By: The Workers' Compensation Practice Group
When negotiating settlements and planning for future exposure in a claim, one issue to remain constantly aware of is the potential role that a Medicare Set-Aside (MSA) may play in your claim. We must take Medicare’s interest into account in every workers’ compensation settlement. Therefore, it is important to understand what a Medicare Set-Aside is, when you might need one, and what effect it can have on the handling of a claim.
A Medicare Set-Aside is an allocation of all or part of a settlement towards future medical expenses. Once these funds have been paid to and exhausted by the claimant, Medicare is responsible for covering any additional Medicare-covered expenses related to the underlying work accident. Therefore, Medicare has an interest in determining whether an appropriate amount of funds has been set aside for the MSA, given that Medicare will be responsible for any costs incurred once those expenses have been exhausted.
The Center for Medicare and Medicaid Services (CMS) is charged with reviewing MSAs to determine whether sufficient funds have been allocated for future medical treatment by the parties to a claim. CMS will not review all MSAs, however, and has developed “review thresholds” to determine which claims will merit their review. It is important to note that these thresholds can change at any time. At this time, the current thresholds for review by CMS are as follows:
Therefore, claims meeting one of these above classifications should be submitted to CMS for review and approval. To the extent that CMS disagrees with the proposed allocation, CMS may return a counter-proposal that may be higher or lower than what was originally submitted.
The Virginia Workers’ Compensation Commission generally will not approve a settlement that meets the thresholds for review by CMS but that has not had the MSA submitted to CMS for review. Therefore, to the extent that your claim meets one of the review thresholds, it will usually be important to secure a Medicare Set-Aside to include as a part of a full and final settlement.
Securing the MSA will also help you understand your future exposure on the medical side of the claim, as it is meant to predict the future Medicare-covered expenses for the remainder of the claimant’s life. This information may be useful to know in negotiating settlement with the claimant and/or the claimant’s attorney.
Several new laws went into effect on July 1, 2015 that affect workers’ compensation in Virginia. These include: