By now, you’ve surely tried navigating the perilous waters of the Medicare Secondary Payer Act (MSP) as it pertains to protecting Medicare’s future interests vis-à-vis a Medicare Set Aside (MSA). You’ve surely heard arguments on both sides of the issue of ‘Do You Or Don’t You Need An MSA On A Liability Case’.
What we do know (and what YOU should know) for sure is that Medicare is secondary to all insurance including no fault and liability insurance, and that payment “may not be made under Medicare for covered items or services to the extent that payment has been made or can reasonably expected to be made under a liability insurance policy plan” (MSA= 42 U.S.C. sec 1395y(b)(5))
For liability cases involving future medicals, The Centers For Medicare & Medicaid Services (CMS) has issued very little guidance other than the requirement that the parties reasonably take Medicare’s interest into account. Forgetting for the sake of this discussion whether an MSA is the required means to take Medicare’s future interests into account, or even whether it is the best or preferred means of doing so, I think most anyone would agree that it is at least one way of achieving this requirement.
A common concern I see among lawyers preparing for a mediation or settlement conference is that although they may see the need for an MSA calculation and allocation report, they don’t want one prepared prior to settlement. Often, the concern is that it may ‘cheapen’ the life care plan that they have prepared to justify their demand on the case. Actually, the opposite is true: when prepared and used the right away, the MSA report can actually strengthen and support the life care plan.
So how do you go about using an MSA report to strengthen your position at mediation? Quite simply by using your life care plan to have the MSA prepared. Instead of the normal method of providing medicals and having an MSA professional prepare an analysis from scratch, you can instead submit your client’s life care plan and have a ‘Life Care Plan To MSA Conversion’ prepared – not only does this support your life care plan, but it is done at a much cheaper cost than an MSA prepared just from raw medicals. The resultant MSA report will have lower total numbers than your life care plan, but that is because the MSA only includes items which Medicare would otherwise cover – so things like home health aids which are in your life care plan are not in your MSA report. However, for the items which are Medicare-covered, the numbers in your MSA will now support your life care plan.
Of course, as your client’s advocate, you want to ensure that he or she is in the best possible financial position post-settlement; this may mean doing everything you can to try to hold down projected future medical costs so that your client can ‘set aside’ as little as possible and have more money at his or her disposal. This is where another under-utilized strategy comes into play: the post-settlement apportionment legal opinion. While your MSA prepared from the life care plan may have aggressive ‘worst-case scenario’ numbers for future medical care, once the settlement is signed and agreed upon, it is now time to put this tool to work. For a very nominal fee, an MSA professional can prepare an apportionment legal opinion, based upon your assertion that the case was settled for some amount less than 100% of ‘full value’ of the injury. This may be because of liability issues, insurance coverage limits, or simply your client wanting to avoid the risk inherent in any trial. Whatever the reason, based upon your assessment of the true full value of the client’s injuries, the MSA report can then (post-settlement) be re-apportioned to a percentage of the original numbers that reflect the settlement amount’s percentage of full value of the injuries in the case. You’ve now (sometimes significantly) reduced the amount your client need set-aside to cover Medicare’s future interests and still be in full compliance.
Using these two simple but under-utilized tools – the ‘Life Care Plan to MSA Conversion’ and the post-settlement apportionment legal opinion, you can begin to embrace the once-dreaded MSA analysis as a tool rather than a hindrance at the settlement table.