Medicare Set-Asides: Fundamentals on Protecting Medicare’s Interest

Medicare’s federal funds assist in covering a wide range of healthcare costs for adults age 65 and older, as well as for younger persons with specific needs and applicable benefits. The Medicare Secondary Payer (MSP) Act directs the Centers for Medicare and Medicaid Services (CMS) with protecting Medicare’s future interest in cases involving Medicare beneficiaries or potential beneficiaries.

MSA Overview:

When a person receives settlement money for a workers’ compensation claim, a portion of that money is put into a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA), or a Medicare Set-Aside (MSA), to pay for their future medical treatment. Under the MSP Act, Medicare does not have the primary responsibility to cover medical costs, providing that another insurance carrier is responsible for the coverage before Medicare; thus, making Medicare the secondary responsible payer.

CMS has identified MSAs as a method for allocating money to pay for future treatment. Settlement recipients must exhaust the MSA funds in their entirety before Medicare will cover costs for treatment related to the injury reported in the claim. The amount allocated within an MSA depends on several considerations. Factors considered when determining future treatment include, but are not limited to, a person’s adjusted life expectancy, future diagnostics, potential surgeries, related prescription medications, medical supplies/equipment, and follow-up physician visits.

CMS Submission:

In some cases, the settling parties may choose to submit the claim to Medicare by requesting that CMS review the proposed MSA and provide an approval letter of the set-aside amount. To be eligible for submission, the claim must meet CMS’ review threshold where 1) the injured worker is a Medicare beneficiary and the settlement amount is greater than $25,000.00, OR 2) the injured worker has a reasonable expectation of Medicare enrollment within 30 months and the settlement amount is greater than $250,000.00. If the claim meets this review criteria, and the parties choose to submit the claim for review, CMS also requires that precise documentation be included along with the proposed MSA. Specifically, two years of treatment records, two years of payment histories, the total settlement amount, the type of funding for the settlement, and the type of administration. An injured worker may self-administer their MSA account, however, they must ensure that their record-keeping is accurate and complete. Since this process can be complex, the parties may choose to designate a professional administrator to assist with the account. The professional administration company must be explicitly appointed upon submission of the claim. It is important to note that these thresholds were created solely as a means to limit CMS’ workload volume and were not intended as a requirement for review. The submission of WCMSAs for claims that meet CMS’ review threshold remains a voluntary process and is not federally mandated.

Non-Submit MSAs:

This is not to say that claims which settle below the criteria for submission should not obtain MSAs. In order to comply with the MSP Act, parties must still take Medicare’s interest into account in all cases to ensure that Medicare pays secondary to the workers’ compensation carrier. Non-Submit MSAs are another vehicle to consider Medicare’s interest. Much like a traditional WCMSA, these allocations not only protect Medicare, but also protect the injured worker post-settlement in that they act as a safeguard from Medicare later denying payment for covered treatment related to the claim.  There are many advantages of utilizing a Non-Submit MSA, whether your claim meets the threshold for review or not. Non-Submit MSAs may rely on evidence-based guidelines that provide a more clinically appropriate and reasonable allocation of future treatment than a traditional MSA. Also, they can fully consider nuanced state laws regarding workers’ compensation that oftentimes get overlooked by Medicare, which can lead to a lengthy review process. Furthermore, these allocations are legally sound and supported by the Code of Federal Regulations.[1] Likewise, Non-Submit allocations may be used in combination with a professional administrator to ensure that expenditures are correctly recorded, and funds are properly exhausted in the event the claim needs to be reported to Medicare.

Closing:

While Medicare Set-Asides remain a preferred method of compliance in this area, parties have flexibility in their overall approach. Bearing in mind the varying needs of each claim, it is paramount to determine which type of allocation would be the best fit to simultaneously protect the Medicare Trust Fund, support improved clinical results, and provide the most successful claims outcomes for workers’ compensation carriers.

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About Sanderson Firm

Sanderson Firm is a law firm specializing in Medicare Secondary Payer (MSP) services and is proud to be a woman-owned business. Our team of legal and clinical professionals have more than four decades of combined experience in the MSP industry, and we are proud to serve as trusted counsel and MSP compliance services vendor to some of the nation’s most well-recognized insurance carriers, self-insured companies, and third-party administrators, as well as smaller, regional insurance carriers and governmental entities.

[1] CMS Updates WCMSA Reference Guide; Provides Much Needed Clarity Around Non-Submit/EBMSAs — Sanderson Firm (sandersoncomp.com)