Medicare Set-Aside Facts and Fiction-Part II

Here is the second part of my article for the Cleveland Metropolitan Bar Journal.  There are some resources at the end of the article that might be helpful if you need to contact CMS regarding any MSA issues or, as discussed in this part of the article, if you are dealing with any Medicaid lien issues in your claim.

FICTION: An MSA guarantees that Medicare will not assert that its interests were not properly protected.

FACT: Even with an MSA, Medicare may still determine that its interests were not protected, unless the settlement fits within the guidelines that allow it to be submitted to CMS for approval and CMS has approved the proposed MSA. As noted above, Medicare has an interest in the proceeds from any settlement that makes an allocation for future medical expenses, regardless of the size of the settlement. CMS, not the parties to the settlement, makes the final determination as to whether Medicare’s interests were reasonably protected.

Particularly when the settlement is for a larger amount, or the injured worker will become Medicare eligible in the near future, you might want to consider having an MSA evaluation performed by a third-party vendor, to increase the likelihood that, in the event CMS challenges the settlement, the parties can point to a rational basis for the amount set aside. While there is no guarantee that CMS will accept the MSA vendor’s proposed set-aside amount, CMS is much more likely to accept a detailed evaluation by a third party than an amount arbitrarily chosen by attorneys. Furthermore, MSA vendors are familiar with the pricing structures used by CMS and are more likely to arrive at an amount that CMS will find acceptable.

Some MSA evaluators offer “threshold MSAs” (for claims which will be submitted to CMS for review) and “non-threshold MSAs” (for claims which do not meet the review thresholds). Non-threshold MSAs are generally less expensive than threshold MSAs, and are performed more quickly.


FICTION: Absent CMS approval there is no way to fully eliminate future exposure to yourself and your client from an action by CMS.

FACT: As noted above, the only way to ensure that the MSA allocation will not be questioned in the future is to submit the MSA (if it meets the review thresholds) to CMS for review. The downside is that a review by CMS takes an average of 70 days to complete, and might end up being considerably more expensive than the parties expected, particularly in claims where prescription medications are involved.

However, you can protect yourself and your client by obtaining a guaranteed MSA evaluation. At least one company now offers a product which, for a cost, provides a lifetime guarantee to defend any action by CMS and to indemnify the parties against any additional amounts CMS might require.

In 2011, The Ohio Supreme Court’s Board of Commissioners on Grievances and Discipline issued an advisory opinion which held that it is improper for an attorney (as opposed to a third-party, as discussed above) to agree to indemnify the opposing party for MSP liability in a settlement. Board of Commissioners on Grievances and Discipline Opinion 2011-1, February 11, 2011. The Commissioners also held that it is improper for an attorney to ask opposing counsel for such indemnification.


FICTION: If the settlement meets the CMS review thresholds, the parties must submit the settlement to CMS for review.

FACT: Submission of an MSA to CMS for approval is voluntary, regardless of the settlement amount or the Medicare status of the injured worker. However, submission of an MSA to CMS for approval creates a “safe-harbor” to ensure that CMS will not come back in the future and refuse to make payment for services or pursue its right of recovery.



FICTION: Once the parties have addressed Medicare’s interests, there are no other potential conditional payment issues.

FACT: Where the injured worker has been a Medicaid beneficiary it is also important to make sure that no conditional payments have been made by Medicaid.  Both Medicare and Medicaid are entitled to reimbursement for payments made for the treatment of work-related injuries.

Medicaid conditional payment issues are dealt with by the individual states. In Ohio, R.C. §5160.37 provides that no settlement in which Medicaid has a right of recovery shall be made final without first providing the Ohio Department of Medicaid with written notice. If the Department is not given an appropriate written notice, the Medicaid recipient and the recipient’s attorney are liable to reimburse the Department for medical payments made for work-injury related conditions.



You can get more information regarding specific MSA issues in the most recent WCMSA Reference Guide, available from the CMS website at

CMS’ Co-ordination of Benefits and Recovery Call Center can be reached at 1-855-798-2627. The Co-ordination of Benefits and Recovery Center also maintains a Medicare Secondary Payer Recovery Portal (MSPRP), a web-based tool which allows attorneys to access and update certain case specific information online. You can access the MSPRP at:

In order to identify and determine the amount of any Medicaid conditional payments, contact the Ohio Tort Recovery Unit at (614) 242-1045. You can submit a subrogation recovery information form to the Ohio Tort Recovery Unit online via their website at after submitting an authorization signed by the injured worker.

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