Medicare Set-Aside Services
Capehart Scatchard is available to assist any individual or entity in obtaining approval pursuant to the Medicare Secondary Payer Statute (MSP).
The MSP provides that the Center for Medicare and Medicaid Services (CMS) may pursue damages against any entity that attempts to shift the burden of medical costs to Medicare. The purpose of the MSP is to ensure Medicare is only secondarily responsible for payment of medical expenses for Medicare beneficiaries who were also covered by another type of insurance. The provisions of the MSP may be found at 42 U.S.C. 1395y (b).
The MSP provides that Medicare does not pay for any services for which payment has been made or can reasonably be expected to be made promptly "under a workmen's compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance." 42 U.S.C. 1395y (b)(2)(A)(i)(ii). Therefore, the insurance carrier is considered the "primary plan" and Medicare is considered the "secondary plan" for the payment of injury-related medical expenses.
Under the MSP, CMS has the right to seek reimbursement of medical expenses paid by Medicare which the insurance carrier should have paid. 42 U.S.C. 1395y (b)(2)(B)(i)(ii)(iii). Additionally, the MSP provides for a private cause of action for double damages against the insurance carrier for failure to provide primary payment or appropriate reimbursement. 42 U.S.C. 1395y (b)(3)(A).
In a nutshell, the Government wants to avoid the shifting of responsibility for medical treatment from the primary payer to Medicare. If CMS believes that the settling parties "shifted the responsibility to Medicare" they will not recognize the terms of the state settlement. This has become an increasingly important issue as CMS has stepped up it's identification and enforcement procedures. This policy is evident in the Memos published by CMS on July 23, 2001, April 22, 2003, and May 23, 2003.
When Must Medicare Be Considered?
Consideration should be given to Medicare's interest whenever entering into a settlement that closes future medical benefits and either of the following conditions apply.
The Petitioner is Medicare Eligible - Regardless of Amount.
A Petitioner is Medicare eligible if he or she is:
- 65 years or older; or
- On Social Security Disability for 24 months or longer; or
- Suffering from End Stage Renal Disorder.
- The Petitioner has a "reasonable expectation" of becoming a Medicare beneficiary within 30 months of the date of settlement and the anticipated amount of the settlement, including indemnity, is expected to be greater than $250,000.00.
An individual would have a "reasonable expectation" of becoming a Medicare beneficiary if any of the following factors apply:
- The individual has applied for Social Security Disability Benefits; or
- The individual has been denied Social Security Disability Benefits but anticipates appealing that decision; or
- The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits; or
- The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or
- The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.
How to Ensure Compliance?
Attorneys must consider both future injury-related Medicare payments and past injury-related Medicare payments prior to settlement of the claim.
Future Injury-Related Medicare Payments
With regard to future injury-related Medicare payments, this will often require the establishment of a Medicare Set-Aside (MSA) arrangement or trust. MSA arrangements are designed to "set-aside" a portion of the settlement for payment of future medical expenses. The expenses must be related to the workers' compensation injury and must be of the type typically covered by Medicare. An approved MSA is the preferred method to close future medical benefits for the carrier and still preserve Petitioner's rights under Medicare for future medical treatment. CMS has stated that "once CMS agrees to a Medicare set-aside amount, the individual can be certain that Medicare's interests have been appropriately considered."
Past Injury-Related Medicare Payments
Payments made by Medicare prior to settlement must also be considered when resolving a claim impacted by the MSP. These payments are commonly referred to as "conditional payments." Medicare has a statutory right of recovery for these payments pursuant to 42 U.S.C. 1395y(b)(2) and 42 C.F.R. 411.24.
CMS may initiate recovery of these conditional payments as soon as it learns that payment has been made or could be made under workers' compensation, any liability or no-fault insurance, or any employer group health plan. If it is necessary for CMS to take legal action to recover from the primary payer, CMS may recover twice the amount specified. Furthermore, interest may accrue from the date when notice is received by CMS and is charged until reimbursement is made.
Consequences Of Not Considering Medicare Prior To Settlement
Failure to properly address the MSP may result in any of the following actions: 1) The beneficiary may receive a notice terminating future Medicare coverage; 2) Social Security may off-set disability benefits on a dollar for dollar basis until the MSP claim, including interest, has been satisfied; 3) The Office of General Counsel may make demand or bring suit against the attorney for the Medicare beneficiary for recovery of the full amount of the MSP claim; or 4) The Office of General Counsel may make demand or bring suit for double the amount of the MSP claim against the carrier who distributed the settlement proceeds or damage award without first paying CMS.
