MEDICARE and MEDICAID UPDATE

Transcription

1 MEDICARE and MEDICAID UPDATE State Bar of Texas 29 th Advanced Personal Injury Law Course Dallas, Texas - 7/10-12 San Antonio, Texas - 9/7-9 Houston, Texas - 9/28-30 Pi-Yi Mayo* 5223 Garth Road Baytown, Texas *Certified Elder Law Attorney by the National Elder Law Foundation Nothing in this paper is to be construed as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. This publication is intended for educational and informational purposes only Copyright, Pi-Yi Mayo, All Rights Reserved

2 Introduction Contents of Paper FUTURE MEDICAL EXPENSES AND THE AFFORDABLE CARE ACT (ACA NEW CASE LAW Benoit v. Neustrom SMART ACT TEXAS MEDICAID: RIGHT OF RECOVERY OR CLAIM MEDICARE S SUBROGATION CLAIM PROCEDURE FOR PAYING A CLAIM MEDICARE SET-ASIDE ARRANGEMENTS OR TRUSTS MEDICARE, MEDICAID SCHIP EXTENSION ACT OF 2007 (MMSEA)

3 Introduction Medicare Set-Asides in third party liability cases Benoit v. Neustrom, 2013 U.S. Dist. LEXIS (April 17, 2013). In this case the United States District Court for the Western District of Louisiana considered the issue of what amount is necessary to fund a Medicare Set-Aside when the settlement is less than the projected MSA amount The case involved a Plaintiff who was an inmate in a Lafayette Parish correctional facility who suffered brain injury after a seizure and alleged failure by the authorities to properly evaluate his condition and provide proper care.

4 Numbers Ahlborn v. Benoit Net settlement to the client after expenses: $55, Midpoint range of MSA projections: $ 305, Net settlement was 18% of MSA projections. Ahlborn type calculation : $17, Source: specialneedsfirm.com Amount Court ruled was reasonable for the MSA amount $10,138.00

5 Benoit v. Neustrom Declaratory Judgment of a Settlement The parties reached a settlement and part of that settlement required the Plaintiff to assume sole responsibility for protecting and satisfying the interests of Medicare and Medicaid. A Medicare Set-Aside Report was prepared by MedAllocators, Inc. for Shapiro Solutions from a review of the medical records and research related to Benoit's injury claim, diagnosis and medical treatment. The case was brought before the Court on a Motion for Declaratory Judgment filed by the plaintiff, confirming the terms of a settlement agreement reached with the defendants, calculating the future potential medical expenses for treatment of Plaintiff's alleged injuries in compliance with the Medicare Secondary Payor Act at 42 USC 1395y(b)(2), and representing to the court that the settlement amount is insufficient to provide a set-aside totaling 100% of the MSA.

6 Benoit v. Neustrom Service No Appearance by CMS The Court required service to be made by the Clerk of Court on the Secretary of Health and Human Services, Chief Counsel of HHS/OGC for Region VI and the Civil Chief of the Office of the United States Attorney for the Western District of Louisiana. After the service, the court received a copy of a letter from the United States Attorney's Office to all parties to this litigation, stating that the United States has a statutory right of reimbursement and subrogation against any settlement proceeds for past conditional payments made on behalf of Michael Benoit for injuries sustained as a result of the incident that occurred on January 1, U.S.C. 1395y(b). At that time, CMS's contractor, (Medicare Secondary Payer Recovery Contractor), issued a demand letter in the amount of $2, for conditional payments made by Medicare specifically for the injuries at issue. The letter stated, Should the plaintiff accept this determination, payment in the form of a check or money order should be made payable to Medicare. This was the only reply from Medicare. The letter made no reference to the MSA allocation issue and no further appearance was forthcoming from the Government.

