Skip to content

Personal Injury Practice? Start your MSA (Medicare Set Aside) notebook now!

February 14, 2011

If you have any intention of practicing personal injury law in the future, it is imperative you start planning for the coming legal and practical requirements for those injury cases which may fall under the Medicare Secondary Payer Act (MSPA).

If you are already an expert on this looming issue,  ignore this blog.  But, if you are one of those many not yet paying much attention to personal injury cases involving medicare recipients or those who are likely to be receiving medicare benefits for their injuries in the future, ignore the following at your peril.

 A good start for your quick education?  Cut out for your mediation/litigation notebook(s), the excellent two-part overview article by Michael R. D’Lugo, a partner of Wicker Smith, Orlando, writing for the OCBA Appellate Practice Committee, in the Orange County Bar , “The Briefs”, for October 2010 and February 2011.

These articles are a good way to become quickly oriented to and initially acquainted with this newest 800 pound gorilla that is coming at you in the form of another complication to parties’ attempted mediation resolutions and/or pre-mediation settlements.

Read and save these articles for later reference.  But here are a few highlights from them to get you started.

In case this whole area of the law is new to you, simplistically stated,  soon your federal government is going to be aggressively seeking total reimbursement from almost everyone for any Medicare payment made, in the past or in the future, for which the Medicare recipient receives any third-party insurance recovery.

This is not new law.  The Medicare Secondary Payer Act (MSPA) was originally passed in 1980,  and made a secondary payer by the Omnibus Budget Reconciliation Act of 1980 for recipients of third-party liability insurance. However, only recently and likely due to the state of the rising cost of medicare, the federal government  has turned to rather pointed reporting and enforcement activity in one of their efforts to bring Medicare costs under control.

“Secondary Payor” means that while Medicare may initially fund medical care for injuries to those entitled to Medicare benefits, under appropriate circumstances they will look to others to be primary payors.  Meaning, that if the care is initially or ultimately deemed to be the result of activity caused by insured third parties, the federal government will expect the third-party insurer to become the ultimate primary source of care payment by repaying Medicare fully.

Repayment by the federal government will be sought by the similar procedures of present lien-repayment subrogation rights for many private healthcare providers.  However, unlike most private healthcare providers seeking monies for benefits paid, anyone making a recovery for which Medicare may reasonably be asked to pay in the future, will also have to re-pay Medicare and likely all benefits at 100% of what Medicare pays!

Important differences:   You must plan to repay not only the monies actually paid by Medicare (usually quite easily identifiable) but all monies Medicare is likely to pay in the future (usually quite unknown and potentially another costly “expert” industry to feed off the legal system)!  It will be the federal government that will be seeking repayment using the federal courts, federal attorneys and federal judges!  And the targets now will include just about everyone responsible for the injury or paying or obtaining third-party monies.

Unlike some of the legal and practical difficulties facing private insurers in state courts seeking subrogation or indemnification, those to whom the government will turn will include not only the injured parties receiving Medicare treatment and then receiving the third-party insurance payments, but, despite full payment to the injured party and full documentation, the defendants and their insurers who made the payments are going to remain fully responsible. 

And, if that is not enough, attorneys for both the injured party and the defendant and their insurer will now also be subject to the responsibility for repayment! 

In short, the government is going to be repaid.  The question is, who will they obtain the money from, should the injured party, usually without means soon after receiving third-party insurance payment, no longer be able to re-pay?

Even worse, when the government comes, to whomever they come, they will be seeking not only what Medicare has paid, but if not paid promptly, the government will be seeking a penalty up to 200% of the monies not paid.

The solution?  Several seem possible, but the most prominent for the moment is the MSA, also known as the Medicare Set Aside account (MSA).

Again, simplistically, this MSA concept is simply an escrow account established to be available solely to repay Medicare (and hopefully thereby to extinguish the liability to the government for everyone).

Because literally everyone in the injured party-third-party recovery chain will be a very real target for monies not repaid to the government, obtaining payment from third-party insurance is going to be an increasing administrative nightmare.  Simply stated, a lot of new hoops are going to have to be negotiated before any monies are going to change hands.

The result may be a total impediment to mediation resolutions, much less settlements, that otherwise would have been considered routine if you are not properly prepared to accommodate the likely stringent requirements requirements of those being asked to pay monies from third-party insurers.

Start thinking now of how any case you have may be impacted by these coming issues.  Forewarned is forearmed.  It is never too early to prepare a solution in advance of being presented a problem.

No comments yet

What Do You Think? Your Insight Can Be Helpful To Others.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: