The short answer is if your settlement includes future medical expenses and there’s likelihood a cost-shift could occur to Medicare (i.e. Medicare could reasonably be expected to pay for injury-related medicals), then it is not advised to attempt to avoid a Medicare Set Aside.
“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.” See Medicare’s Medicare Set Aside official webpage. The MSP is federal law, including statutory, regulatory and policy provisions designed to prevent a cost-shift to the Medicare program.
Medicare is overseen by the Centers for Medicare & Medicaid Services (CMS). CMS’s only recommended method to protect Medicare’s interests is a Workers’ Compensation (MSA).
If parties to a settlement avoid incorporating an MSA, there are potential risks and exposure for this non-compliance. They include:
- Disregard of the Settlement - If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized. See 42 CFR 411.46(b)(2).
- CMS not bound by non-submitted MSA - If the parties to a Workers’ compensation settlement stipulate an MSA amount but do not receive CMS approval, then CMS is not bound by the set-aside amount specified by the parties, and CMS may refuse to pay for future medical expenses related to the work-related injury, even if they would ordinarily have been covered by Medicare. WCMSA Reference Guide, v3.1, Sec. 8
- Refusal to Pay – CMS has the right to refuse to pay for certain expenses related to the workers’ compensation injury until the entire settlement is exhausted. See WCMSA Reference Guide, v3.1, Sec. 3.
- Right of Recovery - Priority right of recovery against any entity that received a portion of the settlement payment. See WCMSA Reference Guide, v3.1, Sec. 3