MSPA = 42 U.S.C. §1395y(b)(5)

MSPA says "Medicare shall be secondary to Workers' Compensation and other insurance, including no fault and liability insurance." Payment "may not be made under Medicare for covered items or services to the extent that payment has been made or can reasonably be expected to be made under a liability insurance policy plan."

• Medicare is secondary payer
• Medicare must be reimbursed for past payments - attorney has ethical & legal obligations to comply
• Failure to comply results in heavy fines and loss of benefits to Medicare beneficiary
  • U.S. v. Harris = law firms and defendant insurers can be deemed primary payers
  • If beneficiary loses benefits from law firm's failure to ensure compliance, law firm may be exposed to a malpractice claim

The Centers for Medicare & Medicaid Services (CMS) have issued specific guidelines in workers' compensation cases for when future medical costs need to be considered in connection with the settlement proceeds. CMS strongly advises (but does not require) that Medicare Set-Asides (MSAs) be used to safeguard funds from the settlement proceeds to cover potential future medical expenses of the Medicare beneficiary.

• No specific guidance yet for liability cases, but attorneys clearly have legal and ethical obligation to take "Medicare's interest into account" while defendant insurers should do the same in light of U.S. v. Harris
• Patel Memorandum, Issued July 23, 2001 = Medicare beneficiary who is settling a Workers' Compensation case must obtain approval from CMS.
  • Submission and review of the WC settlement agreement if claimant is already a Medicare beneficiary and settlement in excess of $25,000; or
  • If claimant is reasonably expected to become Medicare eligible within 30 months of settlement and settlement value is greater than $250,000.00.
  • MSAs strongly recommended as vehicle to help protect Medicare's interest

MMSEA = requires liability insurers and self-insureds, whenever there is a settlement, award, judgment or other similar payment, regardless of an admission of liability to (1) determine if a claimant is entitled to benefits from Medicare on any basis; and (2) provide information on the plaintiff to CMS in a format to be determined by CMS.

• Original deadline was July 1, 2009, but has been pushed back to January 1, 2012; however, insurers allowed to voluntarily submit whenever they are ready
• MMSEA reporting requirements for insurers do not mitigate your legal and ethical obligations to take Medicare's interest into account under the MSPA. These are two separate, but related, issues.

MSA = is a pre-determined dollar amount to be set aside to pay for future injury-related medical and drug expenses of the Medicare beneficiary that would otherwise be paid by Medicare

• Effectively acts as "primary coverage" for injury-related treatment post-settlement
• Once the funds are properly depleted, Medicare becomes the primary payer
• An MSA can be professionally managed or self-administered
• Structured Settlements = favored method for funding MSAs (less costly for the parties)