1. Bradley J. Frigon, JD, LLM (Tax), CELA
MSA Update
Bradley J. Frigon, JD, LLM (Tax), CELA
Certified Elder Law Attorney
6500 S. Quebec St. Suite 330
Englewood, CO 80111
(fax)

2. The New MMSEA Statute Says Nothing About MSAs
Despite considerable urban legend to the contrary, the MMSEA statute does not contain any new guidance or requirements related to MSAs.
The MMSEA statute requires Responsible Reporting Entities (RREs) to report certain information regarding settlements with Medicare beneficiaries to the Secretary of Health and Human Services. The sole purpose of Section 111 of the MMSEA is to ensure that settling parties fully comply with the Medicare Secondary Payer requirement – that is, past Medicare payments must be verified and resolved in all liability, workers’ compensation and no-fault settlements.
Fines and penalties for not reporting.
This new law (to date) has nothing to do with identifying Medicare-covered future costs of care, which leads to MSA issues and analysis.
Most experts believe that CMS will eventually use this information to determine if future injury related medical expenses are being paid by Medicare. Prior to MMSEA, CMS could not track these cases.

3. Medicare Set Aside in Personal Injury Cases
CMS asserts that Medicare is still a secondary payer after the settlement of a personal injury claim.
Authority is based upon Section 1862(b)(2)(A)(ii) of the Social Security Act and 42 U.S.C §1395y (b)(2)(A):
Payment under this title may not be made with respect to any item or service to the extent that. . .
(i) payment has been made, or can reasonably be expected to be made, with respect to any item or service required under paragraph (1) {describing primary insurance plans}, or
(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under a no fault insurance plan.

4. Medicare Set Aside in Personal Injury Cases
Section 1862(b)(2)(A)(ii) of the Social Security Act precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance. Anytime a settlement, judgment or award provides funds for future medical services, it can reasonably be expected that those funds are available to pay for Medicare covered future services related to what was claimed and/or released in the settlement, judgment, or award. Thus, Medicare should not be billed for future services until those funds are exhausted by payments to providers for services that would otherwise be covered by Medicare. Sally Stalcup, Region 6, MSP Regional Coordinator, UTSNT 2007 Conference, Medicare Set- Asides, February 2007.

5. Medicare Set-Asides - - -
We (CMS) uses the phrase “case related” because we consider more than just services related to the actual injury/illness which is the basis of the case.  Because the law precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance, Medicare’s right of recovery, and the prohibition from billing Medicare for future services, extends to all those services related to what was claimed and/or released in the settlement, judgment, or award.  Medicare’s payment for those same past services is recoverable and payment for those future services is precluded by Section 1862(b)(2)(A)(ii) of the Social Security Act.  

6. Medicare Set-Asides - - - Cont.
While it is Medicare’s position that counsel should know whether or not their recovery provides for future medicals, we are frequently asked how one would ‘know.’  Consider the following examples as a guide for determining whether or not settlement funds must be used to protect Medicare’s interest on any otherwise Medicare covered, case related future medical services: 
Does the case involve a catastrophic injury or illness? 
Is there a Life Care Plan or similar document? 
Does the case involve any aspect of Workers’ Compensation? 
*This list is by no means all inclusive.

7. CMS Policy for Denver and . . . .
At this time, the Centers for Medicare & Medicaid Services (CMS) is not soliciting cases solely because of the language provided in a general release. CMS does not review or sign off on counsel’s determination of the amount to be held to protect the Trust Fund in most cases. We do however urge counsel to consider this issue when settling a case and recommend that their determination as to whether or not their case provided recovery funds for future medicals be documented in their records.   Should they determine that future services are funded, those dollars must be used to pay for future, otherwise Medicare covered case related services.
There is no formal CMS review process in the liability arena as there is for Worker’ Compensation, however Regional Offices do review most submitted set-aside proposals.  
On occasions, when the recovery is large enough, or other unusual facts exist within the case, this CMS Regional Office will review the settlement and help make a determination on the amount to be available for future services.   

8. Statutory Problems in Applying WC Rules to PI Cases
The term “Medicare Set Aside Arrangement” is not found in any statute or regulation. It was created by CMS as a “safe harbor” method to reasonably consider Medicare’s interest in WC cases.
Only reference to MSA is found in the MSP Manual.
A worker compensation claim is not the same as a personal injury claim.

