by Vincent A. Toreno, Esq.
While Medicare Set-Asides have been a fixture in workers’ compensation cases for years, they have been much less commonly seen in liability cases. That will likely be changing. Until now, the Centers for Medicare and Medicaid Services (CMS) has provided little guidance on how to ensure that Medicare’s interests are protected in liability cases where a portion of the settlement, judgment or award is paid to cover future medical expenses related to the lawsuit. However, changes are imminent and CMS has issued a notification that a set-aside process for Liability Medicare Set-Asides (LMSAs) and No-Fault Medicare Set-Asides (NFMSAs) will go into effect on October 1, 2017.
The details of the processes have not been disclosed so it is unclear whether there will be threshold amounts below which an MSA will not be necessary as in workers’ compensation case. In workers’ comp, an MSA is required where the claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000; or where there is a reasonable expectation that the claimant will be enrolled in Medicare within 30 months and the settlement is greater than $250,000. We anticipate that LMSAs will need to meet certain criteria before CMS review is required. However, personal injury settlements are quite different from workers’ comp settlements. In workers’ compensation, recovery is typically determined based on a set formula whereas, in liability cases, recovery is not established by formula and usually involves non-economic damages, i.e. pain and suffering and emotional distress. Thus the requirements associated with an LMSA are likely to be quite different from those in workers’ compensation matters.
The result of issuing the set-aside process is that, effective October 1, Medicare may deny payment for claims where it determines those claims should have been paid by a liability insurance policy. Thus, we expect MSAs to soon be a regular consideration in liability and no-fault settlements where there is a reasonable likelihood of future injury related medical care arising out of the incident covered by the settlement.
We will continue to monitor this important issue and will update you with additional information as soon as it becomes available. In the meantime, please feel free to contact us with any questions.