FAQ's - MEDICARE SET-ASIDES
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1. What is a Medicare Set-Aside arrangement?
A Medicare Set-Aside (MSA) arrangement is a document that specifies future
injury-related medical needs and associated costs. Only Medicare-covered expenses
are identified and costs are based upon what would ordinarily be paid by Medicare
within the beneficiary’s state of jurisdiction.
Based upon the MSA projection, part of a settlement award is “set-aside” in
order to pay for the costs of future care which would ordinarily have been
paid by Medicare.
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2. What is the purpose of a Medicare Set-Aside arrangement?
The Medicare Secondary Payer (MSP) statute was created in 1980 to ensure
that Medicare was secondarily responsible for payment of medical expenses incurred
by Medicare beneficiaries who were also covered by other insurance carriers.
This statute was established in an effort to maintain the solvency of the Medicare
benefit program by preventing insurance companies and other payers from shifting
the burden of future injury-related expenses to Medicare.
The development of a Medicare Set-Aside allows parties to satisfy the requirements
of the MSP by considering Medicare’s interests when settling future medical
expenses. Although this statute has been in place since 1980, the Centers for
Medicare and Medicaid Services (CMS) have only recently begun to aggressively
seek set-asides for qualified settlements.
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3. When is a Medicare Set-Aside arrangement necessary?
Federal guidelines clearly specify that Medicare's interests must always
be considered (regardless of the amount of the settlement) before settling
a worker’s compensation or personal injury claim if the claimant is a
Medicare beneficiary.
Those who are not currently receiving Medicare benefits are obligated to
establish a Set-Aside fund if both of the following
conditions are met:
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There is a "reasonable expectation" of Medicare enrollment within
30 months of the settlement date, and
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There is an anticipation of receipt of a “total settlement” of
more than $250,000.
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4. How is a Medicare Set-Aside arrangement developed?
The development of a Medicare Set-Aside (MSA) arrangement is complex. The
following general components are involved in establishing a comprehensive MSA:
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Review of medical records, including billing records
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Verification of eligibility for Social Security and/or Medicare benefits
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Secure rated age, if applicable
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Obtain treating provider recommendations and research applicable standards
of care and clinical practice guidelines
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Conduct a Medicare lien inquiry
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Identify future medical needs, Medicare-covered items, and costs charged
to Medicare within the injured individual’s geographic region
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5. What are the consequences for non-compliance with the MSP statute?
Ramifications of non-compliance can be severe. Among these, the Centers for
Medicare and Medicaid Services (CMS) may:
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Deny the claimant future medical care
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Designate its own allocation (which may be the entire settlement amount)
if an allocation is unreasonable or non-existent at the time of settlement
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Sue the claimant, the claimant's attorney, and/or the insurance carrier
for payment. In a suit against an insurance carrier to recover its MSP claim,
double damages may be sought.
In addition, a claimant may file a malpractice suit against his/her attorney
after the case has been settled.
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