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Worker’s Compensation and Medicare Set-Asides

The need to protect Medicare’s future exposure in personal injury cases has caused a great deal of controversy. The Centers for Medicare and Medicaid Services (CMS) have maintained that Medicare’s future interest must be protected in a liability settlement. This necessity to protect Medicare’s future exposure has seen many discussions over personal injury settlements slow to a crawl. The continuing debate over whether a Medicare Set-Aside (MSA) is the desired method to protect Medicare’s future exposure has added fuel to the fire.

The Medicare Secondary Payer (MSP) statute states that “Payment under this subchapter may not be made…with respect to any item or service to the extent that…(ii) payment has been made, or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self‐insured plan) or under no fault insurance.”

In Worker’s Compensation cases, the method CMS prefers to use to protect Medicare from future exposure is the Medicare Set-Aside. Although current law requires that the Medicare Trust Fund be protected from payment for future services, the CMS has yet to publish specific guidelines on how to protect Medicare from future exposure in liability cases not related to Worker’s Compensation, nor does the CMS have any scheduled plans to install a formal process for examining the possibility of Liability Medicare Set-Asides.

This lack of clarity in the procedures leaves plaintiff’s attorneys in a dilemma. The attorney can tell the defense that the plaintiff has no obligation to protect Medicare from future exposure. The defense can either agree with this statement or assert that they will not make a payment unless the plaintiff takes Medicare’s future exposure into consideration. The defense can also assert that the plaintiff must fully indemnify the defendant and the insurance provider. However, such indemnification has been ruled to be unethical in eleven states.

If the client is no longer under treatment, Medicare’s future exposure becomes irrelevant. A client “under treatment” means that a client is still undergoing procedures covered by Medicare, including receiving prescription medications for the injuries in question. If the court rules that the client does not require any future medical services, Medicare’s future exposure also becomes irrelevant. Medicare’s future exposure also does not enter into compensation for such equipment as handicapped van lifts, therapy spas or toilet grab bars.

If the status of Medicare’s future exposure is still in question, some attorneys may choose not to submit their case information to CMS. The choice not to submit the case data avoids the dilemma of Medicare’s future exposure. Since submitting data to CMS is strictly voluntary in liability cases, such a choice also puts the burden on Medicare to show that choosing not to submit the data was unreasonable.