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Cutting Through the Confusion on Medicare Set-Aside Accounts
By:
Barbara A. Isenhour
Personal
injury attorneys are bombarded with confusing and often inaccurate information
regarding Medicare Set-Aside Accounts (MSA). What is an MSA and what are the
requirements to set up this type of account when you settle a case for a
Medicare recipient?
What
is a Medicare Set-Aside Account?
A
Medicare Set-Aside Account is an account to hold the portion of a settlement
allocated to future medical expenses for a Medicare recipient. This account is
used to pay for specified medical expenses related to the tort injury until the
account is exhausted. Until the account is depleted Medicare will not cover
expenses for medical care and treatment covered by the MSA.
The
agency responsible for determining whether an MSA will be required is the
Centers for Medicare and Medicaid Services or CMS. Whether an MSA will be
required is usually decided at the regional level of CMS. Washington State is
in Region X with headquarters in Seattle.
Currently
CMS only requires an MSA in state and federal workers compensation cases
(including Jones Act cases, Federal Employees Liability Act (FELA) cases and
Harbor Workers and Longshoremen Act cases).
CMS has
never promulgated regulations in the CFR on workers compensation MSAs but there
is information on the CMS web page regarding these accounts.
CMS
does not currently require a Medicare Set-Aside in traditional tort cases with
third party liability.
There is no question the CMS has the legislative authority to
require an MSA in all tort liability cases but they have not done so to date.
Medicare Subrogation
An MSA is
not the same as Medicare subrogation. Medicare has always had a right to claim
reimbursement from liability settlements for medical expenses caused by the tort
feasor’s conduct. Medicare refers to its payments as “conditional payments”
subject to reimbursement when the third party liability claim is paid.
Subrogation claims include Medicare payments paid up to the date the case is
settled.
An MSA is
not for Medicare payments made to the date of settlement but it is for future
medical claims related to the negligent conduct.
New
Reporting Requirements
One
source of the current confusion about MSAs is a recent federal law, the SCHIP
Extension Act of 2007. This act originally was to go into effect on July 1,
2009 but the effective date was recently extended to July 1, 2010.
Contrary
to some information generated by the MSA industry, this statute has nothing to
do with Medicare Set-Asides. The statute is a reporting statute, requiring all
insurance plans to report to CMS information about potential recipients of
Medicaid or Medicare benefit who potentially may receive a personal injury
settlement. This information is to help CMS and state Medicaid agencies enforce
their right to subrogation reimbursement, not to establish an MSA for future
medical expenses.
Should
your client set up a voluntary MSA in a tort liability case?
There is
a cottage industry that has developed around MSAs in the workers compensation
area. Some attorneys, liability insurers, structure sales people and
administrators of MSA accounts recommend that attorneys set up a voluntary
MSA in tort liability cases even though it is not required by current CMS
regulation, memorandum or practice. The concern expressed by those advocating a
voluntary MSA in tort liability cases is that CMS could later deny coverage for
future medical treatment to the Medicare recipient who received a tort
settlement. Others suggest that the personal injury attorney could be held
liable for failure to set up the MSA voluntarily.
Personal
injury attorneys need to make a decision about whether they or their Medicare
clients are at risk if they do not set up a voluntary MSA account in tort
cases. Keep in mind that there are no current CMS regulations or web site memos
requiring an MSA in tort cases. The only current requirement on the CMS web
site relates to MSAs in workers compensation cases. Also remember that if your
client voluntarily sets aside money out of the gross settlement to pay future
medical expenses that would otherwise be billed to Medicare, there will be less
money for the client to use for other needs. The Center for Medicare Advocacy,
a nonprofit organization that advocates on behalf of Medicare beneficiaries, has
expressed concern about the recent trend of attorneys encouraging Medicare
recipients to set up a voluntary MSA in tort cases even though it is not
required by CMS.
Attorneys
need to ask if their clients will benefit from setting up a voluntary MSA if it
is not required under existing regulations. Second, attorneys need to decide if
there is a serious risk that a court is likely to later support CMS if it ever
decided to retroactively punish Medicare recipients and their attorneys for
failing to comply with a rule or policy that was not in existence when the
settlement was received. CMS has never stated that it has any intention of
retroactively applying the current MSA regulations for workers compensation
cases to tort liability cases. Given the general requirements of the
Administrative Procedures Act and due process notice requirements it is not
unreasonable to assume that CMS will adopt written rules and share them with the
public before it implements a Medicare Set-Aside requirement for tort liability
cases.
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