it “implies that what follows is a permissive rule and that it does not create a separate bar that private Medicare Advantage plans must overcome in order to sue.
The importance of this decision can’t be overstated. With no statute of limitations, the private cause of action provisions that MAO’s have been using so aggressively to recover are even more powerful. Insurers are becoming increasingly more fearful of failure to repay MAOs and this can lead to delays in resolution of a settlement when there are potential Medicare conditional payment or advantage plan liens. In addition, personal injury lawyers can be the targets of these types of private causes of action as well which in turn gives trial lawyers another thing to worry about when it comes to lien resolution. Because of these sorts of issues, now more than ever, insurers may want to directly pay MAO liens back directly and demand indemnification.
To avoid these types of scenarios and alleviate concerns, work with Synergy as your partner in bringing to resolution all liens asserted by Medicare Advantage plans, Medicare supplement plans and traditional Medicare outside of litigation. We also offer lien reduction services for many other lien types including ERISA, FEHBA, Military, Disability and Medicaid.
February 13, 2020
An inquiry that Synergy receives on a regular basis involves a Medicare-eligible claimant who has both a workers’ compensation and a third-party liability companion case. The third-party liability claim has resolved and now the workers’ comp carrier has a lien against the liability claim for the amount that has been paid out for past medical/indemnity benefits. The question becomes: Is an MSA necessary and does that get handled through workers’ comp, liability or both?
The short answer is it depends. It depends on how the cases are settled. In some states, the workers’ comp carrier may be granted what is known as a “holiday” from paying any future medical expenses.[1] Specifically, the holiday can oftentimes be a barrier to washing out the workers’ comp medical claim since the carrier will not have to pay for medicals again until the total amount the claimant received from the third-party case has been spent.
In some states, the lien is negotiated as a percentage based on what the full value of the case is compared to what the client is going to net in their pocket. Once the lien is negotiated, comp is then entitled to an offset for future medical benefits paid on behalf of the claimant. For example, let’s say that the liability case settled for 25% of the estimated full value, and the comp carrier agreed to a waiver of their lien in exchange for a compromised sum. In this example, going forward, the claimant would then be responsible for paying 25% out of pocket towards the cost of their medical care until the comp claim has resolved. It should be noted, if the workers’ comp lien is fully waived at the time of the third-party settlement, then the carrier will not be entitled to an offset on future benefits.
Implications for the Claimant
In both scenarios, if the claimant were to attempt to bill Medicare for accident-related care post-settlement, they would get denied because workers’ comp still has an ongoing responsibility for medicals (ORM).[2] There is the possibility that the claimant could seek medical benefits through either a Medicare Advantage Plan or through private insurance, but these policies typically exclude coverage if there is a workers’ compensation case. So, neither of these solutions would be appropriate. A set-aside must be a consideration but what are the practical implications going forward?
MSA Issue on Holiday States
If the medical claim is not closed out, then the claimant will be forced to pay out of pocket for any accident-related care until the holiday amount has been exhausted from the third-party settlement. Those out of pocket expenses could be much greater than any MSA obligation. Whereas if the workers’ comp claim was resolved, the claimant would then be able to use Medicare, Medicare Advantage, or private insurance coverage. In those states that are entitled to the holiday, the claimant should strongly consider closing out their medical claim with workers’ comp in order to be able to use private health insurance and/or establish a Medicare Set-Aside with the intent to use Medicare for accident-related care once the MSA has been spent appropriately.[3]
MSA Issue on Non-Holiday States
If the workers’ comp claim remains open in those states that are entitled to an offset on future benefits, the claimant would be responsible for paying 25% out of pocket indefinitely for future medical care related to the workers’ comp claim. One way to address this issue is using the settlement proceeds from the third-party cases, the claimant could buy a structured settlement annuity to cover the out of pocket differential.[4] That way, there are guaranteed monies available to take care of the claimant’s out of pocket expenses. If the workers’ comp piece ultimately settles, then the carrier will fund the MSA as part of the terms of any settlement. If that event were to occur, the claimant could use the structured settlement payments for anything instead of medical expenses.[5]
Conclusion
Finally, if there is a global resolution of both the workers’ comp and the third-party liability case simultaneously, then the MSA should be established through the workers’ comp side since there are formal guidelines in place for workers’ comp cases. That way, there are no unwanted delays in getting the case to the finish line. If the workers’ comp case meets the Centers for Medicare and Medicaid’s review thresholds for workers’ compensation MSAs, then attorneys must decide whether to submit for CMS approval. All parties to a workers’ comp or liability settlement must take into Medicare’s interests when resolving a claim.
