Medicare Set-Asides (MSAs) are frequent components of workers’ compensation and liability settlements, judgments, or awards that include payment to cover the claimant’s future medical expenses. For many years, they have been the go-to vehicle for meeting the legal requirements of the Medicare Secondary Payer (MSP) provisions of the Social Security Act that require a claims payer to protect Medicare’s interests.
Attorney John Cattie of Cattie, P.L.L.C., and Care Bridge International question whether MSAs as commonly used are always the best mechanism. Referring to a white paper published this summer by Care Bridge, which provides MSP compliance services, Attorney Cattie writes that MSAs reviewed and approved by the Centers for Medicare & Medicaid Services (CMS) may be overfunded by as much as $2 billion. While the white paper itself provides no foundation for that claim, Care Bridge does contend in Medicare Set-Asides: What is the True Cost of Future Medical Care? that utilizing CMS’s policies to project long-term health care costs results in inflated claims costs and high set-aside requirements.
Care Bridge proposes several factors that may contribute to inflated costs, including an average life expectancy of 24 years for CMS-approved MSAs, medication forecasts that rely on higher mandatory pricing guidelines and flawed medication regimes, and presumed high opioid use. CMS also requires that future care forecasts be based upon past health care treatment and costs. The white paper concludes that the consequence of submitting MSA reports to CMS for approval may be bureaucratic delay and larger-than-necessary set-asides carved out of a claimant’s settlement.
Care Bridge asserts that CMS-approved MSAs may not be the best approach for most non-catastrophic injuries. Instead, they suggest that the key to meeting legal obligations under the MSP provisions is to take all required compliance steps and to make realistic forecasts regarding future work-injury-related medical costs, putting into place proper arrangements to protect Medicare’s interests by covering those costs.
In a separate article, Attorney Cattie explores some alternatives to MSAs, including medical savings accounts, other forms of insurance or out-of-pocket payments. “Nothing in the MSP Act or its regulations prohibits these alternatives,” Cattie contends. To read his article, click here.
To read Care Bridge International’s white paper Medicare Set-Asides: What is the True Cost of Future Medical Care?, click here.