Many insurers are perplexed about their obligation, if any, to generate a Medicare Set-Aside account for their insureds who are injured in a no-fault situation or through the negligence of another. Although CMS (the Centers for Medicare and Medicaid) requires notification of all claims made by Medicare recipients for injuries by any cause, there is, at present, no requirement that an MSA be created in a liability case.

Not Required but Strongly Recommended

However, an MSA is usually always a good idea in any injury case because it requires an in-depth risk assessment for potential future obligations related to current and present injuries. The Liability MSA (LMSA) is an excellent risk-management tool for every insuring business because it reduces the risk of unnecessary future expenses on a closed case. And, because the law requires all Insurers to keep Medicare’s interests in mind when resolving injury cases, voluntarily seeking an MSA in a liability case is direct evidence that the Insurance company is taking that obligation seriously.

Present Assurance of Future Obligations

Accordingly, whenever there are potential future health care and drug costs due to work-related or negligence-based injuries, an LMSA agreement gives all case participants assurances of two critical case factors:

  • that there will be sufficient non-Medicare funding available to cover medical expenses for those injuries after the worker’s compensation case closes, and

  • that the parties responsible for reserving those funds do so appropriately.

Tools for Negotiation

Additionally, an LMSA can also be a valuable tool for entities seeking medical care damages in a liability case because they can use it to leverage a more favorable settlement. Just as in the WC case, a Medicare-vetted statement of the probable costs of future health care and drug treatment requirements estimates for the injured party the monetary value of future care costs that are anticipated after the liability case closes. Accordingly, seeking an MSA gives CMS notice that its interests have been considered, and provides a valuable tool upon which to base a more favorable settlement.

At this time, there are no CMS regulations requiring the establishment of an MSA in a liability case (or any case). However, the Medicare Secondary Payer Act (MSP) requires that any entity that provides payments to a Medicare enrollee must notify Medicare of that fact and protect Medicare’s interests in the process. And, if LMSAs are held to the same standards as WCMSAs, then the MSP also gives Medicare the right to seek double damages when conditional payments have been disbursed to an Enrollee and not reported to Medicare, and Medicare has not been reimbursed for them.