We recognize your confusion. Claims adjusters, lawyers, and claimants themselves have a hard time understanding whether or not they need (or should get) a Medicare Set-aside Arrangement (MSA). We often hear that understanding MSAs can be a challenge because of varying opinions on compliance and admittedly, vague Medicare laws on the subject.
Officially, this is how Medicare describes the obligation to create MSAs:
- A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. These funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease.
- All parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases that include future medical expenses. The recommended method to protect Medicare’s interests is a WCMSA.
- The amount of the WCMSA is determined on a case-by-case basis.
Obviously, the need for MSAs to “protect Medicare’s interests” can be interpreted in various ways and that relatively vague requirement has led to a lot of confusion amongst Workers Comp and Property & Casualty Carriers.
This article gathers relevant information needed to answer the most commonly asked questions and clear up confusion about MSAs.
What is an MSA?
As alluded to by Medicare’s definition, an MSA is essentially an account created and funded when settling a workers’ compensation or liability claim. The purpose is to provide funds to the injured party to cover the cost of future medical expenses that can be reasonably expected from the injury that necessitated the claim.
As Medicare’s definition also notes, at this time, only MSAs created for workers’ compensation claims are required by Medicare. However, there are circumstances in which liability claim MSAs are a wise idea, and Medicare is once again discussing implementing rules requiring liability MSAs.
When is an MSA required?
Below is a simple table that outlines Medicare’s published criteria related to when an MSA is needed to protect Medicare’s financial interests.
MSA is required by Medicare
MSA is not required by Medicare
MSA is not required by Medicare but is Recommended by Flagship
All of the above criteria are specific to workers’ compensation claims only. For liability claims involving Medicare and SSI disability beneficiaries, insurers should consider an MSA for claimants that fall in the first column to mitigate risk.
Another way of looking at these criteria is through our “Do I Need an MSA?” decision tree.
Common MSA challenges
“If Medicare isn’t requiring it, why should I bother with an MSA?”
From the standpoint of P&C insurers and their client (the employer whose employee was injured), the creation of an MSA involves taking on an obligation to pay a significant amount toward future medical expenses that cannot be perfectly predicted. If an MSA is put together without enough forethought, it can end up costing more than it should. Many prefer to leave the medical expenses open in hopes the employee will no longer seek treatment in the future. However, an MSA can be a strategic tool to take some of the guesswork out of the process and help the insurer decide when to settle and for how much. The MSA can provide added insight to the future costs involved in the claim regardless of settlement. This information may help the adjuster make decisions as to whether to settle or to keep the claim open.
Learn more about the Flagship Difference.
Meanwhile, from the attorney’s perspective, the creation of a MSA generally necessitates earmarking or allocating a portion of the total settlement for future medical care. This could affect the client’s and attorney’s potential income from the settlement.
In the circumstances described in the third column above, where Medicare will not be reviewing the MSA, these individuals may push back despite Flagship’s recommendation to create one regardless. Doing so is a good idea because it actually provides a level of protection for both the claimant and the insurance company:
- The claimant will have a significant fund safely set aside for as long as necessary to cover medical bills resulting from the injury, some of which may not even be foreseen at the time of settlement.
- The insurance company has the benefit of a thorough investigation prior to the establishment of the MSA to ensure it is funded adequately to cover legitimate medical expenses, but not beyond that amount.
- For the insurance company, if Medicare adjusts their current regulations regarding MSAs down the road, erring on the side of caution will prove to be a beneficial decision.
“Medicare hasn’t yet penalized anyone for failing to create an MSA. Why should I bother?”
This is an understandable concern voiced by insurance companies and attorneys who would prefer to settle a given claim without tying themselves and their clients down to a long-term agreement like a MSA.
They are correct. Thus far, Medicare hasn’t put any real teeth behind their MSA-related regulations. However, Medicare will deny claims for services and treatment they believe to be related to the injury. Medicare also has a long and colorful history of changing their processes quickly and decisively. We only need to look back less than a year to see the dramatic changes that affected the liability world with the advent of the Commercial Repayment Center (CRC).
At Flagship, we urge our clients to mitigate risk and protect their financial assets by honoring the laws and regulations involving MSAs - although admittedly vague and open to some interpretation. They are in effect and clearly publicized by the Center for Medicare and Medicaid Services (CMS).
Unless you want to be the textbook “example” Medicare points to in order to dissuade others from ignoring their regulations, the smart play is to comply as thoroughly as possible.
“I can throw together a boilerplate MSA for every claim. Why do I need Flagship involved?”
This question indicates that clients’ may not truly understand the time and effort that goes into a properly executed MSA, or they’ve worked previously with one of the many MSA vendors that treat these arrangements like parts on an assembly line.
At Flagship Services Group, we take a consultative approach to MSAs. We fully understand that every workers compensation claim is a unique challenge full of unanswered questions. Getting the best results involves extensive research and investigation, thorough documentation, and the experienced input of our on-staff registered and legal nurses.
The end result is an MSA that effectively protects the future of the claimant while ensuring that the insurance company and employer are not paying a dime more than they should. As with all our Medicare compliance services, Flagship’s MSA process is designed to be as professional and painless as possible without sacrificing 100% compliance to Medicare laws and carrying out what’s best for our clients.
So, while a “boilerplate MSA” may theoretically suffice to close out some basic claims, it’s unlikely to offer the optimal combination of cost containment, ease, and speed you’ll get from a Flagship MSA.
Medicare Set-aside Arrangements are just one of a host of Medicare compliance and cost containment services P&C insurance carriers need in order to stay on top of the complicated workers’ compensation and liability claims industry. If you have any questions not directly addressed in this article, review our MSA FAQs.
And if you have additional questions or want to discuss how we have helped companies like yours get the MSA support they need, contact us. We’d love to hear from you.