NASHVILLE, Tenn. — Uncertainty surrounds a Medicare set-aside process for liability claims that will be introduced this fall as defense attorneys try to determine how much money should be placed in those accounts.

“I see a lot of pain coming … with respect to set-asides and future medicals” in liability and no-fault claims, said John V. Cattie Jr., an attorney with Charlotte, North Carolina-based law firm Cattie P.L.L.C.

Mr. Cattie spoke during a presentation on Medicare Secondary Payer issues Friday morning at the Claims and Litigation Management Alliance Conference in Nashville, Tennessee. Medicare Secondary Payer rules require insurers and self-insured employers to repay the Centers for Medicare and Medicare Services for a Medicare beneficiary's medical treatment related to workers compensation or liability cases.

Medicare set-asides are accounts that have been used in workers comp settlements since CMS announced in 2001 that claims payers should pay for an injured worker's future medical care related to their work injury when that person is eligible or expected to be eligible for Medicare. CMS issued a notice in February that it will establish a similar review process, effective Oct. 1, for set-aside accounts related to liability claim and no-fault claim settlements.

CMS has advised medical providers that reimbursement claims they submit to Medicare may be rejected once liability and no-fault set-aside processes start in October when CMS believes a medical claim should be billed to a Medicare set-aside account, Mr. Cattie said. Therefore, he said, claimants or possibly their attorneys, who are paid through claim settlements, could be on the hook for paying medical bills that CMS denies if there is no set-aside account established for a liability and no-fault claim settlement.

Insurers or self-insured employers would not be responsible for those medical expenses since they would have released their responsibility under a settlement, Mr. Cattie noted.

One of the difficulties of liability and no-fault set-asides will be determining what portion of a settlement is related to future medical care versus payments for other claims, such as pain and suffering, mental anguish or past medical care, he said. That’s different from workers comp claims, in which the medical portion of an injured worker’s claim is usually delineated from their wage-loss benefits.

Since liability and no-fault cases are typically settled at a discounted amount compared with a claim's expected value, claim payers run the risk of increasing the total cost of a claim by trying to pay for the full future cost of a claimant’s medical care, Mr. Cattie said.

"The question that needs to be asked and answered is how is the insurance community going to address this? Are they going to follow what happened in workers comp and look at these issues strictly on a medical review basis, which I guarantee you will ultimately end up in overfunding the (Medicare set-aside)?” Mr. Cattie said.

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