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Medicare liens and set-asides — a dynamic field

Medicare liens and set-asides — a dynamic field

By Irma Romero

Since the 1980s, Medicare’s recovery claim rights in workers’ compensation and third-party liability cases have been increasing. Typically, Medicare liens are placed on personal injury cases in which treatment is paid for by Medicare, and Medicare has a legal right to recover funds that would not have been paid without the negligent act that harmed the plaintiff-Medicare beneficiary.

By law, Medicare must be reimbursed for past medical care stemming from its beneficiary’s underlying injury if that individual has received a financial settlement. If that does not occur, the government can file suit for recovery.

To aid lawyers representing Medicare beneficiaries, the American Bar Association Standing Committee on Medical Professional Liability sponsored a webinar, “Mastering Medicare Liens and Set-Asides,” to discuss the latest developments in this dynamic area. Topics included strategies for dealing with Medicare liens, the reduction and settlement of such liens, the applicability and use of Medicare set-asides, when set-asides are necessary and how they are calculated, and expected future developments in the fields.

According to the course materials, the Centers for Medicare and Medicaid Services has proposed but not finalized a reimbursement rule for future medical care in liability cases that states: “If an individual or Medicare beneficiary obtains a ‘settlement’ and has received, reasonably anticipates receiving, or should have reasonably anticipated receiving Medicare-covered and otherwise reimbursable items and services after the date of ‘settlement,’ he or she is required to satisfy Medicare’s interest with respect to ‘future medicals’ related to his or her ‘settlement’ …”

The Strengthening Medicare and Repaying Taxpayers Act, or SMART Act, which took effect in January, creates a better process for Medicare to advise parties of how much is owed so that they can attempt to resolve their Medicare obligations before final settlement.

Sarah Rooney, regulatory counsel at the American Association for Justice in Washington, said the three major provisions of the SMART Act are a three-year statute of limitations, improvements to the CMS Web portal and the requirement that CMS provide a reliable reimbursement amount before settlement.

Jennifer Fiore, a personal injury lawyer with Mary Alexander & Associates in San Francisco, pointed out that, under the SMART Act, “low value” cases need to be reported but not satisfied and any financial penalties for failure to report are discretionary, not mandatory.

If a workers’ compensation or personal injury award contains money for future medical expenses, that amount must be set aside and spent down before Medicare supplies funds.

A Medicare set-aside is a projection of the future injury-related medical costs that would ordinarily be covered by Medicare if another primary payer did not exist. Its purpose is to protect Medicare’s interests and preserve the Medicare benefits of an injured claimant.

John Cattie of the Garretson Resolution Group in Charlotte, a provider of services to those settling personal injury claims, said set-asides are the most confusing area of Medicare transactions. He said the two biggest myths surrounding Medicare set-asides are that submitting proposals for them are voluntary and that they are a plaintiffs’ concern, not a defense concern.


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