[1] This is a credit for future benefits.
[2] Medicare will have the ORM information in their system and the claimant’s common working file which will flag/deny anything related to the accident related care.
[3] The exception to this would be if the claimant was receiving attendant care benefits or significant amount of care that is not covered by Medicare or private health insurance.
[4] That structured settlement would function as an informal “MSA” since workers comp pays 75% and the claimant pays the 25% balance. It is almost like a forced MSA on the third-party case.
[5] This assumes a WCMSA is set up and there are funds available to use for medical expenses.
B. Josh Pettingill
For over a decade, there has been episodic activity from Centers for Medicare and Medicaid Services (CMS) on Liability Medicare Set-Asides (LMSAs), including but not limited to, policy memorandums, Medicare Learning Network announcements, a notice of proposed rulemaking with subsequent withdrawal, an advanced notice of a notice of proposed rulemaking as well as the hiring of a new review contactor. As of the date of this update, we are still without formal policies for how to properly consider Medicare’s future interests in liability claims. But is it time for trial attorneys to start worrying? This brief post will provide some suggestions to be well-prepared for formal guidelines on LMSAs.
Key Takeaways
- Medicare Secondary Payor (MSP) compliance is serious business and should not be ignored.
- Plaintiff attorneys must establish an internal screening process for their liability cases involving Medicare beneficiaries.
- Plaintiff attorneys must be vigilant about MSP compliance from the start of the case.
- MSP compliance starts at the intake of the case.
If your firm does not have an internal process for auditing Medicare-eligible plaintiffs when you undertake representation, then you probably should be worried. If you are on the sidelines waiting around for formal guidelines to be implemented before you start being proactive on the issue, you are doing a disservice to yourself and your clients, as well as putting yourself at risk of being made an example by CMS for non-compliance with the MSP statute. This is so because the Department of Justice has already sued two different personal injury firms over non-compliance with the MSP related to conditional payments (see previous post HERE). You could also be setting yourself up for a legal malpractice claim for failure to educate your clients on the need to properly consider Medicare’s future interests. The good news is that it is not too late; the below can help get you started on establishing a framework within your firm for handling cases with Medicare-eligible plaintiffs.
- Identify Medicare beneficiaries as soon as possible so you can stay ahead of the MSP compliance issues.
- Follow CMS guidelines for reporting and resolving conditional payments.
- Investigate whether the client has ever received benefits under a Medicare Advantage plan (MAO – Part C). If yes, make sure to resolve the lien as it can be “hidden” (see previous post HERE)
- Audit your files at the beginning of the intake process and group the cases into categories based on the injuries, potential future care, available coverage, and potential settlement value to determine which files might be candidates for formal MSA screening.
- Identify all forms of health insurance coverage and disability benefits upon intake of the case so you know what liens have to be resolved as well as whether Medicare’s future interests need to be considered.
- Determine at the onset if future medicals are claimed which will be a key determinant in whether a Medicare Set-Aside should be considered.
- Update your retainer agreement language to allow you to engage your own Medicare experts as a case cost to the client.
From what we have observed firsthand, Medicare is not regularly denying claims on the basis that injury-related care should be paid for out of an MSA account (read more HERE); however, as recently as last month, CMS indicated that change is imminent as it relates to liability claims[1]. Whether or not CMS ever provides formal guidelines on liability MSAs, trial lawyers must establish their own processes for screening and auditing liability case files. For more information about liability MSAs visit us at https://partnerwithsynergy.com/total-medicare-compliance/.
[1] This was mentioned at the National Alliance of MSA Professionals (NAMSAP) annual conference in Baltimore, Maryland.
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