7 Benoit v. Neustrom Medicare Set-Asides in third party liability cases The Medicare Set-Aside Cost Projections ranged from $277, to $333, and the amount of $2, was determined to be the amount of the conditional payments made by Medicare. Medicaid waived any interest in the proceeds as long as a special needs trust was created. The amount of the gross settlement was $100, The fees and costs involved were $44, leaving a net recovery to the Plaintiff of $55, The Plaintiff proposed an MSA allocation based on an Ahlborn type analysis. The proposed amount was ten percent (10%) of the gross settlement proceeds based on the position that the gross settlement in the case was ten percent (10%) of the possible recovery if he prevailed on all of the liability issues.

8 Benoit v. Neustrom Evidence The Court considered the question of the future medical care for Mr. Benoit as a result of the subject accident and the extent to which the Medicare setaside trust can or should be reduced to account for the financial hardship to the beneficiary. The MSA allocation prepared by MedAllocators, Inc., with future cost estimates was considerably larger than the net settlement figure that was also entered into evidence. Evidence was presented by the defendants on the liability issues, and each expressed their positions that they were preparing motions on those issues when the settlement agreement was reached. Shelia Benoit, wife of the plaintiff, testified regarding the medical problems and financial problems her husband faced.

9 Benoit v. Neustrom Medicare s Position on Settlements Other evidence included the position of Medicare that they recognize allocation of liability payments to non-medical losses only when payment is based on a court of competent jurisdiction's order after review on the merits of the case. The Court took note that the position of Medicare here was substantively the same position that Medicare asserted in Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010), an allocation case in which Medicare sought to recover conditional payments it had made to or on behalf of a decedent out of settlement proceeds.

10 Benoit v. Neustrom Medicare s Position on Settlements In the Sebelius case, the settlement proceeds were inadequate to meet the value of the survivor's claims and the full Medicare claim. A lower court determined the amount of the limited settlement proceeds to be allocated to the medical expense recovery. The Court of Appeals reviewed Medicare s position in Sebelius and determined they basically were saying that Medicare s language contained in one of its many field manuals was entitled to deference under Chevron U.S.A. Inc. V. Natural Resources Defense Council inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). The Benoit Court went on to review the Sebelius reasoning concerning the public policy considerations of encouraging settlements in personal injury suits and that the Secretary's position would have a chilling effect on such settlements

11 Benoit v. Neustrom Court Found After this review, the Court made findings of fact and conclusions of law some of which included: Medicare does not currently require or approve Medicare set asides when personal injury lawsuits are settled. Medicare does not currently have a policy or procedure in effect for reviewing or providing an opinion regarding the adequacy of the future medical aspect of a liability settlement or recovery of future medical expenses incurred in liability cases.... the specter of a verdict adverse to the plaintiff on liability was quite real. Had this lawsuit been tried, Mr. Benoit would have been entitled to recover pecuniary and nonpecuniary damages. The parties' agreement to settle this case for a payment of $100, by the defendants represents a reasonable compromise to avoid the uncertainty and expense which would be incurred if this case were tried. The Court finds the estimate of future medical costs set forth in the MSA to be both reasonable and reliable.

12 Benoit v. Neustrom Forget Ahlborn At this point, the Court choose not to accept the Plaintiff s allocation of the amount of the settlement that had been based on a theory similar to the Ahlborn case. The Benoit Court was more aggressive in making a determination calculating the MSA amount on a percentage of the net settlement amount to the range of the MSA allocation entered as evidence in the case, instead of looking at a ratio of the total case value versus the net, it looked at the ratio of the MSA amount to the net.

13 Ahlborn Analysis Medicare Set-Asides in third party liability cases Ahlborn looked at a ratio of the total case value versus the net: Total Case Value $ 1,000, Actual Settlement $ 100, Fees, Costs & Liens $ 44, Net to Client $ 55, Set Aside Amount $ 305, Percentage of Recovery 5.57% Reduced Set Aside Amount $ 17, Source : Jason Lazarus - jlazarus@sllfirm.com

14 Benoit v. Neustrom Benoit Method The net settlement proceeds, after reimbursement of conditional payments to Medicare is $55, The mid-point range in the MSA projections is $305, The net settlement is 18.2% of that figure. Using that percentage applied to the net settlement proceeds, the sum of money to be set aside in trust for future medical expenses is $10, The Court finds that this amount adequately protects Medicare's interests and should be available to provide funding for future medical items or services related to what was claimed and released in this lawsuit that would otherwise be covered or reimbursable by Medicare.

15 Benoit v. Neustrom Benoit Method The sum of $ 10,138.00, to be utilized by Michael Benoit out of the settlement proceeds to pay for future medical items or services that would be otherwise covered by Medicare, reasonably and fairly takes Medicare's interests into account in that the figures are based on reasonably foreseeable medical needs, (as opposed to the standard of proof required by the substantive law that would be applicable if the case were tried on the merits), based on the most recent information from the treating physicians, utilizing fee schedules that would be acceptable to CMS according to the MSA evaluation.

16 Benoit v. Neustrom Medicare Set-Asides in third party liability cases The ultimate value of the Benoit case is yet to be determined, but the case does set forth a template that may be useful in cases where the settlement is grossly inadequate to fund the proposed MSA allocation. The salient points of the case include: Significant damages and liability issues with limited recovery; Serving Medicare and allowing them an opportunity to appear and contest the proposed allocation; Presentation of evidence of the Plaintiff s financial burden and hardships faced in spite of the settlement as well as all of the specific costs and recovery figures (which means the settlement cannot be confidential); Determination by the Court that the methodology for calculating the amount of the MSA is reasonable and adequately considers Medicare s interest.

17 Introduction The SMART ACT H.R. 1845, aka Smart Act, was signed by President Obama on Jan 10, 2013 Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 TITLE II STRENGTHENING MEDICARE SECONDARY PAYER RULES

18 The SMART Act SEC DETERMINATION OF REIMBURSEMENT AMOUNT THROUGH CMS WEBSITE TO IMPROVE PROGRAM EFFICIENCY The claimant or applicable plan may at any time beginning 120 days before the reasonably expected date of a settlement, judgment, award, or other payment, notify the Secretary that a payment is reasonably expected and the expected date of such payment. CMS then has 65 days to provide an amount for the bills in the notice. CMS can ask for an additional 30 days for their response. If you check the portal within 3 days of settlement then that is considered the final demand even if the number later changes. If you accept the amount they are claiming then that would be a final demand. There would be no appeal by either party, it is an all or nothing acceptance. If you want to dispute the amount then.

19 The SMART Act SEC DETERMINATION OF REIMBURSEMENT AMOUNT THROUGH CMS WEBSITE TO IMPROVE PROGRAM EFFICIENCY The individual (or representative) must provide documentation explaining the discrepancy and a proposal to resolve such discrepancy. Within 11 business days after the date of receipt of such documentation, the Secretary shall determine whether there is a reasonable basis to include or remove claims on the statement of reimbursement. If the Secretary does not make such determination within the 11 business-day period, then the proposal to resolve the discrepancy shall be accepted. In no case shall the process under this subclause be treated as an appeals process or as establishing a right of appeal for a statement of reimbursement amount and there shall be no administrative or judicial review of the Secretary s determinations under this subclause.

20 The SMART Act Only for Plans (Insurance Co.) RIGHT OF APPEAL FOR SECONDARY PAYER DETERMINATIONS RELATING TO LIABILITY INSURANCE (INCLUDING SELF- INSURANCE),NO FAULT INSURANCE, AND WORKERS COMPENSATION LAWS AND PLANS The Secretary shall promulgate regulations establishing a right of appeal and appeals process, with respect to any determination under this subsection for a payment made under this title for an item or service for which the Secretary is seeking to recover conditional payments from an applicable plan that is a primary plan which the applicable plan involved, or an attorney, agent, or third party administrator on behalf of such plan, may appeal such determination. The individual furnished such an item or service shall be notified of the plan s intent to appeal such determination. (No timeframe to write regs)

