New Guide Clarifies Employers’ Liability in Medicare Set-Aside Arrangements

On January 9, 2019 the Center for Medicare and Medicaid Services (“CMS”) issued its most recent Workers’ Compensation Medicare Set-Aside Reference Guide (“WCMSA”).   A complete copy of the new WCMSA can be found here.  Most notably, CMS added two examples of how settlements not meeting the CMS review thresholds still require a consideration of Medicare’s interests.

I’ve posted about Medicare Set-Asides several times in the past (MEDICARE SET-ASIDE FACTS AND FICTION-PART IIMEDICARE SET-ASIDE FACTS AND FICTIONDealing With Medicare And Medicaid Liens When Settling A Workers’ Compensation Claim) so feel free to look at those posts for more detailed information.  The short version is, CMS will only perform a formal review of settlements of either: a) $25,000 or more in the case of a current Medicare beneficiary; or b) $250,000 or  more in the case of an injured worker who has a “reasonable expectation” of becoming Medicare eligible within the next 30 months.  However, the Medicare Secondary Payer Act requires that employers “take Medicare’s interest into account” in all settlements, no matter the dollar amount.

The first example given in the new WCMSA Reference Guide is a settlement involving a 67 year old Medicare beneficiary.  A claim for a back injury is settled for $17,000.00.  The reference guide reiterates that the settling parties “must consider CMS’ future interests” even though the case would not be eligible for review.  Per the new guide, failure to do so could leave the settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00).

The second example in the new WCMSA is a $225,000 settlement of the claim of a 47 year old steelworker who has recently received social security disability as the result of the allowed conditions in his workers’ compensation claim.  In that example, the guide states that even though this case also does not meet the review thresholds: “not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.”

The difference in the language between the two examples implies that a formal MSA might not be necessary in smaller settlements.  However, parties that settle larger claims without some type of formal plan (such as an MSA agreement and a separate account funded in the amount of same) would be liable for recovery up to the amount of the settlement itself.  I would personally recommend that an MSA be obtain for settlements of all claims for current Medicare beneficiaries.

So, what’s the takeaway from the new WCMSA Reference Guide?  If you’re dealing with a smaller dollar settlement at least you know that your liability is capped in some way, and a formal MSA may not be needed.  If you’re dealing with a large dollar settlement however, you should definitely obtain a formal Medicare Set-Aside Review and set up a separate account for payment of future claim related medical expenses.

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