We have been trying to reach a settlement of a medical negligence claim with substantial past medical expenses but relatively little in anticipated future Medicare-eligible expenses. The client has significant deficits but future needs primarily are for attendant care rather than the kind of medical care Medicare will pay for.
The defendant's insurer is insisting that we either set up a Medicare set aside trust or get a release from Medicare. Do you have any suggestions on how best to deal with this?
Certainly, your fact pattern is one commonly encountered these days due to the vast amount of misinformation promulgated towards the insurance community regarding Medicare compliance under the Medicare Secondary Payer ("MSP") Act. Because of their new reporting obligations under Section 111 of the MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007, found at 42 USC Sec. 1395y(b)(8)), insurance companies want to ensure that Medicare will not chase them for reimbursement of any interest, either past (represented by conditional payments made by Medicare from date of injury to date of settlement) or future (represented by payments made by Medicare for injury-related care post settlement). In their zeal for satisfying Medicare's interests, they often miss the forest for the trees.
Nowhere in currently enacted law or guidance from CMS are we told that a Medicare Set-Aside ("MSA") must be established as a part of our third party liability settlement. The obligation under the MSP Act is to "consider and protect" Medicare's interests, both past and future. Many insurance companies fail to understand that considering and protecting Medicare's interests does not always mean that you pay Medicare money. In fact, in the third party liability context for MSAs, it rarely means that. What it does mean is that the settling parties should be documenting their files to show what steps have been taken to consider and protect Medicare's future interests, including MSA evaluations, letters from treating physicians indicating exactly what care the injured individual will require, and other items.
Another concept most insurance companies do not realize yet is that the obligation to consider and protect Medicare's future interests falls on the claimant as opposed to the defense. In short, the obligation to satisfy Medicare’s future interests via a MSA or any other vehicle is the responsibility of the claimant and claimant’s attorney, not the defendant. As support for that position, we can look to the federal regulations at 42 CFR 411.46, which contains no language placing liability on the defense (unlike 42 CFR 411.24). Furthermore, evidence exists on the CMS website under the Intro to WC tab of the WCMSA site. If we look at the Future Medical Services portion in the final paragraph, we see that Medicare asserts that the liability to consider and protect Medicare’s future interests extends to those entities that RECEIVE a primary payment (as opposed to liability for conditional payments made date of injury to date of settlement as promulgated under 42 CFR 411.24 whereby Medicare may recover its conditional payment interest from any entity that MAKES/RECEIVES a primary payment).
To sum up, the insurance community appears to be receiving misinformation about Medicare compliance, and requires a re-education as to the appropriate scope of their obligations. For starters, I would forward to them our MSA White Paper and Act Two articles (attached) supporting the proposition that MSAs are rarely appropriate in the liability context, and when they are appropriate, they are plaintiff oriented obligations to handle. Further, share with them the language of the CMS website about Future Medical Services. These tools should make the insurer more comfortable with the notion that it does not face exposure to Medicare on these future interest issues. Finally, I make myself available to you for a conference call to discuss these issues.