21 The SMART Act SEC FISCAL EFFICIENCY AND REVENUE NEUTRALITY Any settlement, judgment, award, or other payment by an applicable plan arising from liability insurance (including self-insurance) and from alleged physical traumabased incidents (excluding alleged ingestion, implantation, or exposure cases) constituting a total payment obligation to a claimant of not more than the single threshold amount calculated by the Secretary under subparagraph (B) for the year involved. (Effective 2014) The annual single threshold amount for a year shall be set such that the estimated average amount to be credited to the Medicare trust funds of collections of conditional payments from such settlements, judgments, awards, or other payments arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section shall equal the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section for the year. Commentators think $ The threshold does not apply to future medical obligations.

22 The SMART Act SEC USE OF SOCIAL SECURITY NUMBERS AND OTHER IDENTIFYING INFORMATION IN REPORTING Not later than 18 months after the date of enactment of this sentence, the Secretary shall modify the reporting requirements under this paragraph so that an applicable plan in complying with such requirements is permitted but not required to access or report to the Secretary beneficiary social security account numbers or health identification claim numbers, except that the deadline for such modification shall be extended by one or more periods (specified by the Secretary) of up to 1 year each if the Secretary notifies the committees of jurisdiction of the House of Representatives and of the Senate that the prior deadline for such modification, without such extension, threatens patient privacy or the integrity of the secondary payer program under this subsection. Any such deadline extension notice shall include information on the progress being made in implementing such modification and the anticipated implementation date for such modification

23 The SMART Act SEC STATUTE OF LIMITATIONS An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.. EFFECTIVE DATE. The amendment made by subsection (a) shall apply with respect to actions brought and penalties sought on or after 6 months after the date of the enactment of this Act.

24 The SMART Act Summary of time lines for items within SMART Act July 10, 2013 New statute of limitations for conditional payment recovery of 3 years begins October 10, 2013 CMS implementation deadline for new conditional payment process with website and timelines SOURCE: PMSI Pharmacy Medical Services and Equipment Settlement Solutions-Webinar

25 The SMART Act Summary of time lines for items within SMART Act January 1, 2014 Threshold to not report a claim or have to pay back conditional payments to begin July 10, 2014 or later SSNs and HICNs not required in reporting CMS has 18 months after enactment of the SMART act to implement One year extensions may be filed if it is creating problems or hardship November 15th (annually) Congress to publish threshold SOURCE: PMSI Pharmacy Medical Services and Equipment Settlement Solutions-Webinar

26 Introduction Medicare Secondary Payer Manual, revised March 20, set aside arrangement An administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A set-aside arrangement may be in the form of a Workers Compensation Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA)

27 Introduction Payment under [Medicare] may not be made... with respect to any item or service to the extent that:... (ii) payment has been made or can reasonably be expected to be made under a workmen s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance (emphasis added). 42 U.S.C. 1395y(b)(2)(A)(ii). This statue has been in existence since December 1980 and CMS takes the position that any settlement that extinguishes liability for future medical expenses in a claim against a primary payer represents a situation in which payment has been made for an item or service otherwise covered by Medicare. Thus, Medicare should not provide future coverage for those items or services until the payment has been exhausted on future medical expenses related to the injury. This is true whether the primary payer is a worker s compensation plan, an automobile or liability insurance plan, or no fault insurance (including self-insured plans). CMS requires that its interests as secondary payer be reasonably considered in the settlement of any claim for medical expenses against a primary payer.

28 Introduction Medicare Enforcement Rules CMS is permitted to recover the full amount of a Medicare claim even if the amount of the claim exceeds the amount a plaintiff receives. (42 C.F.R (c); This right to full recovery applies also to settlement agreements lacking a determination or admission of liability. (42 U.S.C. 1395Y(B)(2)(b)(ii)-(iii). CMS may seek reimbursement of Medicare claims from the entire settlement amount (less attorneys fees) because the MSP regulations do not require Medicare to adjust its claim amount according to the intended allocation of a settlement award.

