Medicare Secondary Payer compliance has become a hot topic within recent years. Despite the subject’s current prominence, MSP compliance is not new. Since its inception in 1965, the Medicare Fund has been secondary to workers’ compensation insurance. Medicare became secondary to liability insurance (including auto, no-fault and self-insured) in 1980 with the introduction of the Medicare Secondary Payer Act, a statute that not only broadened Medicare‘s umbrella of protection, but gave it teeth to inforce its position as secondary with recovery rights and penalties.
There have been several recent developments in MSP compliance which appear to demonstrate The Centers for Medicare and Medicaid Services’ (CMS) intent to enforce MSP compliance more diligently. These include new reporting requirements for workers‘ compensation and liability insurance claims by current Medicare beneficiaries, and CMS’ willingness in certain regions to review Liability Medicare Set-Aside allocations as their workload permits (a review previously reserved for workers‘ compensation settlements only).
Central to MSP compliance is the idea of “considering Medicare’s interest” so as to avoid possible future exposure to penalties and damages imposed by the federal government. This can be accomplished by taking certain appropriate steps which demonstrate an intent to assure that Medicare remains secondary.
Step 1 – Verify Current or Future Medicare Entitlement
The first step in achieving MSP compliance is to obtain information on whether or not a claimant or applicant is entitled to Medicare benefits now or in the near future. If they are not, there are clearly no obligations to consider regarding Medicare. However, if they are entitled to Medicare benefits now or in the immediate future, one must take the proper steps to insure MSP compliance. Medivest contacts the appropriate group to obtain this information on behalf of our clients. Our reports will identify several situations regarding a claimant’s Medicare status including:
- Whether or not a claimant or applicant is currently on Medicare or Social SecurityDisability Benefits (SSDI).
- If a claimant or applicant has been denied Medicare or SSDI benefits, and information on any applicable appeals status.
- The effective date of a claimant or applicant’s Medicare or SSDI eligibility.
Step 2 – Investigate Possible Medicare Liens
After obtaining information on a claimant or applicant’s Medicare and/or SSDI status, our clients must then determine the amount of any existing Medicare liens. Medicare is very clear in stating that any payments Medicare has made on a beneficiary’s behalf prior to settlement must be promptly paid back. Parties to a settlement could incur serious penalties if any existing Medicare liens are not paid back at settlement. Medivest will make the appropriate inquiries to any existing Medicare liens on our client’s behalf in an effort to make sure that MSP obligations are met.
Step 3 – Prepare Medicare Set-Aside Allocation
The next step in achieving MSP compliance is to calculate the Medicare-allowable, injury-related expenses for the remainder of a claimant or applicant’s life expectancy. Medivest utilizes the services of highly trained nurse allocators and a licensed pharmacist to prepare each and every MSA allocation report. Upon completion, our MSA Quality Assurance Specialist reviews each report for accuracy, to insure our clients are provided an accurate MSA that assists the settlement process. An MSA that has been calculated too low runs the risk of a higher counter from the CMS, and could disrupt the settlement process. An MSA that is too high results in an overfunded MSA and needlessly costs the settling parties critical settlement dollars. Our MSAs are completed within 10-business days, which gives our clients the information they need to settle their cases quickly and close their files accordingly.
Step 4 – Arrange Proper Administration
The final step in the MSP compliance process is proper MSA account administration. Once the MSA amount has been calculated, a claimant or applicant must “set aside” the MSA funds in a separate account and use those funds to pay only for Medicare-allowable and injury-related expenses. It is our impression that true MSP compliance cannot be achieved without proper account administration. The administrator of an MSA account must adhere to strict Medicare guidelines such as utilizing proper fee schedules and determining which services are Medicare-allowable, just to name a few. It is difficult for a claimant to learn about these stipulations, let alone implement their usage. Medicest has been professionally administering MSA custodial accounts for over 15 years, and is the industry leader in the field. Our proven account administration system insures that all parties to a settlement, including the defense, plaintiff, and claimant or applicant continue to remain in compliance with MSP obligations long after the settlement is finalized.