A MSA allocates a portion of a liability settlement for future medical expenses otherwise covered by Medicare. Medicare’s interest involves a settlement which includes future cost of care. The amount of the set-aside is case specific and may be reviewed by the Centers for Medicare and Medicaid Services (CMS). Once the set aside is exhausted with proper accounting, Medicare will agree to be the primary payer for future Medicare expenses related to the injury. The MSA may be funded as a lump sum amount or as an annuity.
The Medicare Secondary Payer Act (MSP) 42 U.S.C. § 1395 y (b), entitles Medicare to recover its conditional payments from a Medicare beneficiary in a liability case. Medicare is always secondary to insurance and self-insured plans. In all settlements that include past and future medical cost, the attorney and Medicare beneficiary have two obligations regarding Medicare:
1. Reimburse Medicare for past medical expenses for injury-related care; and
2. Evaluate and set-aside money for future injury related Medicare medical expenses.
Ignoring Medicare’s interest has significant consequences. CMS is granted a right to recover its payments directly from anyone who received a third-party payment, including a beneficiary, provider, supplier, Physician, attorney, State agency, or private insurer.
Richard J. Arsenault, 2011
