A Medicare Set-Aside, or MSA, is a projection of future medical treatment and costs that would otherwise be covered under workers’ compensation. The MSA costs are based upon Medicare covered expenses.
http://www.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp
An MSA should be considered on any case where the claimant has permanent restrictions and there is an indication that future treatment will and/or may be required.
An MSA should be requested at least 90 days prior to entering into settlement negotiations and/or the claim has been identified as a case to settle.
The cost is determined through a review of the medical records and current treatment plan of the treating physician. This includes, office visits, future surgery, physical therapy, vocational rehabilitation, counseling, prosthetic devices, diagnostic testing and prescription drugs. The list can be greater or smaller depending upon the claimant’s injury and treatment needs. The cost is then projected out for the claimant’s life expectancy.
Ref: 4/22/03 Memo Q10 Ref: 10/15/04 Memo Q5
The use of a structured settlement can reduce the cost of the MSA typically by 40% to 60%. In conjunction with the structured settlement, co-morbidity factors identified in the medical records can be used to secure reduced life expectancy from life markets providing the structured settlement proposal. Reduced life expectancy lowers the cost of the MSA.
A current medical report from the treating physician reducing treatment and tapering off or eliminating the use of prescription drugs will also lower the total MSA allocation. Strong medical management is the key to reduction of MSA Cost.
There are several ways in which an MSA process can begin with Ringler Medicare Solutions. Our website, ringlermedicaresolutions.com, contains an electronic submission area, or you may choose to print and e-mail the referral form with required items. The following items are necessary to begin the process of MSA report preparation: any typed medical records for the last three years of treatment (CMS will ignore hand-written notes and reports), the most recent medical report with the future treatment plan, computer payment history for both medical and indemnity, any disputes, i.e. unaccepted body parts or denial of compensability, any independent medical examination reports and any other information you feel would be beneficial.
If all required information was received at the time of referral, our analysts can complete the MSA within 7 to 10 business days. If the report is needed sooner, we also offer expedited processing.
We will work with you to determine if the claimant is a Medicare beneficiary. Once this determination has been made, we will be able to advise whether or not submission to Centers for Medicare & Medicaid Services (CMS) is suggested or required. We will also advise if a simple allocation is needed, without the need for formal review. In either case, we will provide you with suggested settlement language to add to your compromise & release agreement.
http://www.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp Ref: 7/23/01 Memo Q1 (c)
If the claimant is a Medicare beneficiary we will run a lien search to ensure Medicare has not made any conditional payments that would otherwise be covered by workers’ compensation. If such a lien does exist, we can resolve the lien with Medicare. All Medicare liens must be settled in addition to the cost of the MSA.
http://www.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp Ref: 7/11/05 Memo Q1 & Q2
CMS approval is usually 90 – 120 days from the date of submission. Should CMS require additional information, the approval period could take longer.
If CMS approves a higher amount than submitted, the parties to the settlement during settlement negotiations would have to come to an agreement as to who would fund the additional amount-- the claimant, the insurer or both.
Your file may be closed when CMS sends its approval of the MSA and the final settlement documents are sent to CMS to complete its file.
The MSA can be self-administered by the claimant, family member, or friend. In the case of a very large MSA or a catastrophic injury, professional custodial administration can be employed. For self-administered accounts, detailed instructions are provided to the claimant and if CMS approved, CMS also provides written instructions to the claimant.
If CMS approved the MSA, Medicare has agreed to become the primary payer and all future Medicare covered expenses would be paid by Medicare.
http://www.cms.hhs.gov/WorkersCompAgencyServices/08_setasiderelatedtopics.asp Ref: 7/23/01 Memo Q18
Yes. Failure to consider Medicare in the settlement of a workers’ compensation/ liability claim can result in penalties and fines.
A MSA is not required when the medical portion of the claim is not settled. If the medical portion of the claim is settled and the injured party has no permanent disability and the individual’s treating physician concludes in writing the individual will no longer require any Medicare covered treatments related to the workers’ compensation injury.
http://www.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp Ref: 4/22/03 Memo Q20
There has been much concern and debate over the Mandatory Liability Reporting and when to consider Medicare’s interests in the settlement of liability personal injury claims.
February 16, 2010: CMS advises all NGHP RREs the date for first production of NGHP Input Files is changed from April 1, 2010 to January 1, 2011, effective immediately.
CMS extends the “testing period” to December 31, 2010.
CMS further states in Section 111:
Recoveries for payments made under Medicare Secondary Payer Act will be adhered to where appropriate and subject to penalties for non – compliance.
http://www.cms.hhs.gov/MandatoryInsRep/04_Whats_New.asp
While there are also opposite opinions for when and if an Medicare Set Aside Analysis should be completed prior to the settlement of a liability claim, it is the opinion of Ringler Medicare Solutions that the prudent and safe alternative is to consider Medicare’s interest in a liability settlement when the claimant is Medicare eligible. Approval by CMS is further suggested to protect all the parties to the claim. Should CMS opt not to review, that decision is made an addendum to the settlement documents with the proposed MSA as proof that the parties considered Medicare’s interests.
This is the safest approach. Please remember without CMS guidelines for liability MSA’s, there is no guarantee how CMS will rule in the future. There is no statute of limitations applicable to CMS for auditing files or determining if CMS’ interests were adequately considered and protected.
Pursuant to 42 U.S.C. §1395y(b)(2) and § 1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from paying for a beneficiary's medical expenses when payment "has been made or can reasonably be expected to be made under a workers' compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance."
The burden of future medical expenses in WC cases may not be shifted to Medicare. 42 C.F.R. § 411.46 and § 411.47 provide that Medicare's interest must be considered in WC settlements, when future medical expenses are a component of the settlement.
Because Medicare does not pay for an individual WC related medical services when the individual receives a WC settlement that includes funds for future medical expenses, it is in the best interest of the individual to consider Medicare at the time of settlement. For this reason, CMS recommends that parties to a WC settlement set aside funds, otherwise known as Workers' Compensation Medicare Set-aside Arrangements (WCMSAs) for all future medical services related to the WC injury or illness/disease that would otherwise be reimbursable by Medicare.
http://www.cms.hhs.gov/WorkersCompAgencyServices
While the above language refers to workers’ compensation it is quite conceivable CMS could adapt this same language to liability settlements involving Medicare beneficiaries.
The legal community and the insurance industry have adopted both schools of thought on how to proceed. One national insurer advocates a wait and see stating CMS has not set forth guidelines while another national insurer has taken the conservative and safe approach, to complete MSAs on cases involving Medicare beneficiaries or injured parties who will soon clearly qualify for SSDI/Medicare benefits; and, where there is future medical care required. We at Ringler Medicare Solutions agree with the latter. The safe approach is the best approach! However, we will always be guided by the protocols of our clients.