Understand The Concept of A Medicare Set-Aside

The concept of a Medicare Set-Aside (MSA) continues to complicate and frustrate defense attorneys and claim professionals. Since 2001, the Centers for Medicare and Medicaid Services (CMS) have been issuing “policy memoranda,” which has created only more confusion.

The term “Medicare Set-Aside” is a Legal Fiction

Search all you want through the United States Code or the Code of Federal Regulations (C.F.R.) and you will not find the term “Medicare Set-Aside.” It is actually a term first coined in the late 1990s to describe the process or mechanism one can use to consider Medicare’s future interests in a workers’ compensation or personal injury claim.

At this point, some argue that MSAs should only be used in workers’ compensation cases. A point of reference for this assertion is found in federal regulation that concern workers’ compensation settlements. One such regulation is located at 42 C.F.R. §411.46 (b) (2), which states, “If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized.”

MSAs Are Never Required

An MSA is never required by statute or regulation in any workers’ compensation or liability (personal injury) case. CMS has asserted in policy memoranda and other agency interpretations that parties should consider and protect Medicare’s future interests in all such personal injury claims involving a Medicare beneficiary or someone with a “reasonable expectation” of Medicare entitlement in the foreseeable future.

In workers’ compensation matters, CMS has an established review and approval process otherwise known as a Workers’ Compensation Medicare Set-Aside (WCMSA). This process is voluntary and subject to review thresholds where the agency will provide an opinion as to whether a proposed medical allocation is sufficient. Parties choosing to enter this voluntary process should do so with caution as CMS has strict criteria on how a case is evaluated and what medical records are pertinent to the review process. In almost all instances, complete deference is given to the treating doctor’s diagnosis, prognosis and need for future medical care and treatment, including prescription drug use and surgery.

When Is a MSA Recommended?

Successfully navigating the MSA maze starts with understanding the Medicare Secondary Payer Act and the facts of your workers’ compensation or personal injury case. It is important to evaluate your case from the time the initial claim is made, and continuing that process throughout. In addition to evaluating each case on its merits and facts, it is important to evaluate the following:

• Cases where future medical expenses are being considered in the settlement;

• Cases involving a Medicare beneficiary or someone who will be entitled to Medicare in the foreseeable future;

• Catastrophic injury cases such as traumatic brain or spinal cord injuries, multiple amputations or cases involving severe psychological components. Long-term medical care and treatment will be presumed by CMS as necessary in these cases;

• Structured settlements: Medicare generally takes notice of these settlements given that long-term care may be part of the settlement agreement; and

• Any case in which the injured person will certainly require future medical care and treatment for the injury, exposure or ingestion.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.