We have received many questions about the Medicare Set-aside Arrangements (MSA) that are required by the Centers for Medicare and Medicaid Services (CMS). Here are the frequently asked questions on the basics of MSA, which we hope will provide you with more insight into the requirements of CMS.
What is a MSA?
A Medicare Set-Aside is an account set up to pay future Medicare covered expenses for an injured party that would have been paid by Medicare had the injury NOT been the responsibility of the Primary Payer.
That seems like a hassle, is there any way around it?
Yes, leave the medical portion of the work comp claim open when you settle the indemnity portion of the work comp claim.
Does CMS have any say in how much money is included in the MSA for future medical care?
Yes, CMS will review the medical records of the claimant and determine if the dollar amount in the MSA for future medical care should cover all the claimant’s future medical expense related to the work comp claim. If CMS determines the amount being set aside for future medical care is inadequate, they will not approve the MSA. CMS, specifically, the WCRC (Workers Compensation Review Center) reviews for adequacy and sufficiency of the MSA.
Why would CMS even care about a work comp claim?
Too many claimants have spent their work comp settlements without saving the money there were paid for future medical care. When they could not pay for the needed medical care, it was falling on Medicare or Medicaid to pay for their medical treatment. Medicare is secondary not primary (coverage) – right afforded to them under the MSP 42 CFR 411.
Are we required to protect CMS from irresponsible claimants who spend the money for their future medical care unwisely?
Yes, the Medicare Secondary Payer statute and regulations has given CMS the right to inject themselves into work comp settlements. Required to demonstrate “adequate consideration” to Medicare. If claimant fails to appropriately spend MSA funds and/or fails to provide accounting for how the funds are spent (annual accounting), the claimant bears the risk of Medicare endorsing their rights for protection wherein the may deny coverage until such time the claimant provides accounting.
Do we need a MSA on all work comp claims?
No, a MSA is not required on all work comp claims. A MSA is required on claims where:
- the settlement is greater than $25,000 and the claimant is a Medicare beneficiary of
(at the time of settlement) ***
- when the settlement is greater than $250,000 and the claimant is
“reasonably expected to be on Medicare within 30 months post settlement”
- No “safe harbors”
What is a “reasonable expectation” the claimant will soon be eligible for CMS benefits?
CMS defines “reasonable expectation of soon” as:
- Anyone 62 and a half years old or older at the time of settlement
- Anyone who has applied for Social Security Disability Benefits
- Anyone who has been denied Social Security Disability Benefits, but anticipates appealing the decision to deny benefits
- Anyone who has already filed an appeal of a denial of Social Security Disability Benefits
- Anyone with end stage renal failure
(ESRD and Lou Gehrig’s disease grant Medicare entitlement regardless of age). I would not include this under reasonable expectation.
What would happen if we “forget” to obtain CMS approval and do not include a MSA at the time we settle the medical portion of the work comp claim?
Failure to comply with the Medicare Secondary Payer statute and regulations will result in the work comp carrier, the claimant and the attorneys all being exposed to being liable to reimburse CMS for the amount paid by CMS for medical care for the claimant, plus the claimant could be denied future Medicare benefits. Also, CMS can designate most of the settlement or the entire settlement as payment for future medical expense, and not pay for any medical care until the claimant has spent the amount designated for work comp related medical expense.
What if Medicare mistakenly pays a medical bill or prescription bill for the claimant’s work comp claim before the claim is settled?
It will result in a Medicare Secondary Payer claim which must be satisfied as a part of any settlement with the claimant. Medicare has a right for recovery for “conditional payments” and it is very important that conditional payments are researched and addressed prior to settlement. If not, post settlement exposure will exist will any or all entities that are party to the settlement. Medicare has a cause of action against any/all parties, and may also pursue double damages, interest, and attorney fees.
What happens if the Medicare Secondary Payer claim is not paid?
CMS will bring suit against the claimant and/or the employer and/or the insurer and/or claimant’s attorney and/or the employers/insurers attorney. CMS can seek double damages against the insurer to recover its Medicare Secondary Payer claim.Related Article:If a person receives long term care and any part is paid by Medicare, it is important to protect these payments by knowing how long term care is affected by the Medicare Secondary Payor Statute.
Would Medicare ever become responsible for paying the claimant’s future medical expense resulting from the work comp injury?
The MSA must be approved by CMS before the work comp claim is settled. The MSA will state the amount of the settlement that is allocated to future medical expense. If the claimant was to spend for work comp related medical care the entire amount in the MSA that was approved by CMS, and the claimant was approved for coverage by Medicare or Medicaid, then the work comp related medical expense could be covered by CMS. Medicare will step in to become the primary coverage once the MSA funds have been exhausted and accounting has been provided by the claimant.
Who is responsible for administering the money in the MSA that is designated for future medical care?
The MSA will be set up as a trust. The trustee can be the claimant, a family member, professional fiduciary or anyone approved by CMS and the claimant. (A professional fiduciary should be utilized if the future medical portion of the work comp settlement is significant). MSA funds are required to be either self-administered and placed in a separate interest bearing bank account or professionally administered.
Besides CMS, does anyone else benefit from having a MSA approved by CMS?
Yes, the work comp insurer or self-insured employer benefit by reducing their exposure for future medical cost on the claim, and the claimant benefits from knowing their future Medicare benefits will not be denied. Taxpayers – all of us.
If we don’t want our insurer to leave the medical portion of the claim open, is there any other way of avoiding a MSA?
The only other way that CMS will recognize a settlement without a MSA is for the claimant and the insurer to get a judicial determination of the settlement. The court or to the work comp board must determine how much the settlement will be and the amount within the settlement for future medical care and for indemnity. The decision by the court or work comp board must be theirs alone, it cannot be a negotiated settlement being approved by the court or work comp board. We would recommend you approach this differently. The answer is No if you want to comply with the MSP and policy/guidance as set forth by Medicare as this is a federal law with supremacy.
MSA have many facets and can be complex. Obtaining all the answers to your questions about MSA can be a challenge. To learn more, visit the Medicare Set-Asides (MSA) category of our blog.