Medicare Set Asides in Small Settlements?

Question: If a settlement amount is very small, do you have to fund the Medicare Set Aside?

Answer: The statutory language of the Medicare Secondary Payer (“MSP”) tells us that Medicare will not pay for medical expenses where payment either has been made or can reasonably be expected to be made under a workers’ comp policy or plan, a liability insurance policy or plan (including self-insurance) or a no fault plan (42 U.S.C. Sec. 1395y(b)(2). Nowhere in the statute, the regulations enacted in support of the statute or any administrative announcements from Medicare are any “safe harbors” provided. Therefore, parties cannot rely on the fact that a settlement is “small” as the reason why a set-aside (or MSA) was not funded. However, in small settlements (as in any other settlement/judgment/award) if it can be proven quantitatively that the “small” settlement did not contain any proceeds which could reasonably be said to have been payable and allocated to future medicals expenses (whether explicitly in the form of a specific carve out by the parties or implicitly as part of the one undifferentiated lump sum amount), then a set-aside would not be needed. In such cases, the parties should then simply document the file as to why an MSA was not needed and how it arrived at such a conclusion (in the event a CMS official ever asks some time down the road).

Our MSA services are tailor made to address MSA obligations based on the case-specific facts to determine whether such a future medical allocation exists within a settlement amount. Whether you opt for our traditional “MSA Evaluation Letter” or you prefer the ease and convenience of our new “MSA Decision Engine”, GRG can help you address this issue when settling your case.