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SYNERGY MSP Compliance: Protecting Your Firm in 2019

B. Josh Pettingill

CMS has established a set timeframe to roll out formal guidelines for Liability Medicare Set-Asides (LMSAs) in 2019[1]. Plaintiff attorneys must develop Medicare compliance protocols for their law firms to avoid exposing them to liability from legal malpractice pitfalls. Plaintiff attorneys must go on the offensive regarding Medicare Secondary Payer (MSP) compliance issues, including lien resolution and potential Medicare set-aside issues. In addition to reading the guidance below, be sure to watch Synergy’s first Third Thursday webinar of the year titled, Liability Medicare Set-Asides (LMSAs) 2019 Update & Medicare Advantage (Part C).

Start Early—Identify Medicare Beneficiaries ASAP

It is critical to identify exactly what benefits your client is receiving before the resolution of their case. The best time to confirm public benefits eligibility is during the intake of the case. In addition to a detailed client interview, a copy of all health insurance cards and award letters outlining benefits received should be requested. That way, appropriate Medicare Secondary Payer (MSP) compliance or other planning can be undertaken prior to resolution of the case.

In order to be eligible for Medicare benefits, the plaintiff must fall into one of the following categories:

  • They are age 65 or older, a US citizen and have worked for at least 10 years, earning 40 credits.
  • They have a disability and have been receiving Social Security Disability Insurance (SSDI) for more than 24 months.
  • They have been diagnosed with End-Stage Renal Disease.
  • They have been diagnosed with Amyotrophic Lateral Sclerosis (ALS), commonly known as Lou Gehrig’s Disease.

A minor may be eligible for Medicare benefits if they have a disabled or deceased parent. If you are unsure if your client is eligible to receive Social Security benefits, then a Social Security Consent for Release of Information form can be submitted to the local Social Security office to verify eligibility. This form is also known as the Form SSA-3288 and can be downloaded at http://www.ssa.gov/forms/ssa-3288.pdf.

You Control the MSP Process

Plaintiff’s counsel should insist on controlling the process from start to finish. The Federal Government has pursued several law firms in the past for failure to properly reimburse Medicare’s past payments in a timely manner. Most recently, there was a law firm in Pennsylvania that was forced to develop their own MSP compliance program as part of the settlement terms with the government after they failed to reimburse Medicare in the appropriate way.[2] If you control the process and develop your own internal protocols, you will never have to worry about future liability to Medicare related to liens or your client in the form of a legal malpractice suit for failure to properly consider Medicare’s interests.

You must also control the MSP process to ensure an expedited resolution. Establish early in the negotiations that the plaintiff’s party will be responsible for all conditional payments as well as any potential Medicare set-aside issues, if applicable. This also includes engaging your own experts as well as drafting appropriate MSP release language that protects all parties involved.

Never Rely on Opposing Side’s MSA Experts

A plaintiff’s attorney would never rely on the opposing side’s life care planner or an economist. The same goes for a Medicare set-aside specialist.  Many of our clients engage us to do the preliminary MSA analysis prior to sending out a demand package. That way, the MSA amount is already established as an element of damages that must be addressed to resolve the claim. As a trial attorney, you must have your own MSP compliance experts to help you navigate the settlement process. These experts should be engaged early in negotiations.

Educate Your Clients on the Potential Risks

You cannot make your client do an MSA, but you must counsel them regarding the potential implications of not properly protecting Medicare’s interest. This could include double damages for failure to address conditional payments or Medicare denying accident-related care post-settlement indefinitely for failure to set aside anything. The real issue boils down to the risk taken by the plaintiff in terms of Medicare coverage for their future injury-related care.  This is not a defense issue; it is a plaintiff issue.  The plaintiff, if he/she does nothing (without legal justification for doing so), could face a situation where Medicare denies future injury-related care since nothing was set aside.  The plaintiff needs to understand this risk before settling their case.

Reporting Data Must Be Accurate

Since the defendant must report ICD codes as the system will not allow reporting without them, it is incumbent on plaintiff attorneys to provide the correct codes to be reported.  Plaintiff’s counsel must be proactive in communications with the defendant to insist on accurate reporting. When in doubt, the ICD codes should be included in the settlement agreement and release. To take this a step further, the settlement parties could also agree to include the ICD codes in the mediation agreement. That way, there can never be a dispute as to what was reported.  This avoids problems that can arise from improper codes being reported or unrelated care being included in the data provided to CMS.

Go on the Offensive for Part C Liens & Potential MSA Issues

Most plaintiffs are unaware if they are receiving traditional Medicare, Parts A, B, and D, or if they have a Medicare Advantage (Part C) plan. If Medicare has a zero or low balance for their lien, and you know the bills should be much higher, that is a strong indication that the plaintiff has a Medicare Advantage Plan. We refer to this lien as the “Hidden Lien” since this lien information cannot be ascertained from Medicare, BCRC or CMS. You must find this lien if it exists to avoid paying potential penalties or double damages.

Part C plans have been aggressively asserting that they have the same rights as Medicare under the MSP and its implementing regulations. Case law is evolving on this issue, but the trend is in favor of Medicare Part C plans. MSAs are different since they were created by CMS as a means to protect Medicare’s future interests. MSAs come from Medicare’s interpretation of the MSP and not from any regulation, statute or case law. Accordingly, it would be a significant stretch to say that a Part C plan could insist upon a set-aside when Medicare itself does not have a legal basis to insist upon them in liability settlements.

You Must Document Your File

The more documentation in the file regarding MSP compliance the better. If an MSA is going to be established, we recommend attorneys issue separate checks from their trust account to fund a lump sum MSA account: one for the MSA amount and one for the balance of the settlement proceeds. The check should be written to the plaintiff with the subject referencing: “John Doe Medicare Set-Aside Account” or “John Doe MSA Account.” To be ultimately cautious, some attorneys request the defendant issue a separate check to seed or fully fund the MSA account.[3]

Prior to releasing any settlement monies, attorneys should also have the plaintiff sign a separate document indicating they understand what their obligations are for self-administering the MSA account.[4] Synergy offers an MSA consultation which includes a separate waiver for the plaintiff to sign indicating they understand the MSA obligations and are willing or not willing to create a set-aside account. Attorneys do not have to hire an expert to advise and prepare such a document but it is the prudent way to ensure all parties are protected.


Until CMS provides formal guidance on liability MSAs, the plaintiff’s bar must consult with competent MSP compliance experts such as our team at Synergy, advise their respective clients on what the potential implications are for not properly taking into account Medicare’s interests, and document the file as to what was done (or what was not done) to protect Medicare’s interests. For more information about liability MSAs visit us at https://synergysettlements.com/total-medicare-compliance/ or if you would like to sign up for a complimentary CLE on liability MSP compliance issues, please go to https://synergysettlements.com/synergy-cle/

[1] In their private meetings with stakeholders, CMS gave an 18-month window going back to April 2018.

[2] Under the terms of the settlement agreement, the law firm agreed to pay a lump sum of $28,000. The firm also agreed to (1) designate a person at the firm responsible for paying Medicare Secondary Payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.

[3] If the MSA is being funded with a structured settlement, the annuity will also be funded by the defendant with the seed being included in the cash paid at settlement.

[4] CMS allows for the MSA account to be either professionally administered or self-administered. Over 98% of MSA accounts are self-administered.

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