MSA ADVOCATES, INC.

MSP CLAIMS (Medicare Secondary Payer Claims)

Medicare/CMS Approval of Medicare Set Asides (MSA) for the Settlement for Workers’ Compensation Claims

Medicare Regulations at 42 CFR 411.46 states that:

“If a lump sum compensation award stipulates that the amount paid is intended to compensate the individual for all future medical expenses required because of the work related injury or disease, Medicare payments for such services are excluded until medical expenses related to the injury or disease equal the amount of the lump sum payment”.

In addition, the Medicare manuals Section 3407.8 of the MIM, Section 2370.8 of the MCM states:

“When a beneficiary accepts a lump sum payment that represents a commutation of all future medical expenses and disability benefits, and the lump sum amount is reasonable considering the future medical services that can be anticipated for the condition, Medicare does not pay for any items or services directly related to the injury or illness for which the commutation lump sum is made, until the beneficiary presents medical bills related to the injury equal to the total amount of the lump sum settlement allocated to medical treatment.”

MEDICARE SET ASIDES (MSA)

The Department of Health and Human Services have provided the following criteria and if the Workers’ Compensation file falls under one or more of the following qualifying criteria, a Medicare set aside is required:

  • When the claimant/beneficiary is clearly a Medicare beneficiary no matter the amount of settlement.
  • Commutation vs. Compromises: Medicare/CMS defines commutations and compromises as follows: Commutation: WC settlements that are intended to compensate the claimant/beneficiary for future medical expenses. Compromises: WC settlements intended to compensate the claimant/beneficiary for current or past medical expenses. (Most Section 32’s are Commutations) Medicare/CMS interests must be considered where the settlement involves future medicals and the claimant/beneficiary is eligible for Medicare. A settlement is considered a commutation regardless of liability. The distinction rests solely on whether the settlement involves future medical exposure.
  • If the claimant/beneficiary is not yet eligible for Medicare but there is a reasonable expectation of the Medicare within 30 months AND the future medical AND indemnity being offered in the settlement exceeds $250,000.00.
  • The claimant/beneficiary is 62 years and six months old or older (may be eligible for Medicare based upon age (65) within 30 months) AND the future medical AND indemnity being offered in the settlement exceeds $250,000.00.
  • The claimant/beneficiary has an End Stage Renal Disease (ESRD) that does not yet qualify for Medicare based upon ESRD.

Workers’ compensation settlements with full settlement values of $25,000.00 or less do not require written approval from CMS/Medicare for the Medicare set aside completed for the settlement of the claim. However, CMS/Medicare Rules require that their interests still be protected and the same outlined in the Settlement Agreement and Release for the workers’ compensation settlement. Please see CMS/Medicare’s Memo of April 25, 2006 for details.

This memo and other memos addressing the CMS/Medicare Rules for Medicare set asides can be found CMS/Medicare’s web site:

If there are any outstanding liens that may have been generated by Medicare’s conditional payment(s) of compensable medical bills, these conditional payments (liens) must be identified and resolved with Medicare. The liens may be resolved after settlement.

The current CMS/Medicare Rules allow for the Medicare set aside allocation to be computed using the State’s workers’ compensation medical fee schedule or usual and customary medical billing rates. The State’s workers’ compensation fee schedule may reduce the amount of the Medicare allocation. However, it is important to note that the recent rules of CMS/Medicare indicate any Medicare covered treatment for the work injury and/or illness in excess of the fee schedule may not be paid out of the Medicare set aside. The workers’ compensation release should outline what schedule was used to compute the Medicare set aside. Therefore, any excess payments in this regard may bethe responsibility of the claimant/beneficiary. We strongly suggest that a statement be obtained from the claimant/beneficiary that this is agreed to and is understood. MSA Advocates, Inc. is not providing legal advice on this matter and we urge all our client’s to review the current rules of CMS/Medicare at their web site: In addition, we recommend that all our clients seek legal advice on this matter before deciding to use the State’s workers’ compensation fee schedule for the computation of the Medicare set aside.

The Medicare set aside can be self-administered by the claimant/beneficiary. Language regarding the Medicare set aside and the self administration of the Medicare set aside account is required by CMS/Medicare for the Workers’ Compensation Release. In addition, if a Medicare custodial account is requested by the claimant/beneficiary or attorney, MSA Advocates, Inc. can assist the parties in setting up the same. Upon request, MSA Advocates, Inc. will provide language that has been approved by CMS/Medicare for the Workers’ Compensation Release.

An annuity may be used to fund the Medicare set aside providing more of the settlement money to be used for indemnity and a “deductible program” for the claimant/beneficiary. Contact MSA Advocates, Inc. for information regarding the use of structures to fund the Medicare set aside.

Simply assign the file and MSA Advocates, Inc. will take care of the details.

MSA ADVOCATES, INC. IS AVAILABLE TO ASSIST CLIENTS IN NAVIGATING THE CMS/MEDICARE REQUIREMENTS FOR REPORTING CLAIMS UNDER SECTION 111 OF THE MEDICARE, MEDICAID AND SCHIP EXTENSION ACT OF 2007.

Contact us:

MSA Advocates, Inc.

505 East Fayette Street

Suite 214

Syracuse, New York 13202

Phone: 315-472-7965

Fax: 315-472-2616

Email:

Web Site:

Date: 10/05/2018

Page: 1 WC Consultants, LLC