By: Brian Schultz

It often seems like The Centers for Medicare & Medicaid Services (CMS) has gone out of its way to leave us all in the dark when it comes to guidelines for Liability Medicare Set-Aside (LMSA) Arrangements. Despite announcing its intention to create LMSA guidelines back in September of 2019, CMS followed it up with almost half a dozen official “delays” before finally withdrawing it on October 13, 2022. So, does that mean the very idea of LMSAs should be kicked to the curb? Not at all.

Even with the little guidance offered on liability cases from CMS, more specifically, CMS has not provided clear guidance on what actions will constitute “reasonable consideration” of Medicare’s future interest in liability claims.  Whether the case is a WCMSA or LMSA, Medicare Set-Asides (MSAs) Arrangements are not mandatory, but the law requires that the Medicare Trust Fund be protected from payment for future medicals whether it is a Workers’ Compensation or liability case.  There are two laws which protect the Medicare’s Trust Fund: 

1. The Medicare Secondary Payer Act (MSPA) of 1980, which requires Medicare to be a secondary payer when another insurance is available.  The MSP applies to past and future benefits paid by Medicare. This statute indicates that Medicare wants to be repaid for any conditional payment made when another insurer should be the primary payer.
2. Section 111, The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007 is an expansion of the MSP.  The mandatory insurer reporting added reporting rules, defines who must report, also known as the Responsible Reporting Entity (RRE), includes penalties for noncompliance and the type of information that must be reported on. Section 111 states insurers/RREs must report details about the settlement, judgements, and awards received by Medicare beneficiaries from liability parties like employers or insurance companies. 

Reasonable Expectations of Medicare Enrollment

In a personal injury claim, the attorney or insurance company can request a LMSA arrangement to be prepared by a third-party allocation company. The decision is typically made when there is a probability that the injured party is or will soon be a Medicare beneficiary and their injury will likely require ongoing medical treatment. To determine if the injured party will be Medicare eligible, any of these statements must be true:

• The individual has applied for Social Security Disability Benefits.
• The individual has been denied Social Security Disability Benefits but anticipates appealing that decision.
• The individual is in the process of appealing to a denial of or re-filing for Social Security Disability benefits.
• The individual is 62 years and 6 months old or within 30 months of becoming Medicare eligible.
• The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

Preferred Method for MSA Arrangements

Unlike the Workers Compensation Medicare Set-Aside (WCMSA) arrangements, there are no LMSA guidelines or formal review process for LMSA arrangements currently.

Although attorneys can use various methods to calculate the LMSA dollar amount, the preferred method to protect Medicare’s interest is having a Medicare Set-Aside (MSA) arrangement prepared. The purpose of the MSA arrangement is to allocate a portion of the settlement funds specifically to cover future Medicare-covered and injury-related expenses.

Best Practices

When addressing Medicare’s interest in cases involving a Medicare beneficiary or individuals soon-to-be eligible for Medicare, it is advisable to take a prudent and conservative approach. The best practice is to have a LMSA prepared, and it is recommended to select a competent MSA allocation provider to help you navigate the complexity of the case.

During the allocation process, the MSA allocator can help resolve any outstanding Medicare conditional liens, accurately determine the total MSA amount, and provide release language in the settlement documents of how Medicare’s interests were considered in the client’s file.

Following settlement, it is also advisable to inform the injured party of the importance of establishing a separate account for MSA funds. This allows for proper tracking of medical expenses paid from the account until the funds are fully exhausted, ensuring compliance with Medicare guidelines. 

How to Select a MSA Allocation Company

It’s highly recommended to consult with an allocation company specializing in Medicare Set-Asides to ensure compliance and the accuracy of the allocated report.  A good allocation company will evaluate the case and inform the client/attorney whether an LMSA arrangement is recommended or not. When evaluating an allocation company, here is a list of criteria to consider:

• Select an allocation company with plenty of experience.
• Choose knowledgeable Settlement Consultants that will provide a case-by-case strategy that will protect the injured party’s Medicare and public benefits.
• Rely on highly trained nurses and case managers to accurately project the future medical costs related to the injury.
• Choose a company where the staff maintains credentials such as Certified Medicare Secondary Payer (CMSP), Medicare Set-Aside Certified Consultant, (MSCC), Registered Nurses (RN), Juris Doctor (JD) or Certified Case Consultant (CCC), to name a few.
• Verification of Social Security Disability and Medicare eligibility before you begin the report.
• Resolve all liens and Medicare conditional payments.

Brian Schultz is the Director of Sales, Northeast, at Medivest, and can be reached at bschultz@medivest.com or 862-312-6098.