The Code of Federal Regulation (42 CFR Sections 411.46 and 411.47) provides that payment for injury related medical expenses and prescription drug expenses should not be shifted to Medicare from the primary or “responsible” party. In order to accomplish this goal, a portion of a claimant’s settlement or award can be set aside to pay for future accident related medical services and prescription drug expenses that would otherwise be reimbursable by Medicare. The bottom line is: Medicare will not pay for any medical expenses or prescription drug expenses for the accident related illness or disease after a settlement or award is received, until the amount allocated (or “set-aside”) for future medical expenses and future prescription drug expenses, that would otherwise be reimbursable by Medicare, are “properly” exhausted.
Medicare Set-Aside Administration Requirements
The key word, of course, is properly. The question becomes: “Is this is being done?” The complexities surrounding this task can be astonishing. The following are the basic requirements for ensuring that settlement funds are properly exhausted:
1. Medicare Set-Aside Account – The MSA funds shall be placed in an interest bearing account, which is separate from any personal checking or savings account. A copy of the documents establishing the MSA account should be sent to CMS at Coordination of Benefits Contractor within 30 days of disbursal of the settlement.
2. Distribution of funds from the Medicare Set-Aside Account – The funds in the MSA account shall be used solely for expenses related to medically necessary services or supplies or prescription drug expenses incurred for those medical needs related to or resulting from the related injury, which would otherwise be reimbursable or paid for by Medicare. Funds in the MSA account shall not be used to pay for medical services or prescription drug expenses not covered by Medicare.
3. Set-Aside Account Interest – All interest earned on the Medicare Set-Aside account will be allowed to accrue in the account and will be used solely for medical expenses and prescription drug expenses that would otherwise be covered by Medicare and for taxes, banking fees, mailing fees, or document-copying charges related to the account.
4. Reimbursement to Medicare – In the event CMS determines that Medicare has erroneously paid benefits, CMS (or its designated Contractor) shall have the right to seek and receive reimbursement of any such conditional payments or overpayments.
5. Accounting Records – The administrator, whether the claimant or a professional custodian, shall maintain accurate records of the distributions and expenditures from the MSA account. The records should indicate:
- the date of service;
- the name of the medical provider, supplier or pharmacy;
- the medical diagnosis, procedure, service, or item received;
- the amount paid for the medical expense or prescription drug expense;
- and the date of the payment.
The administrator shall also retain a receipt or other evidence of each and every payment made from the MSA account.
6. Annual & Final Accounting and Delivery of Notices – The administrator shall submit all required annual accounting of the MSA and notices to MSPRC. The annual accounting shall be submitted no later than 30 days after the close of the annual accounting period (which is the anniversary of the funding of the MSA from the award or settlement). The administrator shall submit a final accounting within 60 days of the funds being depleted. The annual and final accounting will include the information set forth in paragraph 5 above.
7. Distributions Following Death of Beneficiary – In the event that the Medicare beneficiary dies before the funds in the MSA are depleted, the account will continue to exist for payments of any outstanding bills for accident related medical expenses and prescription drug expenses. Any remaining monies shall be paid to the beneficiary’s estate or subject to state law.
8. Inappropriate Set-aside Account Expenditures – If, after the MSA account is depleted, the final accounting reveals that funds in the account were used to pay for items other than Medicare allowable expenses related to necessary services, supplies, or prescription drug expenses resulting from the accident related injury, Medicare will not pay for any future injury related medical expenses or prescription drug expenses until the funds have been restored to the account and properly exhausted.
Post-settlement administration programs are designed to accomplish two main goals: provide claimants with support from either an advisement role or an administrative role, and to protect Medicare’s interests. Management of post-settlement funds is crucial to both sides of the equation and, if not properly monitored and allocated, can lead to severe consequences. With the proper attention, both parties’ interests can be protected and further action can be avoided.
About the Author: Christie Britt is the Vice President of Operations overseeing the extensive operations of Gould & Lamb. She has vast knowledge of Medicare Set Asides and Post-Settlement Administration from an insurance claims perspective. Christie is MSCC certified and has her Green Belt Certification in Six Sigma. She is also a member of the National Association of Medicare Set Aside Professionals (NAMSAP) and the Workers’ Compensation Claims Professionals (WCCP).