By Josh Pettingill & Jason Lazarus
For those who are still uncertain about protecting Medicare’s future interests once a settlement has been reached, click HERE to read a letter from CMS which should give you serious cause for alarm. CMS/MSPRC sent this letter to one of our clients who settled their liability case back in March of 2011. Fortunately, this individual set aside funds in a Medicare set aside (MSA) account and elected to have the MSA professionally administered through our trust solution. The allocation was not submitted for CMS’ approval since it is a liability settlement and the Atlanta regional office will not review them. Therefore, Medicare must have become aware of the settlement through conditional payments made and/or the settlement was reported by the insurance carrier.
This letter raises a number of serious concerns:
- This was a case settled nearly two years ago so Medicare is tracking settlements to make sure they are not the primary payer for any, injury related treatment. This letter is proof they have the resources to monitor and track cases post settlement.
- What would have been the implications with the client’s Medicare benefits if the MSA had not been previously established? If the MSA had not been established, Medicare is implying that the entire settlement, by default, becomes the MSA allocation. If the MSA had not been set up, there is a likelihood that the claimant would have to prove to CMS that they had exhausted all of their settlement proceeds before Medicare would again start to pay for medical treatment.
The intention of this post isn’t to scare attorneys. Rather, we want to provide you the most relevant information in regards to MSP compliance, so that you and your clients are protected. Synergy has developed a tiered approach to MSP compliance as it relates to “futures” exclusively for 3rd party liability settlements. It is as follows:
- MSA Consultation & Waiver Preparation: $500
- MSA “Estimate”: $1,500
- MSA “Estimate” & Reduction Opinion Letter (for cases with a limited recovery): $2,000
- Full MSA Allocation (meeting CMS guidelines from WCMSA memos): $3,000
The first option (consultation & waiver) would be for cases where the client needs to have the issues explained to them and to identify their options. If they decline, we create a customized waiver for them to sign. That is the $500 cost. The second option (estimate) would be for cases that are “small” or where future medical is quite “small” and instead of a full allocation being created to comply with CMS guidelines, an estimate is done. We prepare the estimate based on a medical summary you provide to us instead of a full review of all of the medical records. The third option combines the second option with a reduction opinion letter for cases where the recovery is small relative to the total damages. For example, you recover policy limits of $200k but the value of the case is $2,000,000. In that situation, we would estimate future medicals that are Medicare covered then reduce that amount down based upon the limited recovery by using an Ahlborn type formula. The final option is a full Medicare Set Aside allocation which is prepared based upon CMS guidelines and after review of all medical records from the date of the accident forward or the last three years. This method fully protects the client and is as complete Medicare Secondary Payer compliance as you can get.
Synergy decided to offer these services given the realities of many settlements in the liability context. We provide multiple resolution options for you to protect yourself and the client as much as possible from MSP related compliance issues.