What the Law Says About MSAs

Medicare Set-Asides are never discussed in any United States’ statute.

 

Even the term “protect Medicare’s interest” isn’t in the Medicare Secondary Payer Act. That term comes from a 2005 “Q&A Memorandum” from CMS. So, what does the law say?

 

42 USC 1395y(b)(2)(A) states that Medicare may not make payment for case-related care if another payer exists. Or Medicare is secondary. That’s it. The statute makes it illegal for Medicare to pay; but creates no provision for if Medicare does pay. For this reason, Medicare suggests an MSA.

 

The only verified penalty for no MSA is that Medicare will not pay for a beneficiary’s care after settlement. While not a directly monetary penalty, this could mean thousands of dollars in medical bills that your client cannot afford post-settlement. Or worse, it could mean doctors will refuse to perform the care without a payment method available.

 

Medicare verifies this process in Section 3.0 of its user guide, stating “Medicare may also refuse to pay for future medical expenses related to the … injury until the entire settlement is exhausted.”

 

So, does your client need an MSA? The answer is probably still yes – but for practical, rather than legal reasons.