There are more than 46.5 million Medicare recipients in the United States, according to the Kaiser Family Foundation. Of those, 1,636,281 are Michigan residents. Some of these current recipients, and those who will be eligible in the future, have other payer policies available to them, such as workers' compensation. If a Medicare recipient receives a workers' compensation settlement for an on-the-job injury, questions may arise about the worker's duty to pay Medicare for future medical treatment.
What Is a Medicare Set-Aside
A Medicare Set-Aside (MSA) or Medicare Set-Aside Trust allocates a portion of a workers' compensation or other settlement for future medical expenses that would otherwise be paid by Medicare. This is because, in order to preserve Medicare funds, Medicare is a secondary payer after workers' compensation, liability or group health policies, or other available primary payer policies have been exhausted.
According to the Medicare Secondary Payer Act, parties in a workers' compensation case have a duty to consider Medicare's interests. An MSA allows Medicare to identify workers' compensation claims and avoid making payment when a primary payer is available to pay. After a lump sum settlement is received, Medicare will not pay for any future medical expenses until they exceed the amount of the settlement that was allocated to future medical expenses.
The Centers for Medicare & Medicaid Services (CMS) require every workers' compensation settlement and proposed MSA to be submitted for CMS approval. While CMS cannot prevent settlement without its prior review, claimants who do not seek and obtain prior review risk future reimbursement claims from Medicare for conditional payments for care that was covered by workers' compensation. Furthermore, claimants may receive a notice terminating future Medicare coverage or be required to prove that they have spent the entire settlement for Medicare-eligible expenses prior to receiving Medicare reimbursements. Additionally, their Social Security Disability benefits may be affected.
How Do You Seek Approval of a Medicare Set-Aside
While all workers' compensation must be considered for Medicare beneficiaries, CMS currently reviews only claimants who meet certain thresholds for liability settlements. These claimants must set aside some part of the settlement to use for payment of future medical expenses. The allocation must be an approximation of the projected future medical expenses that would otherwise be covered by Medicare over the worker's remaining life expectancy.
The Referral Process
A proposed MSA should be sent to the Coordination of Benefits Contractor (COBC). The referral is forwarded to the COBC contractor in Detroit, who catalogs it and forwards the submission to the Workers' Compensation Joint Venture Contractor. The process is designed to help establish a centralized case control system.
After the contractor has reviewed the referral, it will forward a recommendation to the CMS Regional Office that has jurisdiction over the claim. In determining whether a settlement has sufficiently considered Medicare's interests, CMS attempts to ascertain whether the claimant is attempting to shift liability for the cost of a work injury to Medicare. CMS examines a number of factors, including the date of entitlement and basis of entitlement to Medicare, type and severity of the injury or illness, the amount of the settlement and, if a commutation, whether for the claimant's lifetime or a specific time period.
Timeline for Referral Process
CMS aims to review and complete the approval process within 60 days after receipt of all the required documentation but it may be more realistic to anticipate a response in roughly 90 to 120 days. Claimants who disagree with the amount CMS determines for the MSA can request clarification, a correction of errors (such as mathematical or pricing errors), or in the event there is additional evidence not previously considered, may request re-evaluation.
The MSA should be personalized to fit the individual needs of every claimant. While medical professionals may be versed in the projection of future medical expenses, an experienced attorney can create a customized trust after advising the client of his or her options, including consideration of claimant eligibility for public benefit programs, tax consequences and how to avoid over-funding the MSA. Additionally, if CMS does not agree to the initial set-aside amount, an MSA lawyer can negotiate with CMS, seeking approval of a reasonable amount. Workers' compensation claimants who are or will be eligible for Medicare benefits should seek experienced counsel.
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