As a result, this is an issue that concerns all parties to a settlement and should be carefully considered by everyone prior to settling a claim that may be impacted by the MSP.
Capehart Scatchard has closely followed this legislation and has extensively researched this important area of the law. As a result of our efforts, we are able to offer our clients a cost effective way to resolve cases impacted by the MSP across the country. Capehart Scatchard utilizes attorney's to ensure compliance with both state and federal law.
Capehart Scatchard offers the following services to our clients:
- Render a legal opinion on the need for CMS approval and/or the need for a Medicare Set-Aside Arrangement.
- Determine Social Security Disability and Medicare status.
- Obtain rated age and life expectancy information.
- Obtain an allocation amount for future Medicare covered expenses and, if necessary, utilization of a comprehensive life care plan.
- Perform Lien inquiry, investigation and negotiation.
- Coordinate services with structured settlement brokers and professional administrators, if necessary.
- Prepare and submit paperwork for approval to CMS.
- Preparation and/or review of settlement documents to ensure compliance with both State and Federal Law.
In addition to obtaining approval for entities across the country, Capehart Scatchard has been at the forefront in providing information and educational materials on this topic to keep our clients up to date. Mr. Lewis has published the following articles on the MSP:
- Don't Forget Medicare's Share, New Jersey Law Journal, December 2004.
- The MSP Statute: Impact Of the Medicare Prescription Drug, Improvement & Modernization Act of 2003, Mealey's Managed Care Liability Report, April 23, 2004
- Expanding the Reach of the Medicare Secondary Payer Statute, New Jersey Law Journal, November 2003.
- Secondary Payer Statute: Safeguarding Medicare's Interests, New Jersey Lawyer, October 2003.
- Ensure Compliance with the Medicare Secondary Payer Statute, Mealey's Managed Care Liability Report, September 2003.
- Mealey's Litigation Report: Employer Liability Insurance, The Medicare Secondary Payer Statute: A New Jersey Perspective, February 2003.
- Health Care Fraud Litigation Reporter, The Medicare Secondary Payer Statute, February 2003.
- 2003 Geaney's New Jersey Workers' Compensation Manual for Practitioners, Adjusters, and Employers. Book written by John Geaney and Chapter on The Medicare Secondary Payer Statute by Robert T. Lewis.
- Capehart Scatchard Update: ADA/FMLA/WC Update (PDF) - October 3, 2003.
- Capehart Scatchard Update: ADA / FMLA / WC Updates (PDF) - May 30, 2003.
- Capehart Scatchard Article: The Medicare Secondary Payer Statute - January 2003.
- Capehart Scatchard Newsletter: Workers' Compensation Newsletter (PDF) - December 2002.
Additionally, Mr. Lewis has spoken on the MSP at the following seminars:
- HR and the Law Forum," Council on Education in Management, Orlando, Florida, November 12-14, 2003.
- "The Fundamentals of Workers' Comp in New Jersey," Lorman Education Services, Atlantic City, NJ, September 29, 2003.
- "Understanding Key Workers' Compensation Issues," New Jersey Institute for Continuing Legal Education, July 18, 2003 Mt. Laurel, NJ.
- "Understanding The Basics Of the Medicare Secondary Payer Statute and Set Aside Agreements," Council on Education in Management, Morristown, NJ, June 4, 2003.
- Return to Work Issues and Beyond: Issues and Updates Under The New Jersey Workers' Compensation Act, ADA, FMLA, and New Jersey Law Against Discrimination, April 4, 2003, Lorman Education Services, Mt. Laurel, NJ.
For more than 125 years, Capehart Scatchard has provided clients with superior legal services in a prompt manner and at a reasonable cost. Our practice is technology-based and utilizes electronic files, scanned documents, and e-mail communications. We would welcome the opportunity to share our experience and assist you in the handling of your MSP claims.
For additional information:
If you would like to arrange a seminar for your organization, please contact Carol Wright: email@example.com.
If you would like to be added to our Firm's weekly e-newsletter addressing the ADA, FMLA, and Workers' Compensation issues or our monthly e-newsletter addressing Medicare issues, please contact Carol Wright: firstname.lastname@example.org.
If you have a question concerning regarding the MSP, please feel free to contact Robert T. Lewis, Esq.: email@example.com.
To make a referral, please forward the following information to Robert Lewis:
- A completed referral form.
- Three (3) to five (5) years of medical records.
- Printout of all benefits paid to date by the carrier.