On May 25, 2011, Sally Stalcup, the MSPMedicare Secondary Payer Act Regional Coordinator for Region VI of CMSCenters for Medicare and Medicaid Services, issued a “handout” in response to recurring questions her office has received, particularly surrounding whether an MSAMedicare Set-Aside is required. The handout is Ms. Stalcup’s attempt to provide clarification on several issues including the use of MSAsMedicare Set-Asides in liability settlements. For a copy of the handout, click here. Let us examine the handout’s key sections.
As an initial matter, Ms. Stalcup’s handout is simply her opinion, as a Regional Administrator for CMSCenters for Medicare and Medicaid Services in Oklahoma, Texas, New Mexico, Louisiana, and Arkansas. It is not meant to replace any laws or regulations and should not be considered a CMSCenters for Medicare and Medicaid Services official statement of policy.
Ms. Stalcup, right off the bat, provides two key points. First, that “The law does not require a ‘set-aside’ in any situation.” Second, that the CMSCenters for Medicare and Medicaid Services “method of choice” is the set-aside, and the agency feels it “provides the best protection for the program and the Medicare beneficiary.”
To the extent that some individuals believe MSAsMedicare Set-Asides are “required by law,” Ms. Stalcup’s first two points should clear up this confusion. However, what is less clear, and discussed in two and half pages of a three-page handout, is how concerned parties should protect their interests in attempting to obtain approval that a settlement has, in fact, sufficiently protected Medicare’s interest. Unfortunately, the answer to this question is not provided.
Ms. Stalcup’s handout does acknowledge that under existing law Medicare shall not be billed for future services until settlement funds are exhausted by payments to providers for services that would otherwise be covered and reimbursed by Medicare.
If a set-aside of some kind is not used, how would a claimant’s future Medicare benefits be protected from some future claim challenging the use of these funds? This is not answered, and as Ms. Stalcup suggests, there is no statutory solution to this question. If the parties attempt to set-aside funds for future Medicare benefits, but arbitrarily designate a specific amount to be set-aside, then what analysis would CMSCenters for Medicare and Medicaid Services use to determine if this Medicare’s interests have been met? CMSCenters for Medicare and Medicaid Services has not opined on this issue either.
Ms. Stalcup further mentions that Medicare payment for services is precluded to the extent that payment has been made or can reasonably be expected to be made promptly under workers’ compensation and liability insurance. She highlights upon the word “reasonably expected” by stating that, “Anytime a settlement, judgment, or award provides funds for future medical services, it can reasonably be expected that those monies are available to pay for future services related to what was claimed and/or released in the settlement, judgment, or award.” This statement appears to be a reference to CMSCenters for Medicare and Medicaid Services’ policy concerning a primary payer’s payments made on potentially disputed claims and the CMSCenters for Medicare and Medicaid Services position that once payment is made, the primary payer assumes continual payment responsibility even if it is later determined that the payer is not legally responsible for such payment.
Reviewing Ms. Stalcup’s discussion of liability MSAsMedicare Set-Asides she states that, “There is no formal CMSCenters for Medicare and Medicaid Services review process in the liability arena as there is for Worker[s]’ Compensation. However, CMSCenters for Medicare and Medicaid Services does expect the funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is ever billed. CMSCenters for Medicare and Medicaid Services review is decided on a case by case basis.”
In essence, what Ms. Stalcup is saying is that a liability MSAMedicare Set-Aside is not required, but as stated previously, if one is not established in a settlement that forecloses future medicals, Medicare will require the entire settlement amount to be exhausted before Medicare will pay for any expenses related to the injury. This is something we have known all along as well; yet the liability industry remains resistant to accepting the fact that jeopardizing a plaintiff’s Medicare benefits by not providing an MSAMedicare Set-Aside could result in a malpractice lawsuit against the plaintiff’s attorney or perhaps a bad faith action against the carrier.
Ms. Stalcup states that with each settlement, “Each attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds.” Unfortunately, it is not quite that simple in reality. The parties to a settlement might not elect to establish an MSAMedicare Set-Aside, and will include statements to the plaintiff within the settlement documents surrounding the repercussions of not establishing an MSAMedicare Set-Aside, but does the plaintiff really understand that they will have to spend their entire settlement before they will get Medicare coverage related to their injury again? Do they really understand that their Medicare benefits will be cut off? On the other hand, if the parties to a settlement include an MSAMedicare Set-Aside as part of their settlement, and the cost of future medicals exceeds the settlement amount, what are the parties to do then? CMSCenters for Medicare and Medicaid Services has not provided guidance on this issue, nor provided a framework for which MSAsMedicare Set-Asides would work from a practical standpoint in liability settlements.
In summary, while the handout leaves many questions unanswered, the industry is appreciative of some guidance from Ms. Stalcup and hopes to see more communications from CMSCenters for Medicare and Medicaid Services that address the industry’s concerns.
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