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Medicare Set-Asides (MSA)

What Are Medicare Set-Asides?

As the name suggests, an MSA is a finite sum that is set aside by the primary payer, typically in a claim settlement, based on an estimate of future health care costs for a Medicare beneficiary due to a work-related or general liability injury, illness or disease. Medicare has recommended Workers’ Compensation MSAs as a reasonable means of protecting Medicare’s interests for future medical expenses involving a Workers’ Comp claim for a Medicare beneficiary when a primary payer exists.

For example, a Medicare beneficiary who suffers a broken knee cap resulting from a fall may have been covered for the emergency room health care bills by his/her private insurance carrier, but funds may also be required for the cost of an expected knee replacement surgery sometime in the future based on a medical prognosis. These funds are referred to as a Medicare Set-Aside (MSA).  MSAs can be very costly, as individuals 65 and older often require significantly more time to heal than do similar injuries incurred by younger individuals.

What Is The Goal of MSAs?

The goal of most MSAs today is to ensure funds are available to pay for projected future medical expenses required by a Medicare beneficiary as a result of a prior work-related injury. The recommended use of MSAs for Workers’ Compensation claims evolved from the 1980 Medicare Secondary Payer (MSP) Act, which established Medicare as a secondary payer when a primary payer exists.  This was done to transfer some of the increasing financial burden from the explosive growth in federally funded health care expenditures to the private sector, such as self-insured employers, Workers’ Compensation insurance companies and liability insurance carriers.


What if MSA funds are insufficient?

If an injured party’s future medical needs related to the initial injury cost more than the set-aside amount, due to inflation or other secondary issues, and the primary carrier has taken the appropriate steps to protect Medicare’s interests, then Medicare will cover allowable expenditures in excess of the depleted MSA funds.

Flagship provides innovative solutions to protect the interests of Medicare while concurrently protecting the financial resources of our clients. Sometimes that can be done without the cost of developing a formal MSA, or taking the risk of a “counter higher” (Medicare counters the proposed MSA with higher projected costs). Flagship’s dedicated legal, medical, and claims professionals provide comprehensive assessments to limit potential expenditures and compliance risks.


What Are The Challenges of MSAs?

  • Demonstrating that the primary payer insurer has taken appropriate steps to protect Medicare’s financial interests for future health care costs related to a personal injury covered by the primary payer.
  • Identifying when an MSA is appropriate vs alternative lower cost options.  Flagship utilizes a consultative approach in determining that answer.
  • Maintaining a degree of control over the MSA funding to ensure funds are actually used for medical expenses and provide reversionary options.
  • Providing better and more cost effective solutions.


What Are The Documentation Requirements For An MSA? 

To create an MSA, Flagship needs the following basic information:

  • A completed Medicare Set-Aside Referral Form.
  • Past two years of medical records.


Where Are MSA Funds Kept?

MSA funds must be placed in an interest bearing account. Here are the guidelines:

  • Funds are restricted for the exclusive use of the specific injury-related medical expenses that would otherwise be covered by Medicare.
  • Medical treatments unrelated to the original injury, illness or disease, or those not normally covered by Medicare, cannot be paid from an MSA fund. For example, diabetic supplies or medications cannot be covered by an MSA fund created for a knee injury.
  • An Account Administrator must be designated, and provide an annual accounting of all disbursements from the MSA fund.

When the MSA fund has been depleted, a final audit is performed to assess the appropriate disbursement of the funds to determine if the beneficiary is entitled to continuing Medicare benefits.  If any medical expenditures are deemed to be outside of Medicare’s coverage for the subject injury, illness or disease, future claim-related medical care through Medicare may be denied.


Who Qualifies To Be The Designated Account Administrator?

An MSA account can be administered by:

  •  The injured party (self-administered), or
  • An appointed administrator.

When the injured party has a designated representative, payee, appointed guardian/conservator or has been ruled incompetent by a court, the settling parties are required to provide this information in the MSA proposal.


What Types of Claims Are Recommended For An MSA?

Workers’ Compensation claims, and certain liability claims (on a discretionary basis) that involve personal injury. In some instances it is prudent to submit an MSA to Medicare for review and approval.


What Are The Benefits In Using Flagship To Create An MSA?

Combining years of experience in the Medicare market with consistent monitoring of Medicare’s ongoing changes, we specialize in implementing processes and procedures to keep you compliant.

As a privately held company, Flagship’s priority is to offer a consultative and flexible approach in creating a unique customized program for each of our clients. We provide several innovative solutions, depending on your needs. Our goal is to form a partnership to ensure compliance while providing the highest level of customer service.

  • Proper formatting for CMS review when requested by client.
  • Comprehensive analysis by experienced and credentialed medical, legal and claims professionals.
  • Intensive legal review of claims to identify potential claim resolution issues or opportunities.
  • Accurate future medical cost projections based on state fee schedules and CMS pricing guidelines.
  • Rated Age services through “A” rated (or better) insurance carriers.
  • Ten business days turn-around from receipt of complete medical records.
  • Flagship Medicare experts available to answer questions and discuss options.
  • Submittal process to Medicare.

Learn the Flagship Difference, Flagship Services Group

  • Ghostbusters (11/1/2019) - In 1984, Ivy League trained parapsychologists Venkman, Stantz, and Spengler started a ghost-catching business in New York City, despite implausible research, and eventually were welcomed as heroes by saving the city from the paranormal disguised as giant marshmallow man Stay Puft. Only in the movies! But, we can use this ghoulish time of the year to serve as a reminder: Don’t let MSP enforcement claims by Medicare Part C Advantage Plans sneak up to shock and detract your standard claims operating procedures. Identifying and resolving these repayment claims may be just as important a part to your overall MSP compliance strategy as similar claims by traditional Medicare Parts A and B.
  • How far is too far when negotiating Medicare release terms? (10/7/2019) - At the recent NAMSAP Educational Conference in Baltimore, during a breakout panel discussion on “Leveraging Settlement with Medicare Set-Asides in Mediation”, a rather strident concern was raised with respect to the reasonable scope of terms in a settlement release irrespective of the type of primary plan covering the loss. Specifically, attendees questioned whether Medicare eligible individuals could or to what extent may release their claim or claims in the future to these public health and welfare insurance benefits while negotiating compromise settlement provisions under liability, no-fault or workers compensation plan.
  • Treasury Trove (9/17/2019) - Medicare is paid for through two Trust Fund accounts—Hospital Insurance and Supplementary Medical Insurance—held by the United States Department of Treasury, How Is Medicare Funded. In 2018, over 60 million people were covered by Medicare with over $731 billion in total expenditures from the Trust Funds Facts on Medicare Spending and Financing. Further, CMS reports validating $493.68 million in recoverable mistaken conditional payments, while returning $98.68 million dollars to the Medicare Trust Funds in 2018 as a direct result of its recovery program activities, on top of $131.78 million in 2017, MSPRC Commercial Repayment Center in Fiscal Year 2018. Collection activity by the United States Department of Treasury (DOT) on Medicare conditional payments is reportedly increasing in 2019, plus, over the past 15 months, the United States Department of Justice reached six-figure settlements with two Plaintiff’s law firms for failure to repay Medicare conditional payments.