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Should you purchase MSA liability insurance?

It’s estimated that the number of Medicare beneficiaries will reach 80 million by 2030. When it comes to Medicare Secondary Payer (MSP) compliance, enforcement will likely increase as the number of beneficiaries grows and Medicare’s budget becomes pinched. Insurers need to start planning now for the increased compliance burdens they may face.

So, should you be even more worried about the Centers for Medicare and Medicaid Services (CMS) enforcement against workers' compensation settlements? First of all, there’s no obligation to submit your workers' compensation settlement to CMS. Basically, you need to make sure that your settlement doesn’t shift the burden of the worker’s future medical treatment to the federal government. The best way to do that is to set aside future medical treatment funds. And if you do have your settlement reviewed by Medicare, then you gain a measure of protection against possible adverse enforcement after the settlement.

Binders

What happens if you don’t submit your case to CMS? If you ensure the settlement doesn’t shift the burden of future medical care to the Medicare program, then you’re covered. But what happens if CMS comes knocking and attempts to enforce collection? And what are the odds that it will? Before answering those questions, let’s recall the two goals of the Medicare Secondary Payer program:

  • coordination of benefits (payment prevention)
  • recovery (getting Medicare dollars back in the government’s coffers)

Medicare Set-Asides (MSAs) are primarily a coordination of benefits tool. The failure to obtain and adequately fund an MSA can result in a denial of payment by Medicare. That’s if Medicare decides to even enforce the denial of payment at all.

Now back to the question of what happens if CMS comes knocking. Recently, we’ve seen the emergence of something called “MSA insurance.” Sometimes, parties decide that possible increased claim costs in the form of delayed settlements or exorbitant MSAs could be avoided by non-submission of MSAs. Lately, some enterprising individuals have pushed the idea of buying expensive insurance to cover the cost of dealing with CMS enforcement activity. Sounds like a win-win situation, right? Not necessarily.

What protection does this kind of insurance really afford? Will it protect against the unlikely risk that CMS will uncover the non-submitted MSA and deny Medicare coverage to the claimant? Will it retroactively determine that non-submitted MSAs fail to protect Medicare’s interests sufficiently?  While anything’s possible, it’s hard to see how this leads to an effective result for anyone involved. If your company does choose to buy this type of insurance, make sure to read the fine print—and take a close look to see if you’re protected even if CMS policy changes.

Our advice is that it’s not necessary to buy insurance if you choose not to submit. If you decide against submission, support your future medical allocation by using evidence-based medical guidelines. Take measures to ensure that your allocation is reasonable, reflects the medical and legal evidence contained in your case, and is justifiable in the unlikely event CMS challenges the allocation. If you work with an MSA provider that has legal and medical experts working tirelessly on your behalf to address any contingencies that arise, that’s all the “insurance” you need.


Carrie Barr

Carrie Barr is chief operating officer at ISO Claims Partners, a Verisk business. You can reach Carrie at cbarr@verisk.com.


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