When Medicare announced strict enforcement of the Medicare Secondary Payer Statute in July of 2001, few companies knew what a Medicare Set-Aside Arrangement was. Since that time, many new faces have emerged touting their Medicare compliance solutions, but only one reliable and consistent resource has been serving Workers' Compensation carriers, self-insured employers, third-party administrators, structure settlement brokers, and attorneys since the inception of the Medicare Program.

Just what is a Medicare Set-Aside Arrangement?

History
The Medicare Secondary Payer (MSP) statute has been around since 1980, but the concept of a Medicare Set-Aside Trust was not adopted by The Center for Medicare & Medicaid Services (CMS) until 1995. The basic premise of the MSP is that Medicare will remain a "secondary payer" if a "primary payer" exists. While the statute applies to Liability, FECA, Black Lung and Longshore claims, Workers' Compensation cases became the focus of CMS attention, in part, due to a General Account Office (GAO) report to Congressional Committees in May of 2001. The report found that federal benefit programs, such as Social Security and Medicare, were losing potentially billions of dollars per year as a result of payment errors from Workers' Compensation cases. To quickly combat these obvious concerns, CMS released the July 2001 Policy Memorandum that initiated the MSA Arrangement process as it is known today.

According to the Centers for Medicare and Medicaid Services' July 11, 2001 Policy Memorandum and subsequent FAQs posted since then, CMS requires that certain Workers' Compensation settlements, those seeking to limit or close future medical benefits with a qualified claimant, obtain CMS Regional Office approval of the settlement and MSA Allocation. An MSA Allocation is simply an accurate projection of the lifetime future medical costs covered by Medicare. Qualified claimants are often referred to as Class I and Class II claimants or beneficiaries and are determined as follows:

CLASS I - Any claimant who is currently Medicare eligible and the total settlement value is greater than $25,000.
CLASS II - Any claimant who has a reasonable expectation of Medicare enrollment in 30 months or less and the total settlement value is greater than $250,000.

The formation of a Medicare Set-Aside Arrangement is a complex and challenging issue to deal with. Inexperience and mishandling leads to increased settlement costs, inappropriate Medicare Set-Aside allocation amounts, and significant time delays when obtaining approval from Medicare. We assist clients with the many facets and complexities of settling a Workers' Compensation claim. You can rely on our experience to help protect your interests.