What in heaven's name is a Medicare Set Aside Account?

Think a  comp claim is expensive?  Like most things, wait till the Federal government is involved.  That's when the expense is really out of control.  But you say, WC is a state program, why is the Federal Government involved?  Here's how it happens: When your employee has a serious injury and is out of work for an extended period of time, he can pick up the phone and call one of those oh so helpful TV lawfirms advertising for Social Security Disability claims (SSDIB).  The application for SSDIB attempts to prove that the employee is unable to return to his previous work or to work that might be available to him in substantial numbers in the national economy.  The decision will include an assessment of whether your employee's physical capacity (work restrictions and the employee's other health issues), education and transferable skills and whether given those factors, there are enough jobs out there that the employee could perform if he was looking for work.  Oh, by the way, you don't get a seat at the table when these issues are decided.  You don't even get notice of the hearing or even an opportunity to be heard over whether the employee is in fact capable of returning to work. 

Once on SSDIB, the employee eventually becomes eligible for Medicare Coverage based on that disability.  This is where the Medicare Set Aside Account comes in.   The taxpayers among us would all agree that we do not want our taxes paying for someone else's fault or someone else's responsibility.  That is the basic idea behind the Medicare Secondary Payor Act.  This act states that Medicare is not the primary payor for medical expenses related to a private risk.  This includes not only WC claims but also auto accidents as well as many other incidents for which a private person or business might be responsible.  The basic idea is that the Federal Government and the taxpaying public will not be picking up the tab and that, in this example, the Employer/Insurer need to take Medicare's interests into account when settling a WC claim. The Medicare set-aside account (MSA) is the vehicle whereby Medicare's interests are protected. 

So what's in a Medicare Set Aside Account.  The easiest answer is that the MSA is made up of the best guess as to what the medical expense is going to be for the covered condition for the rest of that employee's life.  For this reason it's always important for the carrier to cover ONLY those conditions related to the injury and to jealously guard against attempts to include unrelated conditions.  For example, your employee has a shoulder injury and then begins to complain of neck pain.  When the medical coding for that claim (the Diagnostic Related Group) includes not just that DRG for the shoulder but the DRG codes for the neck as well, you may just have increased exponentially the cost of the claim as the medical conditions covered by the MSA will have to include the medical care, diagnostic evaluations and worst of all the prescriptions necessary for treatment of that condition.  Unrelated condition should be very clearly denied and if necessary litigated.  Unfortunately, the calculation of how much money must be placed in the MSA is little more than a multiplication of prior expense by the life expectancy of the injured worker.  If the medications are all name brand and expensive, then the cost of the prescription medications in that MSA may very well make the cost of the MSA such that settlement is not possible. 

In most WC claims, the Federal Government will never become involved.  If you play your cards right, then doing the right thing, protecting your employees and protecting your business will make sure that your entanglements with the Federal Government are kept to  minimum.   In future posts, we'll talk about what steps you can take to try and make sure that you don't need an MSA or, if you do, ways to keep the cost of MSA's down
"Skedsvold & White
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