1. “What is my risk if my client makes mistakes with his Medicare Set Aside (MSA)?”
2. “What’s the chance that Medicare denies my client’s care because the client misused or misreported Medicare Set Aside funds?
3. “Why can’t my client just find coverage through another private insurance plan?”
Determining the best approach to address MSAs with a client in the settlement process can be a challenge for many plaintiff attorneys. The questions above are common among plaintiff attorneys who struggle to provide comprehensive advice to their clients regarding the regulations and ramifications of the Medicare Secondary Payer statute (“MSP”).
There are still quite a few attorneys in the workers’ compensation and liability industries who try to find ways to avoid the need for a Medicare Set-Aside (“MSA”) altogether when their clients settle their claims. It is understandable; the MSP regulations are complex, and the guidelines from the Centers for Medicare and Medicaid Services (“CMS” or “Medicare”) restrict how their clients can use the settlement funds – which their clients do not like at all. In addition, most jurisdictions preclude attorneys from taking contingency fees on medical funds allocated for Medicare purposes.
These factors, among others, can lead attorneys to shy away from addressing MSP issues head-on with their clients and, instead, consider risky approaches that may put them in danger of committing malpractice. This article, in consultation with a number of the nation’s prominent plaintiff attorneys, addresses the less clear aspects of MSP compliance and the common questions attorneys have, as well as how attorneys can best protect themselves and their clients as they address these issues.
Protect Your Client’s Benefits
4. “Will Medicare really deny my client’s benefits?”
5. “Show me a case where Medicare benefits were ever denied or Medicare came after the client or attorney for misappropriated MSA funds?”
As Ametros assists attorneys and their clients all the time with Medicare and MSA issues, these questions are posed to us frequently. We see denials of treatment from CMS after settlement daily. The Medicare administrative contractors in charge of approving all Medicare claims have systems in place to automatically deny injury-related treatments for individuals who have MSAs accounts with remaining funds. The contractors are closely monitoring MSA account recipients using the Mandatory Insurance Reporting Section 111 data they receive from insurance carriers for every single settlement that involves a Medicare beneficiary. They match this data with the injured party’s MSA reporting to verify if the MSA has funding to pay, or if Medicare should accept responsibility for payment.
While very few of the MSA accounts managed by Ametros exhaust, when that occurs, Ametros automatically notifies Medicare of the account’s exhaustion. We are often contacted by Medicare to review the treatments that were paid and to determine exactly when the funds were exhausted. In most cases, Medicare requires receipt of this information before it begins providing coverage for any injury-related bills. There can be a number of unique issues that arise after settlement, such as conditional payments, denials, etc., that require specialized attention to be resolved.
There are no known litigated cases against Medicare for cutting off benefits due to misuse of MSA funds; however, that does not mean that denials of care are not routinely taking place. The ability to deny care and remain the secondary payer is the fundamental right that Medicare established in the federal MSP statute. Most industry experts have seen Medicare increase its commitment to monitoring MSA accounts over the past several years and expect that will continue into the future. In addition to workers’ compensation cases, Medicare has indicated that it plans to also institute a review process for liability cases; it’s a clear sign that, if anything, Medicare is paying closer attention to all settlements.
Here are the facts about MSAs:
There are hundreds of pages of information and reference guides from the Centers for Medicare and Medicaid Services (CMS).
The federal government has made it very clear that it takes MSP compliance seriously. See Ametros’ reference area to review and be able to easily search the substantial documentation Medicare has put out regarding MSP compliance and administration.
The reference guides and memos provided by CMS have some authority, but the authority is not statutory. An attorney could follow all the guidance provided by CMS yet still run some minimal risk of failing to address the regulations under law. Nonetheless, the safest approach is to recognize and consider MSP laws in settlement proceedings, which requires providing thorough client guidance and a qualified advocate, like Ametros, to help the client abide by the guidelines. By doing this, attorneys can show that they did everything possible to protect the client’s Medicare benefits, thus avoiding any successful claim of malpractice.
Insurance Coverage Misconceptions
6. “ But can’t my clients find coverage through another private insurance plan after they settle?”
7.”What about the Affordable Care Act?”
There is a frequent misconception by attorneys that their clients can get insurance coverage elsewhere and thereby not have to worry about an MSA. Although sometimes the injured party may initially be able to get another entity to cover an injury, most of the time insurance carriers are including exemptions for care relating to settled claims. Using another plan may be a good near-term way to save some of the MSA funds, but it may result in confusion over the long term, and the client spending MSA funds to pay for the premiums and deductibles of these new plans will put them out of compliance with Medicare’s guidelines.
Private insurance plans, whether they be Medicare Advantage, Affordable Care Act plans or plans provided through an employer, only last for one year at a time. MSA funds are meant to be used properly for the client’s lifetime. If injured parties believe they can rely on a private plan to cover their injury costs, they have more incentives to use their MSA funds to pay for that plan or for other non-injury related costs. If the private plan they rely upon ceases to exist, increases premiums drastically or starts to deny their injury-related claims, the client will be in a very compromised position. At that point, clients will likely not have a record of what they did with their MSA funds, which will result in Medicare denials if they exhaust their funds. At the heart of the matter, it is risky to assume that a private insurance plan will be in place and available to the injured party for 10, 15 or 20-plus years after settlement.
See also: Get a Grip on Non-Medicare Costs
Over the past several years, private insurance plans have become much more vigilant on MSP matters. Other insurance entities are becoming increasingly savvy regarding the fact that they should not be the primary payer for these work-related or personal injuries and are finding ways to avoid paying. Medicare is the ultimate backstop for an individual’s healthcare, so if the injured party has misused MSA funds and can’t get coverage, there really is nothing left to assist them with their care. When the client has exhausted funds and cannot find private coverage, he will likely make two calls: The first is to his attorney, the second is to a malpractice attorney.
What Is My Responsibility?
8. “I advised him of the risks; what else am I supposed to do?”
For attorneys who recognize the importance of having their clients thoroughly advised and aware of MSP guidelines, they are off to a good start. Many attorneys give their client an overview of the MSA’s purpose but struggle determining how they can truly protect themselves and their client once they hand their client what can be a sizable amount of money.
Medicare does allow for self-administration of MSAs, but there’s good reason that Medicare recently came out and “highly recommended” professional administration. (See Section 17 of Medicare’s updated reference guide.)
Going through self-administration alone has often proven to be too much of a burden and challenge for the injured party. Medicare seems to have realized that its 31-page Self-Administration Toolkit is just too complicated for the average individual to follow. Attorneys need to consider whether their client understands what is happening and must determine whether the client can realistically handle what is being asked of him for the rest of his life. Or as Medicare puts it: Will the client be a “competent administrator?” Providing a professional administrator to help the client with administration of the MSA funds not only shows good faith to abide by Medicare’s recommendation, but it also helps the injured party save money on medical care, remain compliant and have a resource to rely on so that he is not continually reaching out to the attorney after settlement.
As with all decisions, attorneys should consider what approach sets both their clients and themselves up for success and the most defensible case if there are complications down the road. Taking a little extra time to set up professional administration will save the attorney potential exposure on a number of issues. Also, one should not forget: Typically, carriers are offering to pay for the administration service, so it is no extra cost to the attorney or the injured party.
Plaintiff attorneys take enough risks managing and growing their businesses and fighting for their clients’ rights; there is no need to add to those challenges by risking any potential issues with Medicare.