What are your options when an Medicare set-aside (MSA) has derailed your settlement discussions or, complicated resolution of a claim with a Medicare beneficiary?
Concerns about protecting Medicare’s interests come into play when settling future medical care in workers’ compensation claims where the applicant is either a current Medicare beneficiary or has a reasonable expectation of becoming a beneficiary within 30 months. Typically, this type of settlement will require a carrier to obtain an MSA, which is then self-administered by the applicant. These MSAs require the applicant to administer their own medical treatment and provide an accounting to CMS.
Once the future medical care in the workers’ compensation claim has settled, Medicare will require the applicant to show they have exhausted their settlement funds before covering any treatment related to industrial body parts- and insurance carriers are not necessarily protected from Medicare seeking reimbursement for covered treatment. But what are the options for settling a claim with an applicant who is also a Medicare beneficiary?
The initial question is, will a traditional Compromise and Release that resolves all issues require an MSA?
First, if the Applicant in your claim is a current Medicare beneficiary, you will need an MSA for all settlement at or above $25,000.00.
Secondly, if the applicant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months, you will need an MSA if your settlement is at or above $250,000.00. But what does “reasonable expectation” mean where CMS is concerned?
The term “reasonable expectation” has been defined as follows: Where the applicant
- has applied for Social Security Disability Benefits,
- is currently or plans to appeal a Social Security Disability denial,
- is 62 ½ years old or older
- suffers from end stage renal disease, but has not yet qualified for Medicare due to this condition, they have a reasonable expectation of becoming a beneficiary within 30 months. (See our discussion of MSA use in C&R settlements here)
The most common alternative to settlement with an MSA is the Stipulation with Request for Award. This option leaves most issues open, except for permanent disability and those issues specifically resolved by the parties by stipulation. This is the most specific, restricted type of settlement of a workers’ compensation matter and requires that future medical care be administered for the life of the claimant. It also leaves open the potential for a petition for new and further disability for five years from the date of injury.
INDEMNITY-ONLY COMPROMISE AND RELEASE
A lesser-used settlement option is the indemnity-only Compromise and Release. This leaves future medical care open. Where the buyout of future medical care, with or without an MSA, is too costly, the parties may wish to consider this method of settlement. Settlement in this manner closes out all issues through the date of settlement, except for future medical care. This forecloses applicant’s ability to file a petition for new and further disability, and can resolve additional issues such as disputed body parts and potential 132a and/or serious and willful petitions. This method of settlement resolves more issues than a Stipulated Award, but does still leave open the administration of future medical treatment for the life of the claimant.
An emerging option for settlement of Medicare beneficiary involved claims now also includes the potential use of a Medicare Set Aside Administrator. These companies use principles of financial management and medical cost containment to reduce exposure while protecting Medicare’s interests. These programs also take the reporting to CMS requirements out of the applicant’s hands and, thus, help to mitigate risk by ensuring post-settlement CMS compliance. MSA administration through a third party is a novel approach to administration of future medical care using an MSA, and a potential alternative to settlement via traditional Stipulated Award or Compromise and Release using self-administered MSA.
Whatever the situation, a self-administered MSA is not necessarily your only option for resolution of future medical care with a Medicare beneficiary. Be sure to explore all of your options before settling out future medical care!
If you have questions regarding Medicare Set Asides or workers’ compensation claims, feel free to contact Zane P. Uribarri at Bradford & Barthel’s Ontario office at (909) 476-0552 or firstname.lastname@example.org. Mr. Uribarri has defended workers’ compensation claims for over 10 years.
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