In 1980, Congress created the Medicare Secondary Payer Act (MSP) in an effort to slow the rising cost of Medicare. The MSP prohibited Medicare from paying for medical treatment that was also covered by other insurers (workers’ compensation, liability, automobile, no-fault, or employer insurance). In these instances, Medicare becomes the ‘secondary payer’ for medical care.
Between 1991 and 1998, Medicare paid nearly $40 billion for medical care in workers’ compensation cases where Medicare was the secondary payer. Medicare demands that their interest be taken into consideration when settling cases where the settlement funds include payment for future medical care. If not, Medicare can take legal action to recover funds and the Medicare benefits can be negatively impacted in the future. In certain cases, Medicare strongly recommends compliance of future related Medicare allowable medical care be set-aside from the settlement funds and Medicare to review/approve the adequacy of the amount.
This is the conception of a Medicare Set-Aside (MSA). The MSA Allocation is a detailed report which determines future medical care and what is acceptable/covered by Medicare. During the settlement process, it is imperative that you understand when and how the case should be evaluated to assure Medicare’s interest has been taken into consideration.