Uncertainty Posed by New Medicare Set-asides for Liability Claims
This article examines the uncertainty posed by the new review process CMS plans to bring for liability claims.
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Medical records analysis is an important process in personal injury and workers’ compensation claims to determine the nature of the injury, its extent and to determine the right course of treatment. Usually, employees have no difficulty in getting their workers’ compensation claims sanctioned. However, sometimes employers may contest the claim or the claim may be contested within the employee’s state’s workers’ compensation process. When such a workers’ compensation or personal injury liability case is settled, the amount of the settlement that is set aside for medical care must be put into a special account called a Medicare Set-aside Account or MSA Account. Once the claimant spends all of the money in his/her MSA Account, Medicare will begin paying bills for the claimant’s injury provided all the funds are spent properly and all the rules for reporting and record keeping are followed. Medicare is involved in the settlement because as per Federal law, Medicare is always a “secondary payer.” This means that if any other insurance is available as from a workers’ compensation or a personal injury suit, Medicare will not pay for a person’s injury unless that insurance becomes unavailable. The MSA Account is the means by which Medicare ensures that it does not pay bills for a person’s injury until his/her settlement funds are spent. MSA Accounts require detailed record keeping and reporting to the CMS and have restrictions regarding how the money in the account can and cannot be spent. Medicare set-asides have been used in workers’ comp settlements since CMS announced in 2001 that claims payers should pay for an injured worker’s future medical care related to their work injury when that person is eligible or expected to be eligible for Medicare. A workers’ compensation Medicare Set-aside Allocation or WCMSA makes an estimate of every possible future medical expense related to the injury, including prescriptions, surgeries, tests, medical procedures, doctors’ visits, equipment, supplies and so on. A Medicare Set-aside process for liability claims that will be introduced this fall is bound to create uncertainty as per recent reports, with defence attorneys trying to determine how much money should be placed in those accounts. Medicare Secondary Payer rules require insurers and self-insured employers to repay the CMS for a Medicare beneficiary’s medical treatment related to workers’ compensation or liability cases.CMS issued a notice in February that it will establish a review process similar to the WCMSA for set-aside accounts related to no-fault claim and liability claim settlements. CMS has advised providers that reimbursement claims submitted to Medicare may be rejected once no-fault and liability set-aside processes start in October when CMS believes that a medical claim should be billed to a Medicare set-aside account. Claimants and their attorneys who are paid through claim settlements could find themselves in a difficult situation for paying medical bills that CMS denies if there is no set-aside account
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established for a no-fault or liability claim settlement. Insurers and self-insured employers would not be responsible for those medical bills because they would have relinquished their responsibility under a settlement. The uncertainties are as follows. •
Determining what portion of a settlement is related to future medical care versus payments for other claims as for instance suffering and pain, past medical care, or mental anguish. This is different from workers’ comp claims, wherein the medical portion of an injured worker’s claim is usually delineated from their wage loss benefits.
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Since no-fault and liability cases are settled at a discounted amount in comparison with the claim’s expected value, claim payers stand the risk of increasing the total cost of the claim if they try to pay for the full future cost of a claimant’s medical care.
Personal injury attorneys and their support services that provide medical record review for attorneys are all anxiously waiting to find out how the insurance sector would address this development.
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