Optimizing Medicare Set-Asides

Employers should consider taking a more active role in scrutinizing procedures surrounding Medicare set-aside arrangements (MSAs) employed by their claims administrators, panelists said during a recent Marsh Workers’ Compensation webcast.

MSAs are used when settling workers’ compensation claims involving Medicare beneficiaries, and are created for settlements in which injured workers are Medicare beneficiaries at the time of settlement or will be entitled to Medicare within 30 months, said Jeff Sickles, senior vice president, claims, at Broadspire. Although the term “Medicare set-aside” does not appear in any law or regulation, it is an accepted method that the Centers for Medicare and Medicaid Services (CMS) recommends to allocate the amount of money needed to protect Medicare’s interests for future medical care that would otherwise be covered by Medicare if the injury had not occurred.

And while some employers are knowledgeable about — and may even be involved in — the process used to procure MSAs, many defer to their third-party administrators (TPAs) and insurers to create and control the process. But given that MSAs could cost employers millions of dollars annually — and could involve unnecessary costs if MSAs are not properly created — employers should consider being more involved, said Gail Krinsky, a vice president at Marsh Risk Consulting. Among other actions, employers should seek to become better informed about compliance requirements under the Medicare Secondary Payer Act. Employers should also become fully informed of the protocols, procedures, and contractual arrangements their TPAs and insurers have in place, allowing them to understand their MSA programs in detail.

In addition, employers should weigh the value of alternative solutions to standard MSAs, said Rich Reynolds, senior manager, workers’ compensation, at Providence St. Joseph Health. These include evidence-based MSAs that are not submitted to CMS for review, along with medical annuities and structured settlement options.

CMS is expected to publish new guidelines on the recommended use of MSAs in auto and liability claims later this year, making effective MSA management particularly important. Roy Franco, chief client officer at Franco Signor, noted that employers should consider audits of their reporting platforms for Section 111 compliance, which can help identify gaps in current processes and yield recommendations for how to prevent civil monetary penalties for failure to timely and accurately report claim information involving Medicare beneficiaries.

Click to access the replay.