1. “What is my risk if my client makes mistakes with their MSA?”
2. “What’s the chance that Medicare denies my client’s care because they misused or misreported their 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 their client in the settlement process can be a challenge for many plaintiff attorneys. The questions above are common amongst 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 that 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 a malpractice claim. This article, in consultation with a number of the nation’s prominent plaintiff attorneys, addresses the less obvious 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?”
Denials of treatment from CMS after settlement occur daily. The Medicare Administrative Contractors in charge of approving all Medicare claims have systems in place to automatically deny injury-related treatments for individuals that 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 payment.
Generally, very few of the MSA accounts managed by professional administration exhaust, when that occurs, the administrator should automatically notify 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 they begin 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 as well; it’s a clear sign that, if anything, Medicare is paying closer attention to all settlements.
Facts about MSAs:
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 the 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, to help the client abide by the guidelines. By doing this, the attorney 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 their 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 which will put them out of compliance with Medicare’s guidelines.
Private insurance plans, whether they be Medicare Advantage, Affordable Care Act plans, or 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 the injured party believes they can rely on a private plan to cover their injury costs, they may be more incentivized 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 have put themselves in a very compromised position. At that point, they 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+ years after settlement.
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 their MSA funds and can’t get coverage, there really is nothing left to assist them with their care. When the client has exhausted their funds and cannot find private coverage, they will likely make two calls: The first is to their attorney, the second is to a malpractice attorney.
What is My Responsibility?
8. “I advised them of the risks, what else am I supposed to do?”
For attorneys that 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 to determine how they can truly protect themselves and their client once they hand their client what can be a sizable amount of money.
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 they can realistically handle what is being asked of them for the rest of their lives. Or as Medicare puts it: will they 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 their medical care, remain compliant and have a resource to rely upon so that they are not continually reaching out to the attorney after settlement.
Get Professional Administration Involved
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 get a professional administrator involved to explain what the MSA is and to set up 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 client’s rights; there is no need to add to those challenges by risking any potential issues with Medicare.
If you have questions about MSA compliance and administration, don’t hesitate to reach out to our team of experts.
Porter Leslie is the President of Ametros. Porter has a passion for directing the growth strategy of Ametros and working with its many partners and clients. He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, Porter worked in investment banking, private equity and corporate development.
Porter earned a B.A. in Economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. Porter is fluent in Spanish and Portuguese and resides in Boston with his wife, Ruth, and son, Camilo. Contact: https://www.ametroscards.com/porter-leslie/
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