Personal injury and workers’ compensation cases that involve medical record retrieval and review focus on obtaining fair compensation for the injured person. Claimants who are Medicare beneficiaries already or expect to receive Medicare in the near future have to follow certain guidelines when it comes to their future medical payments. A Medicare set-aside may have to be established to avoid losing eligibility for the benefits. Medicare set-asides can be either WCMSA (Workers’ Compensation Medicare Set-aside Arrangement) or Liability Medicare set-aside (LMSA). These are more or less similar because both are financial arrangements that assign a portion of the plaintiff’s settlement amount to pay for future medical services associated with an injury, illness, or disease. A WCMSA can be established when you are going to receive money from a workers’ comp claim and an LMSA can be established when you are going to receive a personal injury settlement. In this blog, we will consider LMSA in some detail.
What Are Medicare Set-asides?
Medicare set-asides (MSAs) are not mandatory, even in workers’ compensation cases. According to the MSP (Medicare Secondary Payer) Act, Medicare will not reimburse medical expenses where payment has been made under a workers’ compensation, liability insurance (including self-insurance), automobile, or a no-fault insurance plan. If a person is being compensated for future medical care as part of the settlement, Medicare should not be expected to pay a bill related to the settlement until that amount of compensation for future medicals paid is spent and exhausted on future medicals related to the settlement. In other words, a Medicare set-aside arrangement is made to ensure that Medicare is not billed in advance after the settlement of a case for future medical care for the injury related to the settlement.
Typically, any review of a Medicare set-aside arrangement by Medicare is voluntary. It is made mandatory only when the settling parties have made that a condition of the settlement arrangement.However, Medicare may not review all the MSA proposals it receives. There is an established review process for MSAs in workers’ comp (WC) cases, but for liability MSAs, Medicare does not yet have a formal review process. For workers’ compensation cases, if
- The injured worker is a current Medicare beneficiary and the gross settlement amount exceeds $25,000; or
- The injured worker is not yet enrolled with Medicare but has a “reasonable expectation” of Medicare enrolment within 30 months of settlement, and the gross settlement exceeds $250,000,
the parties concerned can request Medicare voluntarily to review an MSA. However, if a particular case does not meet these criteria, it does not mean that the parties can ignore the MSA concern. According to Medicare, “Claimants must still consider Medicare’s interests in all workers’ compensation cases and ensure that Medicare pays secondary to WC in such cases.”
The MSA obligation in a liability settlement is not as well-defined as in a WC settlement. In a WC settlement that doesn’t follow any fault standards, damages fall under three categories: indemnity, past medicals, and future medicals. Every WC settlement has a future cost of care damage allocation, and what is left to consider is whether there is a permanent burden shift to Medicare in the obligation to pay for future injury-related medical care. In a liability settlement on the other hand, there are concerns such as comparative fault, special damages, and other non-future medical damages that are present, which make it difficult to apply the usual MSA concepts.
It’s Best Not to Ignore MSA Requirement in Liability Cases
But can you choose to ignore the MSA requirement in a liability case just because there are no formal guidelines issued as yet? Most probably, no. CMS (Centers for Medicare and Medicaid Services) understands that many parties to liability settlements are not considering Medicare’s interests appropriately and can implement the recovery options they have at their disposal. Here are some things to note.
- The MSP Act gives Medicare the authority to seek recovery for any conditional payments it has made after the case settlement from the responsible party, i.e. the injured person in most settlement agreements.
- If the injured person has received compensation for future medical care as part of the settlement; has received medical treatment related to the settlement and instructs the medical provider to bill Medicare; and Medicare pays that bill in error, then Medicare can exercise its statutory right to seek recovery of the amount of the overpayment. By the same statute, Medicare can even recover double damages or twice the amount of overpayments. In addition, Medicare can also seek interest.
- Medicare can refer such matters to the U.S. Department of Justice, which could then take steps to recover the amount using the FCA or the federal False Claims Act. Under this, the Department of Justice could even collect thrice the damages and also charge penalties of between $5,000 and $10,000 per false claim.
Since guidance from the CMS is lacking regarding the use of Medicare Set-asides in liability settlements, the onus is on the settling parties to seriously consider whether an MSA should be established as a part of settling a liability claim. Experts point out that a claimant voluntarily choosing to pursue a set-aside arrangement to protect his/her Medicare benefits can either:
- Identify the appropriate allocation and educate the claimant to ensure that those proceeds are spent down on future injury-related care (for which Medicare would otherwise pay), or
- Contact the appropriate Medicare regional officer, and share the fact pattern of the case to determine if he/she chooses to review and approve the allocation. The regional offices make these elections based on workload thresholds and are subject to change without notice.
As Robert L Sagrillo, chief compliance officer, NuQuest says, liability stakeholders must be aware of their legal obligations under the MSP Act and take steps to address those obligations when settling claims. As providers of medical review solutions to personal injury attorneys, we understand that attorneys would provide the right advice to their clients in this regard. In fact, plaintiffs could benefit immensely from legal counsel when it comes to understanding whether their Medicare benefits would be adversely impacted in such cases. Attorneys may advise that an MSA or allocation be included in the settlement when the injured party is being compensated for future medical expenses.