Medicare Set-Asides

Navigating the sea of public benefits and knowing what is required, and when, can be murky at best. This is especially true with the rules and regulations governing Medicare Set-Asides, but you can count on two constants:

Medicare Set-Aside Consultant in Orange County, California & Nevada
  • The Centers for Medicare and Medicaid Services (CMS), which is the successor regulatory agency to the Health Care Financing Administration (HCFA), and charged with regulating social security and Medicare programs, is always changing and updating the rules.
  • One rule has not changed, and will unlikely be changed, and that is: Medicare’s interest must always be protected, no matter what type of case you have.

Knowledge of the Medicare Set-Aside requirements is critical for at least two very important reasons:

  • Failure to protect Medicare’s interests carries stiff penalties for all parties involved, including you and your client.
  • Failure to protect Medicare’s interests may result in loss of your client’s Medicare benefits.
Ms. Meinhard holds certification as a Medicare Set-Aside Consultant and has been retained by a major insurance carrier to testify as an expert in a dispute concerning an alleged failure to protect Medicare’s interests – and the ensuing battle over the resultant delay in disbursement of settlement funds. She is also a Contract Nurse Attorney for a Medicare Recovery Audit Contractor, with extensive experience reviewing medical records in conjunction with Medicare/Medicaid Audits and drafting Appellate Position Papers. She routinely testifies nationwide on behalf of the Centers for Medicare/Medicaid Services (“CMS”) at Administrative Hearings held by the United States Department of Health and Human Resources/Offices of Medicare Hearings & Appeals.

She is ready to provide you with the assistance you need to protect Medicare’s interests and to help you avoid potential delays to settling your case. Regardless of case type, it is imperative that you know how you are going to address the Medicare Set-Aside (MSA) or Liability Medicare Set-Aside (LMSA) issues well in advance of settlement negotiations – not as an after thought when the settlement check is ready to be written. The same holds true with regard to investigation of any Medicare Conditional Payments that may have been made – it takes time to reconcile those payments and negotiate with the Centers for Medicare and Medicaid Services (CMS), with the goal of a maximum recovery for your client. You don’t want to begin this process at the 11th hour – if you do, unwelcome surprises may very well delay the settlement process.

A MSA is a federally mandated allocation of funds arising from a recovery in Workers’ Compensation or Liability claims that is “set aside” to self-insure Medicare-allowable, injury/illness related future medical expenses.
The purpose of this allocation is to ensure that Medicare’s secondary payer status is protected, and that the primary responsibility of paying for injury/illness related medical expenses is shifted to the rightful primary payer (e.g., Workers’ Compensation carrier, automobile or liability insurance carrier, including a self-insured plan, no-fault insurance, etc.).
Currently, CMS will only review new Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) that meet the following criteria: a) the claimant is a Medicare beneficiary at the time of settlement, and the total settlement amount is greater than $25,000; or, b) the claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date, and the anticipated total settlement amount to cover future medical expenses, disability/lost wages over the life or the duration of the settlement agreement is expected to be greater than $250,000.
The Centers for Medicare/Medicaid Services (CMS) protects its interests in Workers’ Compensation settlements by requiring that a certain amount of money be set aside for payment of future medical benefits that Medicare would otherwise pay. If no amount of the settlement is set aside, or too little, CMS may refuse to provide any Medicare covered services related to the injury until the entire amount of the settlement is exhausted.
The Centers for Medicare/Medicaid Services (CMS) has asserted that Medicare is still a secondary payer following settlement of a personal injury claim, as the Social Security Act precludes payment for services to the extent payment has been made, or can reasonably be expected to be made, under liability insurance. Consequently, Medicare should not be billed for future injury/illness related medical expenses until payment for those expenses provided via the personal injury settlement has been exhausted. Currently, CMS has stated that it has “a very informal, limited process for liability set-asides” (sometimes referred to as “Liability MSAs” or “LMSAs”), and the parties to a PI settlement are directed to “reasonably consider Medicare’s interest”. CMS has indicated they are working on new FAQs to provide guidance in personal injury cases. Bottom line: While there are no statutory requirements for a LMSA, there is a statutory requirement to protect Medicare’s secondary payer status, even in PI cases. Failure to do so may result in your client’s loss of Medicare benefits to the full extent of the recovery.
The traditional way to do this is through a LMSA. Additional considerations include: Document the file to show that Medicare’s interest was considered and reasonably protected; calculate a set-aside amount based on current Workers’ Compensation regulations; submit a proposed set-aside amount to the Centers for Medicare/Medicaid Services (CMS); fund the Medicare Set-Aside amount, even if CMS refuses to respond; advise the client to submit annual accountings to CMS, even if CMS refuses to respond. In all cases, inform the client that the law is unsettled; inform the client of the options for third party or self-administration of the LMSA; and, inform the client of the potential for denial of injury/illness-related Medicare coverage and the need to appeal the denial. It is also prudent to: address exactly how Medicare’s interest has been considered in the body of the release and settlement agreement; who has responsibility for what; obtain release and indemnity from the client or his/her legal representative as part of the settlement agreement; and, enter this information into the court record.
Submission to the Centers for Medicare/Medicaid Services (CMS) regarding adequacy of proposed funding should be pursued prior to concluding the settlement agreement.
Medicare may make a “conditional” payment when there is evidence that the primary payer has not paid. The Benefits Coordination and Recovery Center (BCRC) is the organization responsible for recovering conditional payments when there is a settlement, judgment, award or other payment made. When the BCRC has information concerning a potential recovery situation, it will identify the affected claims and begin recovery activities. Beneficiaries and their attorneys are instructed to recognize the obligation to reimburse Medicare during any settlement negotiations. Consequently, the Medicare conditional payment investigation and reconciliation process should commence well before settlement discussions begin, definitely before they are concluded, and well in advance of trial. Neglecting to do so can delay settlement, as the investigation and reconciliation process can be complicated.
The allocation amount is determined by evaluating the claimant’s past course of medical treatment, current condition, the reasonable probability of future medical needs, and other factors. Future Medicare-covered illness/injury-related expenses, including prescription drugs, are included in the allocation amount. Life Care Plans, past medical history and physician’s statements are considered. Duration of the need for future medical expenses is based upon a rated age.
By establishing an interest bearing account with a proper funding mechanism (i.e., lump sum, or qualified structured annuity with initial seed money) and administration oversight. Options include a Medicare Set Aside Trust, with a trustee; a Medicare Set-Aside Custodial Account, administered by a custodian; and, self-administered accounts, administered by the claimant. The same accounting rules apply, regardless of the mechanism chosen.
The Medicare Secondary Payment (MSP) statute authorizes the United States to bring an action “against any entity”, including a beneficiary, provider, supplier, physician, attorney, state agency, or private insurer that has received any portion of a third party payment directly or indirectly if those third party funds (rather than Medicare) should have paid for injury/illness-related medical expenses. The statute provides that double damages, plus interest, may be collected from the primary payers. (42 USC §1395y(b)(2)(ii).
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