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3 Myths and Facts About Medicare Set-Asides

3 Myths and Facts About Medicare Set-AsidesA Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. Workers compensation carriers are often required to establish Medicare Set-Asides (MSAs) that help pay for future work-related injury costs. These funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease. Simply put, MSAs were created to protect Medicare from paying for medical benefits that should have been paid for by the party responsible for the injury.

MSAs are only relevant to workers’ compensation cases in which the claimants are either eligible for Medicare or will become eligible in the near future. While the MSAs process should be fairly straightforward, insurance agents and claims managers often become frustrated, costing them excess time and money when determining how to approach it. Here are three common myths and facts about medicare set-asides that may help agents and claims managers avoid making costly mistakes:

Myth #1: “MSAs aren’t necessary for workers’ compensation cases under $25,000.”

The Centers for Medicare & Medicaid Services (CMS) has monetary thresholds in place to reduce workload, but regardless of the settlement account, parties are still required to consider and protect Medicare’s interests if the claimant is, or will soon be, Medicare eligible. The CMS states: “All parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases that include future medical expenses.  The recommended method to protect Medicare’s interests is a WCMSA.”

Myth #2: “MSAs prevent workers’ compensation claims from being settled.”

MSAs are recognized as a tool in taking Medicare’s interest into consideration, and are part of the settlement process with medicare eligible claimants. According to the most recent NCCI study, MSAs represent more than 40% of total submitted workers compensation settlement costs. Additionally, 22% of the total settlement ,on average, is for the portion of the MSA covering Medicare Part D (prescription drugs) and 20% is for the portion of the MSA covering Medicare Parts A and B (hospital stays, office visits, and related services). The rest of the settlement is for costs other than MSAs, such as indemnity coverage, medical costs not covered by Medicare, and other expenses such as attorney fees. By incorporating MSAs into the settlement practice, Medicare’s interests are protected, and the claim can be settled.

Myth #3: “The settlement language will prevent penalties brought on by Medicare.”

The Medicare Secondary Payer Act requires parties to consider Medicare’s interests with regard to the settlement of the medical portion of the claim. Because Medicare is not a party to the settlement, it does not consider itself bound by the terms of settlement. Therefore, Medicare may pursue recovery, regardless of the settlement, if it does not believe the parties adequately considered Medicare’s interests. Medicare has the right to come after any party involved who did not protect their interests; regardless of what the release states.

About ASIA Workers’ Compensation

Associated Specialty Insurance Agency, Inc. has been “The Workers’ Compensation Specialist for Brokers and Agents” for the past two decades and is committed to providing brokers and insurance agents across the East Coast with expertise and services to develop a Workers’ Compensation policy. For more information about how we can assist you with claims management, anti-fraud measures, and more call (610) 543-5510 to speak with one of our professionals.

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