What is Medicare and the MSP?
Medicare is a federal health insurance program. Medicare entitlement comes 2 years after the date of disability under Social Security’s definition. Medicare coverage is available again without regard to the client’s finances.
If a client is covered by Medicare, you have to worry about the Medicare Secondary Payer (MSP) statute. The MSP is a series of statutory provisions enacted during the 1980s as part of the Omnibus Reconciliation Act with the goal of reducing federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. CFR Title 42, Part 411, Subpart B, Section 411.20 (2) provides “[s]ection 1862(b)(2)(A)(ii) of the Act precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following” (i) Workers’ compensation; (ii) Liability insurance; (iii) No-fault insurance. There are two issues that the MSP deals with: (1) Medicare payments made prior to the date of settlement and (2) future Medicare payments for covered services. Enforcement of the MSP as it pertains to future Medicare covered services began back in 2001 when the Centers for Medicare and Medicaid announced in a memorandum the requirement to set aside a portion of Workers’ Compensation settlements allocated to future Medicare covered expenses. This memo was the genesis of a whole new industry – Medicare Set Aside professionals who do allocation and administration of Medicare Set Asides. Recently, there have been some developments that indicate that the MSP may be enforced to a greater extent in liability settlements as well for future Medicare covered expenses.