What are Medicare Set-Aside Agreements?
A Workers’ Compensation Medicare Set-Aside Agreement (MSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the work injury that Medicare would have otherwise paid. The purpose of the MSA is to protect the Medicare Trust Fund by ensuring that Medicare does not pay for certain medical treatment when other health insurance coverage should apply. MSAs also protect injured workers by ensuring that they get coverage for medical treatment. Once the injured worker exhausts the MSA funds, Medicare will pay for allowable expenses in excess of the properly exhausted MSA funds. If Medicare denies coverage because an MSA was under-funded, then the Claimant can sue the carrier for under-funding the MSA and causing a loss of benefits.
When settling a workers’ compensation case, it will be necessary that all parties consider Medicare’s interest, regardless of the amount of the settlement. The Centers for Medicare & Medicaid Services (CMS) will review and approve MSAs in the following when the settlements are above certain threshold amounts. The following circumstances call for CMS approval of an MSA:
- The Claimant is a Medicare beneficiary at the time of settlement 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.
“Total settlement amount” includes but is not limited to wages, attorney’s fees, all future medical expenses, and repayment of any Medicare conditional payments.
In reviewing MSAs for approval, CMS will need to conduct an independent review of the Claimant’s conditions and future medical needs to give an opinion on the value, and for this the Claimant must sign a Consent to Release.
Employers do not always have to set aside funds for Medicare. There can be a “zero-dollar set-aside” if:
- It is a denied claim and no payments have been made by the Employer other than “expenses” (for example, IME fees, mileage); or
- The injury is not compensable per a court order or a physician’s opinion that any future treatment will not be work-related.
If an MSA was under-funded, Medicare does not have a private cause of action against the carrier, however, the Claimant could technically sue the carrier for this. To avoid getting sued, defense attorneys might include language in the MSA that the Claimant will hold the carrier harmless.
If the value of future medical care changes drastically, an MSA can be amended. Amendments can be requested as long as the request is submitted within 1 to 4 years after CMS approval and there is a 10% or $10,000 change in the valuation of the claim based on a change in treatment. The new MSA must be submitted with an itemization of the changes in treatment.
If a Claimant is not Medicare eligible and the workers comp settlement is lower than the threshold amount, in lieu of a formal MSA, the parties can get a medical cost projection (MCP). An MCP, usually prepared by a registered nurse, compiles information from past and present medical records to accurately project future medical costs through a claimant’s lifespan. MCPs are informational and aid in setting reserves for medical and prescription drug costs.