Ken W. Harrell, Esq.
Joye Law Firm, LLP
October 4, 2013
Do I Need A MSA? (Four-step Process)
- Is the claimant a MSA candidate?
- Does the settlement end future medical rights and is any portion of the settlement allocated to future medical costs?
- Determine the claimant’s future medical care costs.
- Educate your client about future MSA obligations.
What is a MSA?
- MSA = Medicare set-aside account
- A fund to pay for future injury-related medical care that would otherwise be paid by Medicare.
Medicare’s Two Interests
- Resolving its lien for conditional payments made before the settlement.
- Evaluating obligations for future medical costs after the date of settlement.
Step 1 – Screening
For workers’ comp cases, it’s fairly clear:
- Is the claimant a current Medicare beneficiary or is there a “reasonable expectation” of the same within 30 months of the settlement?
- Does the WC settlement end the WC
carrier’s medical coverage responsibilities?
- Does the claimant require future injury-related treatment that would otherwise by covered by Medicare?
If all three questions are answered “yes,” the claimant is a MSA candidate.
Step 2 – Assessing The Settlement Terms
For workers’ compensation cases, if the claimant’s medical rights have been ended and a portion of the settlement amount is allocated to future medical costs, the claimant must pay this amount down before Medicare is responsible for taking over payment for medical costs.
Step 3 – Valuing the Proper MSA Amount
- A future cost of care analysis identifies all of the claimant’s future injury-related treatment costs and determines the amount which would be paid by Medicare.
- In most cases, the initial assessment is prepared by a company hired by the insurance carrier.
Step 4 – Educating The Client
- After determining the proper MSA amount, the methods of funding and administering the account need to be explained to the client.
- Funding (two options)
- Lump sum
- Annuity/structured settlement
- Administration (two options)
- Professional administration
What about the WCMSA thresholds?
- The WCMSA thresholds:
- $25,000 for a Medicare beneficiary
- $250,000 for someone with a “reasonable expectation” of becoming a beneficiary within 30 months
- CMS workload thresholds only.
- They have no effect on whether a MSA should be done.
Liability cases – why is a MSA approach problematic?
- No-fault system
- Statutorily defined components of damages
- No cap on medical costs exposure
- Claimant may be awarded future medical coverage
- Settlement amounts often allocated specifically
- Comparative fault issues impact the settlement amount
- Intangible damages (pain and suffering, loss of enjoyment of life, etc.)
- Insurance policy limits and, in some cases, statutory caps on damages
- No future medical coverage available
- Settlement proceeds typically not allocated with specificity
What about future medical costs when a liability case is settled?
- The MSP Act contains no guidance on how to protect Medicare’s future interest.
- CMS regulations provide guidance on how to deal with future medical costs in the
workers’ comp setting but no such guidance for liability cases.
- Absent agency guidance, some parties have sought judicial decisions.
So what’s required?
- “Reasonable good faith effort at compliance”
- Approach based on a series of federal decisions addressing the amount of deference owed to a federal administrative agency’s statutory interpretation when the agency has failed to promulgate regulations.
- Once a “reasonable” determination of the parties’ obligations has been made and documented, CMS will have difficulty punishing the parties.
When should a liability MSA be established?
- The obligation to fund a liability MSA is only clear on its face when a definitive allocation for future medical costs exists in the settlement agreement (or verdict) for an injured Medicare beneficiary.
- To meet the “good faith” standard, parties:
- Determine whether a MSA is appropriate
- Document the file accordingly.
S(creen)A(ssess)V(alue)E(ducate) – LMSA’s
- Screen – if the injured party is not a MSA candidate, that is the end of the issue.
- Your intake forms should include:
- Are you a Medicare beneficiary?
- Have you applied for Social Security Disability?
- Are you 62.5 years old or older?
- Do you suffer from end stage renal disease or blindness?
- Your intake forms should include:
- Assess – if the injured person is a MSA candidate, assess whether the gross settlement proceeds contain sufficient dollars to fund any MSA obligation on future medical costs.
- If the claimant will clearly not have future medical needs related to the accident, it would be advisable to have the treating doctor state the same in writing to a reasonable degree of medical certainty.
- Value – If you determine that a MSA is needed, the next step is to determine the appropriate LMSA amount by having a future cost of care analysis done.
- Educate – an injured person with LMSA needs has the same funding and administrative decisions to make that a workers’ compensation claimant faces.
How To Document Your File
- For larger cases, consider outside consultants and tools such as the Garretson firm’s “MSA Decision Engine.”
- Click on client login/claimant inquiry.
- If using for the first time, they will contact you for a tutorial.
What about the MMSEA?
- The Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) has nothing
to do with MSA issues.
- MMSEA is a reporting statute which requires all insurance carriers to determine if a
claimant/plaintiff is Medicare-eligible, and to report any settlement or other payment made to Medicare beneficiary.
- Allows for fines of up to $1,000 per day for failure to comply with the reporting requirements.
Three Primary Goals When Dealing With Medicare On Injury Cases
- Resolving any conditional payment liens.
- Complying with MMSEA reporting requirements (carriers).
- “Consider and protect” Medicare’s future interests by determining if a MSA is needed and, if so, the appropriate amount to fund the MSA.
What does the recently enacted “SMART” Act do?
- Strengthening Medicare and Repaying Taxpayers (SMART) Act was intended to streamline the Medicare lien system when dealing with conditional payment liens.
- The six improvements were:
- Creation of a Medicare web portal to help attorneys and claimants determine the final conditional payments lien amount prior to settlement.
- Increased privacy for Medicare beneficiaries by eliminating the use of Social Security numbers for reporting purposes within 18 months.
- Establishes a three-year statute of limitations for Medicare actions to recover conditional payments.
- Will establish a minimum threshold for collection of payment for liability cases by November 15, 2014.
- Reduces the penalties imposed by MMSEA for failing to comply with reporting requirements.
- Will eventually result in Medicare having to establish appellate procedures for conditional payments issues.