Medicare Set-Aside Allocations (MSA)

This terminology and acronym has become the latest “buzz-word” in the insurance/legal industry and is fast becoming a key ingredient to bring a claim to conclusion.This process is currently common practice in the worker’s compensation and liability arenas, and could move into other areas of insurance coverage as it assimilated into each carrier’s routine.

What is a Medicare Set Aside Allocation?

An MSA as a simple concept is an accurate projection of the lifetime future medical costs associated with a claim, that are anticipated to be Medicare covered services.It is a cost projection that goes the additional step to include a separate description and “allocation” of those services that would traditionally be covered by Medicare if there was not another funding source available.Those costs are “set side” from the “allocation” for future medical in an effort to protect Medicare’s interest.

How did this concept evolve?

In an effort to conserve Federal dollars and protect the Social Security and Medicare funds, the concept of the Medicare Secondary Payer (MSP) legislation was introduced around 1980, although it did not come to the forefront until 1995.The core concept of this legislation proposed that Medicare would always remain the “secondary payer” if a “primary payer” existed, regardless of the status of the claim with the primary payer.This statute was adopted to protect Medicare’s interests by curtailing the common practice of shifting the burden of the cost of future care to Medicare, in the event of a claims settlement.The statute applies to liability cases and benefits available under the Federal Black Lung and Longshore programs, but the majority of the focus lies with worker’s compensation benefits, as they represent the largest percentage of claims. In May 2001, after a lengthy study, a report was submitted to Congress to confirm the potential loss of billions of dollars if the statute was not enforced.At that point the Center for Medicare and Medicaid Services (CMS) was created within the HCFA structure, to focus on coordination of benefits from primary payer sources.According to the Policy enacted 7/11/01, CMS requires that Worker’s compensation carriers proposing settlements that include dollars allocated for future medical expenses obtain prior approval of the MSA from their regional CMS office.

Who is involved?

Medicare Set Aside Allocations require input from the providers, injured worker, plaintiff and defense councils and the carrier, to provide the most accurate and up to date information to compile the MSA.Provision of current data allows the consultant to offer the most valid future care projections and the most accurate representation of an appropriate set aside allocation to protect Medicare’s interests.Once an allocation is complete, it is submitted to CMS for approval.

How do you determine if a claim requires an MSA?

In the CMS policy memorandum of 2001, and subsequent revisions, there are two categories of settlements that require MSA consideration:

Class 1 – the settlement involves an injured party that is already a Medicare recipient, regardless of the dollar amount of the settlement.<>This would include the older injured worker who is Medicare eligible based on age, as well as the younger Medicare recipient based on SSD eligibility.

Class 2 – this designation is a “two-pronged” test:
the injured party must have reasonable expectation of becoming a Medicare recipient within the next 30 months ie: they have applied for SSD or they have been denied and are appealing the decision or they are 62 ½ years old or they have end stage renal disease, but are not yet on Medicare

AND - the TOTAL settlement value (indemnity, medical and attorney fees) is greater than $250,000.

What if the injured worker doesn’t want to “set-aside” part of their settlement?

This process and policy is based on legislation that is now being enforced through the efforts of the regional CMS offices. It is no longer a voluntary process, it is mandated, if the claims’ settlement falls into one of the categories noted above.All the parties involved can be held liable if the set aside allocation does not adequately cover Medicare allowable future medical expenses and can be fined or held responsible to provide additional funding.The lack of a proper MSA can also jeopardize the recipient’s future Medicare eligibility, should CMS determine that appropriate allocation arrangements were not included in the original settlement. Therefore, it is no longer negotiable to eliminate the need for an MSA; it must be included in the settlement. The approval process through CMS currently takes six to nine months, depending on region, so some carriers have elected to proceed with the settlement without prior of approval of the MSA, with the understanding that additional funds will be allocated, should the original MSA not meet CMS approval. Proper documentation is crucial! If accurate information was available to formulate an appropriate MSA, it is unusual for CMS to reject the proposed MSA after the fact.

What is the current process for an MSA?

If you have identified a file that meets the criteria for an MSA you can fax a completed referral form to 574-825-3355 for immediate submission.

The usual turn around time for a completed allocation is dependent on the complexity of the case. Special exceptions can be made for extenuating circumstances, if consultant availability allows, however there is an additional charge for rush cases. Fees vary with the complexity of the claim, please contact the office for a detailed fee schedule for this product line.

After submitting the referral, please forward the required documentation to include: initial notice of injury, any and all available medical records **, current medication listings and claims payment data.Legal information and/or claims notes should be included if they impact the anticipated future care (for example a stipulation limiting care, a controverter case, a contribution claim with another carrier, etc).Please include the original signed releases authorizing communications with Medicare/Social Security. . Incomplete records can delay the processing of your file and may not serve your needs in a timely manner. We will notify the referring party if required documentation is missing from the original packet.

***if the claim is over 10 years old, or very complex, it is not necessary to forward each individual record, however major consultations, IME’s, hospitalization discharge summaries, major diagnostic studies and any new evaluations should be included.

Our consultants will review the medical records and provide a chronological summary of the claim, along with future care recommendations and an anticipated Medicare set aside allocation within the expected time frames.