Q&A: How do I protect Medicare’s interest with limited coverage?

Question: My associate has an MVA where there is 15,000 in coverage. The client has an additional $15,000 in uninsured/underinsured (UM) coverage. Client has herniated cervical disc and will ultimately need surgery. He is on Medicare and SSDI. Am I correct in believing that Medicare cannot factor in a client’s UM coverage in reaching the 25K threshold? If that is correct, then no MSA is needed since we only have $15,000 in coverage. And if that is correct, how do you protect Medicare’s interest with limited coverage?

Answer: Medicare’s right of recovery ripens on a settlement-by-settlement basis. So, if the $15K plus $15K will be paid at different times, then there would be two separate analyses, but if paid together then there would be only one analysis. The threshold you mention simply refers to Medicare’s willingness to review and approve an MSA figure, rather that the need to fund an MSA in the first place based solely on gross settlement amount. MSAs are needed in many cases where the gross settlement value is less than $25,000 just as they are needed when the value exceeds $25,000.

The way to figure out how much to fund the MSA comes from determining how much of the award is for non-medicals (indemnity/wage loss) versus medicals. See, for example, 42 C.F.R. §§ 411.46(d) and 411.47. The maximum MSA figure is that amount of dollars inside the settlement which are for medicals. That amount could then be minimized by reviewing the medical bills and concluding that the actual future medicals otherwise covered by Medicare would be less than that amount of money in the settlement available and apportioned for medicals. By doing that analysis and properly advising the client of that figure as well as how to spend down and exhaust that amount prior to billing Medicare, you are protecting Medicare and fully complying with the MSP Act in a limited coverage situation. If you like assistance with that calculation, please let us know!

The added benefit of working with us on MSA compliance issues is the fact that there is a complete risk transfer from your client and firm to us with respect to that issue. Many firms like the fact that they have the option to point the finger at someone else in the event the federal government pursues their client or themselves for dollars post-settlement related to MSA issues.