9. Medicare Secondary Payer (MSP) Manual Chapter 1 - Background and Overview Definitions Section 20
Set-Aside Arrangement – An administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A set-aside arrangement may be in the form of a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA).

10. Statutory Problems
Section of the MSP Manuel provides in part as follows:
Contractor Action if a Liability Claim Is Pending and Medicare Benefits Were Paid
“There should be no recovery of benefits paid for services rendered after the date of a liability insurance settlement. However, the entire amount of a settlement is subject to recovery, whether the liability payment is made at the time of settlement, or over a period of time agreed to by the parties in a structured settlement.”

11. Statutory Problems
Reference to future medical expenses is found in 41 CFR However, the regulation references future medical expenses for a “work-related injury or disease.” There are no existing regulations that references future medical expenses for a personal injury case.
Lump-sum commutation of future benefits. 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.

12. MSP Rules Are Clear
MSP regulations allow for a private cause of action against a primary payer that fails to reimburse Medicare or otherwise make payment.
The private cause of action applies to anyone involved in the settlement of a claim with a Medicare beneficiary. This includes YOU.
It does not matter to Medicare if you have already paid the plaintiff.
With MMSEA, CMS has the ability to track all prior conditional payments.

13. No MSA Required When
1. Currently, not a Medicare beneficiary or likely to be a Medicare beneficiary within the next 30 months, then no MSA issue. 2 If the claimant will be a Medicare beneficiary in the next 30 months and the total settlement is less than $250,000, then CMS does not require the set aside be submitted for approval. Still must consider Medicare’s interest, but do not need to submit to CMS for approval. For a current Medicare beneficiary, total settlement must be less than $25,000 before no submittal is necessary. 3 Medicare set aside issues do not apply to Medicaid beneficiaries. 4. Damages are not being paid for a personal injury claim.

14. MSA must be considered in the following cases:
Current Medicare beneficiary, applied for SSDI or will eligible for Medicare due to age within 30 months.
If a workers compensation claim is being settled in a third party liability case.

15. In the good old days, I only had to worry about. . .
Develop a specific check list for cases that have a MSP/MSA issue.
Keep updated. CMS does not have a policy. Currently, each regional office is making up their own submission requirements. Most regional offices want you to follow WC guidelines.
Likely, Medicare beneficiary will be denied coverage by Medicare for medical services completed after settlement that are related to the injury.
Incorporate specific language that addresses these issues in your release and settlement documents.
Verify that plaintiff’s counsel has contacted COB office early in the case to ascertain MSP claim.
Know how you are going to address the MSA/MSP issue at the time of settlement, not as an after thought when you are ready to write the settlement check. See Tomilson v. Landers, 2009 WL (M.D.Fla.)
Be careful of a claimant that is not represented by counsel.
Request a review or opinion by outside counsel or have outside counsel available at the mediation to advise you on public benefit, MSA/MSP issues.

16. Sample Release and Settlement
0 COMPLIANCE WITH OBLIGATION TO PROTECT MEDICARE’S INTEREST
The parties acknowledge that Claimant currently receives Title II (Social Security Disability Income) monthly disability benefits from the Social Security Administration. The parties agree that this Settlement and Release Agreement is not intended to shift to the Center for Medicare and Medicaid Services (CMS) the responsibility for payment of the Claimant’s future medical expenses related to the alleged occurrence describe herein. To that end, Claimant shall establish, fund and administer a Medicare Set-Aside Arrangement pursuant to the requirements of the Section 1917(d)(4)(A) of the Social Security Act Section 42 USC 1395y(b)(2) and the regulations and policy memoranda issued by CMS applicable to and interpreting Medicare Set-Aside allocations, being 42 C.F.R et seq. These efforts have been undertaken by Claimant without the participation or consultation of Defendant or Insurers. Claimant agrees to indemnify, defend and hold harmless Defendant, Insurers and all persons or entities released by name or description in this Settlement Agreement from any loss, damage or claim, including attorney fees that occurs to Defendant or it’s Insurers by reason of Claimant’s failure to consider Medicare’s past or future interest in this settlement, and all matters related to the creation and administration of the Medicare Set-Aside Arrangement. THIS IS SAMPLE LANGUAGE AND SHALL NOT CONSTITUTE LEGAL ADVICE.