Introduction

            Our mission at Bleakley, Cypher, Parent, Warren & Quinn, PC has always been to deliver enthusiastic, effective, and efficient litigation services to our clients.  We are proud of our efforts and the results we have achieved. Click here for a description of our professional service offerings.

            It is well known that, in the past few years, the federal government has strengthened the enforcement of Social Security Administration laws regarding all Workers’ Compensation and liability settlements.  It is equally well known to our clients that compliance with government laws is always cumbersome, confusing, and intimidating.  Accordingly, we now offer our clients expert assistance in preparing Medicare Set-Asides which are required by the Social Security Administration when an injured person settles his/her workers’ compensation or third-party claim for a lump sum of money.  To assist in understanding Medicare Set-Asides, please review the following:

• The US Congress established the Medicare program in 1965 to pay medical expenses for the elderly and disabled.  Initially, Medicare paid essentially all expenses for eligible participants (beneficiaries).  However, in 1980, Congress enacted the Medicare Secondary Payor Statute to reduce spending of Medicare assets.
• Under the Medicare Secondary Payor Statute, Medicare is no longer required to pay for treatment when the injury or illness is the responsibility of a third party.  The theory is to shift the cost back to the responsible party.  More specifically, the Medicare Secondary Payor Statute provides that Medicare will not make any payment on behalf of a beneficiary if, “payment has been made or reasonably expected to be made under a Workers’ Compensation law or plan…or under an automobile or liability insurance policy or plan (including a self-insurance plan) or under no-fault insurance.”  As a result, Medicare will look to one of these designated plans or policies as the “primary” payor for all injury related medical expenses.  The Medicare Secondary Payor Statute provides that the government (Medicare) will provide funds for treatment only if Medicare’s “…interests are considered…” in the settlement.
• In order to enforce the above statute, naturally, the government created a bureaucratic organization known as the Centers for Medicare & Medicaid Services (CMS).  In 2001, the CMS began strict enforcement of the above statute.  Since that time, they have held a “principal payor” (employer, insurance company, etc) totally accountable for participating in the claimant’s future medical expenses.  CMS requires the claimant/recipient to submit a recommended method of considering Medicare’s interests.  If the primary payor (employer, insurance company, etc) is settling future medical benefits for a claimant meeting certain criteria which will be discussed below, a CMS approved Medicare Set-Aside (MSA) arrangement is required.  The primary components of an MSA arrangement are: the MSA allocation amount, the method of funding the MSA account, and the method of administering the MSA account.  The “primary payor” (employer, insurance company, etc) must submit an MSA in certain circumstances or face harsh consequences, including exposure for double damages, penalties, forfeiture of Medicare benefits, or future Social Security benefits offset.  Employers who fail to strictly comply with CMS may be subject to penalties of up to $1,000 per day.
• Please see the attached chart outlining when an MSA is required by CMS.
• There are numerous companies throughout the United States who hold themselves out to be experts in CMS compliance.  Some are law firms, but most are not.  In order to meet certain quotas, we have found that most of these companies are more interested in making sure that the MSA proposals are approved upon the first submission rather than saving their customers money.  We advocate for our clients by keeping the MSA as low as possible and achieving approval as soon as possible.