Medicare Set-Asides serve as a glaring reminder that the legal sector must remain vigilant in its awareness and understanding of evolving government benefit guidelines. The following article discusses the current status of the Liability Medicare Set-Aside process and offers insight into existing Workers’ Compensation Medicare Set-Aside procedures.
Current Status of Liability Medicare Set-Asides
In 2017, the Centers for Medicare & Medicaid Services (CMS) indicated that after years of speculation, changes were imminent for the Liability Medicare Set-Aside (LMSA) review process. The changes went into effect as of October 1, 2017; CMS modified and reissued the transmission on October 27, 2017.
To date, here are the major points attorneys and their clients need to know about LMSAs:
- Medicare Administrative and Recovery Contractors (MACs) may deny payment for items and services that should be paid from a Liability MSA (or No-Fault MSA);
- Medicare may deny payment for claims if it determines that the claims should have been paid by a liability insurance policy or another payer as outlined in the Medicare Secondary Payer (MSP) provisions; and
- Medicare is within its rights to seek reimbursement for expenses it has paid if those expenses should have been paid for out of the settlement or by another payer.
Since last fall, CMS has not provided any further information on how LMSAs will be reviewed. In the meantime, plaintiff attorneys and their clients must continue to determine how to deal with Medicare and whether the claimant is adequately protected. Failure to comply with MSP provisions may result in severe consequences for the attorney and the claimant. Think of an MSA as “future conditional payments”—will there be any?
As changes continue to develop, how can plaintiff attorneys make sure they’ve done their due diligence to protect their law firms and their clients? Guidelines for Workers’ Compensation Medicare Set-Aside (WCMSA) review are the only existing industry standard we can reference to measure whether Medicare’s future interests have been adequately considered. An experienced settlement professional can help connect attorneys and claimants with the necessary resources to determine an appropriate LMSA allocation.
Existing Medicare Set-Aside Standards
The MSA process for workers’ compensation cases has been fairly well-established for the past several years. Presently, review thresholds for a WCMSA are:
- The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000; or
- The claimant is not a Medicare beneficiary at the time of settlement but has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the total settlement amount is greater than $250,000.
In addition to identifying Medicare-covered expenses, it is also important to identify non-Medicare covered expenses prior to finalizing the settlement. Many attorneys and claimants forget to consider the cost of medical care outside of what Medicare would normally cover, and as a result, the claimant is left to pay those expenses out of pocket. For liability cases, a review of the life care plan may help separate out the non Medicare-covered expenses so that they are not included in the MSA calculation.
After the Allocation is Determined: Funding and Administration
Funding and administration are additional decisions that must be made when setting up a Medicare Set-Aside. CMS requires utilizing one of two methods to fund an MSA:
- Deposit a lump sum for the entire amount of the MSA; or
- Use cash to seed the MSA, combined with an annuity providing annual payments to replenish the MSA account through the remainder of the claimant’s life expectancy.
Using an annuity to fund an MSA provides advantages to both the claimant and the defendant. With a lump sum MSA, a Medicare beneficiary must spend the entire amount of the MSA before Medicare will cover Medicare expenses related to the injury. If the MSA is funded with the cash and annuity option, Medicare will cover any expenses over and above the claimant’s current MSA balance each year.
Some claimants may choose to self-administer their MSAs, while others opt to use professional administration companies. Self-administration can prove to be challenging, especially for claimants with larger MSAs. Administration requires in-depth record-keeping and a close eye on ever-changing regulations. Many claimants find that hiring a professional MSA administrator saves them time and money while ensuring all components of compliance.
How to Start the MSA process
Our settlement planners have access to a broad range of industry experts and can help tailor an approach to best suit your client’s individual needs. To help ensure a smooth road to MSA approval, contact ALLIANCE-WEST today at 800-354-2258 or firstname.lastname@example.org.