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Medicare Actively Expanding MSP Compliance for Personal Injury Claimants

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By Shannon Laymon-Pecoraro

On February 3, 2017, the Centers for Medicare and Medicaid Services (CMS) announced that they would be establishing two new Medicare Set-Aside (MSA) processes – one for Liability Medicare Set-Asides (LMSA) and the other for Non-Fault Medicare Set-Asides (NFMSA). As a result, CMS will begin rejecting claims for payment of Medicare expenses associated with an injury for which a personal injury payment has been made. Specifically, CMS will direct the Medicare claimant to use LMSA or NFMSA funds to cover injury-related medical expenses.

When an injured person receives or has a “reasonable expectation” of receiving Medicare, the client has a duty to take Medicare’s future interest into account. Medicare is prohibited from paying claims when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance” pursuant to the Medicare Secondary Payer Act (MSPA). Essentially, the MSPA states that, when there is a primary payer, such as a motor insurance or worker’s compensation insurance policy, then Medicare will not be responsible for the medical expenses associated with an injury. Instead, the claimant is expected to utilize the funds received from the primary payer to pay the medical expenses. The setting aside of settlement or verdict funds to pay for future medical expenses associated with the injury is a MSA.

It is important to note that the rule only applies to those payments that have been, or can be expected to be, paid by the primary insurer. In the context of personal injury settlements, primary insurers are expected to make a person whole against – which would mean payment for future medical expenses. As a result Medicare will not pay the medical associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of an MSA.

Although Worker’s Compensation MSA rules have been established for some time, CMS has not implemented rules for LMSAs or NFMSAs. In May 2012, CMS issued an Advanced Notice of Proposed Rulemaking, which was withdrawn in October 2014. Many practitioners and advocates have anticipated the formal implementation of MSP compliance via LMSAs and NFMSAs for some time, but this is the first formal transmittal we have received.

Hook Law Center has been working with personal injury attorneys and their clients for a number of years to protect Medicare benefits. We assist attorneys and their clients in assessing whether a Medicare Set Aside is necessary, calculating the amount to be set aside, and options for administering the Medicare Set Aside.

Kit KatAsk Kit Kat – Blue-Footed Booby

Hook Law Center:  Kit Kat, what is a blue-footed booby?

Kit Kat:  Well, I have to tell you, when I first read about it, I thought there was a typing error in the title. However, that wasn’t the case at all. A blue-footed booby is a bird that lives on the Galápagos Islands which belong to Ecuador. They also can be found on Isla Isabel, south of the Baja Peninsula, Mexico and on certain Pacific Islands. It is thought that the name evolved from the Spanish word “bobo,” which means clown. Their feet really are a vibrant shade of blue, but they also have a distinctive wiggle to their walking, which can appear clown-like to the observer. They are about the size of large seagulls, with wingspans which can approach five feet. Females are about 20-30% bigger and stronger than males.

The booby has several interesting characteristics. 1) They feed like pelicans—taking a nosedive straight to the fish they eye flying high above the water. The booby hits the water at a speed of 60 miles an hour, its head protected by air sacs in the skull. 2) They live their lives close to where they were born, rarely straying beyond a range of a few dozen feet. 3) Their mating can be for life, but it is not always the case. Some select new partners every season. Those that do mate for life, however, tend to produce 35% more offspring than those that switch partners continually. Those mates which are most fertile are those where the mates are mismatched in age. It does not matter whether it is the male or female who is the older one of the couple. 4) It appears that the secret to longevity of a relationship is equal sharing of parental duties. In these long-term relationships, both males and females spend equal time nest sitting and feeding the young.

So perhaps we have much to learn from the blue-footed booby. Some of their traits are quite admirable. But one thing is certain—they are a good subject for research. Most birds would not tolerate the presence of humans in their midst—but not the booby! According to David J. Anderson of Wake Forest University, Winston-Salem, NC, ‘They let you move among them without minding too much. You try to do that with a continental bird or mammal—forget about it. But with these guys you see it all.’ (Natalie Angier, “On Galápagos, Revealing the Blue-Footed Booby’s True Colors, The New York Times, Science section, March 6, 2017)

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Posted on Monday, March 20th, 2017. Filed under Newsletter.