When to Use a Liability Medicare Set-aside Arrangement


The Centers for Medicare & Medicaid Services (CMS) has put the insurance industry on high alert. Threat of penalties for failure to report liability claims involving a Medicare beneficiary has raised concerns over properly meeting obligations owed Medicare. One particular responsibility is a subject of great controversy – Does a settlement, judgment, award or other payment to a Medicare beneficiary need to protect Medicare’s interest in the liability case? The answer follows.

Most experts opine “it depends,” which regrettably is an unworkable solution for bringing closure to a liability case. The best approach is to examine each case step by step.

Step One: Is the plaintiff a Medicare beneficiary?

If yes, proceed to the next step. If not, stop, as there is no statutory requirement to protect Medicare’s interest. A potential Medicare beneficiary is a red herring in this analysis. The CMS Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) workload review thresholds have caused this confusion but have no bearing on the liability claim. Unless CMS issues policy as it had in the past with workers’ compensation claims, the Medicare Secondary Payer Statute (MSP)1 can be reasonably interpreted to apply only when a Medicare beneficiary is involved.

Please see full supplement below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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