Gitter & Associates: Medicare

MEDICARE

Introduction To Medicare Set-Asides

Through a series of Memoranda issued beginning in 2001, Medicare has outlined the parameters of compliance with the Medicare Secondary Payer Statute relative to the liability for ongoing medical needs stemming from an industrial injury.

Medicare requires that the parties to a Workers’ Compensation claim consider their interests in evaluating settlement of a claim to ensure that the liability for future medical treatment is not transferred to Medicare; instead appropriately valued.

Through the use of a Medicare Set-Aside (MSA) the parties establish the valuation of these future medical costs and fund them in a manner (either though cash or an annuity) that is consistent with an appropriate consideration of Medicare’s interest and to avoid shifting any liability to Medicare.

Presuming a MSA is appropriate (criteria to determine the need for a MSA); the parties are directed to “set aside” funds to pay for the anticipated future medical needs of the injured worker.

What Is A MSA?

A Medicare Set Aside is a comprehensive analysis completed by a third-party which provides a detailed outline of the future medical needs of an injured worker which arise from their industrial injury. Included in the MSA are any and all “treatment” related expenses including but not limited to physician visits, durable medical equipment, physical therapy, surgeries and medications.

Typically, a review of medical records and medical payment history in the two years leading up to the analysis are reviewed in determining the future medical exposure. Additionally, a review of any and all AME, QME and IME reports are evaluated in consideration of the anticipated future medical exposure.

Why Is A MSA Necessary?

The Medicare Secondary Payer Statute (MSP) is federal legislation designed to prevent the shifting of financial responsibility for medical expenses from a primary payer to the federal government. The statute states that the federal government serves as a secondary payer for medical services when another source of coverage exists.

Leading up to the enforcement of the MSPS beginning in 2001, studies have revealed that nearly $43B in liability was “shifted” to Medicare from 1991 to 1998.

Failure to consider the interests of Medicare may expose the parties to liability for damages double the amount of exposure shifted to Medicare plus any potential interest that may have accrued.

What Are The Criteria For Obtaining A MSA?

One of the most common and misunderstood aspects of MSAs are if and when it is appropriate to obtain one. The following represent the guidelines set forth by the Center for Medicare Services (CMS) via a series of memoranda (CMS Memoranda). Medicare has provided an outline of two “classes” of individuals and set forth the need to consider their interests as follows:

CLASS I

The beneficiary is a Medicare Recipient.

CLASS II

Claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months of the settlement.
AND
The settlement is greater than $250,000 (For purposes of determining if a settlement is in excess of $250,000 it is necessary to consider the total amount of indemnity paid as well as the total proceeds from an annuity, not just the present value).

The “Reasonable Expectation” Criteria

Medicare has defined a “reasonable expectation” of eligibility as follows:

The individual has applied for Social Security Benefits
The individual has been denied Social Security Benefits but anticipates appealing the decision
The individual is in the process of appealing and/or refilling for Social Security Benefits
The individual is 62 years and 6 months old (i.e. may be eligible for Medicare based upon his/her age within 30 months)

The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ERSD.

How Is The Allocation Amount Determined?

Various factors are used in determining an appropriate MSA allocation. Below are a list of many; however, depending upon the facts of your case, some of these items may or may not be included for consideration.