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When is a Medicare Set Aside necessary?

The short answer is that there are no statutory or regulatory requirements to prepare or submit a Medicare Set Aside (MSA) to the Centers for Medicare & Medicaid Services (CMS) for review or approval. However, CMS does mandate that Medicare’s interests are considered and protected in all workers’ compensation settlements which resolve medicals. The only sanctioned vehicle to accomplish this is an MSA.

“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 [Workers’ Compensation Medicare Set Aside].” 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.

“A [Medicare Set Aside] allocates a portion of the [workers’ compensation] settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 19.2.

CMS will voluntarily review proposed WCMSAs in order to determine if the proposed amount is sufficient to cover future Medicare-covered medical expenses related to the settlement. See WCMSA Reference Guide, v.3.1, Sec. 8, and 8.1. CMS will voluntarily review a WCMSA proposal in the following circumstances:

  • The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
  • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00

CMS indicates their voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality with respect to obligations for medical care required after a settlement. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS' approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement. See WCMSA Reference Guide, v.3.1, sec 4.2.

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