29 Introduction Medicare Set Aside in Personal Injury Cases Section 1862(b)(2)(A)(ii) of the Social Security Act precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance. Anytime a settlement, judgment or award provides funds for future medical services, it can reasonably be expected that those funds are available to pay for Medicare covered future services related to what was claimed and/or released in the settlement, judgment, or award. Thus, Medicare should not be billed for future services until those funds are exhausted by payments to providers for services that would otherwise be covered by Medicare. Sally Stalcup, Region 6, MSP Regional Coordinator, UTSNT 2007 Conference, Medicare Set- Asides, February 2007.

30 Introduction Medicare Set Aside in Personal Injury Cases The fact that a settlement/judgment/award does not specify payment for future medical services does not mean that they are not funded. The fact that the agreement designates the entire amount for pain and suffering does not mean that future medicals are not funded. Sally Stalcup, Region 6, MSP Regional Coordinator, UTSNT 2007 Conference, Medicare Set-Asides, February 2007.

31 Introduction Current Policy from CMS Regional Office Expect any funds that are allocated for future medicals to be spent before any claims are submitted to Medicare for payment. The beneficiary will be asked on the initial enrollment questionnaire that is system-generated. CMS has no current plans for a formal process for reviewing and approving liability MSAs. However, there is an obligation to inform CMS when future medicals were a consideration in reaching the judgment, award or settlement as well as any instances where a settlement specifically provides for medicals in general or future medicals.

32 When Do You Need to Consider using a MSA Triage your liability cases and determine which cases have a potential MSA issues: Is the plaintiff currently receiving Medicare or is there a "reasonable expectation" that the plaintiff will receive Medicare within 30 months? A reasonable expectation of Medicare eligibility will occur if any of the following situations apply: (a) The individual has applied for Social Security Disability Benefits; (b) The individual has been denied Social Security Disability Benefits but anticipates appealing that decision; (c) The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits; (d) The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or (e) The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD. If a workers compensation claim is being settled in a third party liability case.

33 No MSA Required When 1. Currently, not a Medicare beneficiary or likely to be a Medicare beneficiary within the next 30 months, then probably not an MSA issue. 2. Currently, CMS does not require a written submission for a WCMSA if the total settlement is less than $250,000 and the claimant is not a current Medicare beneficiary. Still must consider Medicare s interest, but do not need to submit to CMS for approval. For a current Medicare beneficiary, total settlement must be less that $25,000 before no submittal is necessary. 3. Medicare set aside issues do not apply to Medicaid. 4. Damages are not being paid for a personal injury claim.

34 Options Disregard Medicare set-aside issue because CMS is not enforcing the MSP statute and there are no rules for guidance (not recommended). Document file showing that Medicare s interest was considered and was reasonably protected: Calculate a set aside amount based on current WC regulations, but do not submit to CMS for approval; Submit proposed set aside amount to CMS for approval. May need to create IRC 468B Qualified Settlement Fund if necessary to avoid constructive receipt of funds to plaintiff;

35 Working with MSAs Usually funded with a qualified structured annuity with initial seed money; Usually administered by a third party administrator; For the life of the beneficiary; Used to pay Medical expenses related to the injury that Medicare would reimburse; Must include prescription drug coverage; Must provide accountings to CMS; Cannot pay fees and costs to establish the MSA from set aside amount. MSA is a countable resource for Medicaid/SSI purposes. If Medicaid/SSI eligibility is required, the MSA must be administered as a subtrust of SNT.

36 Funding a MSA A Medicare Set-aside Arrangement can be established as a structured arrangement, where payments are made to the arrangement on a defined schedule to cover expenses projected for future years. In a structured Medicare setaside arrangement, monies are apportioned over fixed or definite periods of time. In such cases, Medicare will not agree to cover the beneficiary if there is no verification that the funds apportioned in the arrangement have been exhausted. Medicare does not make any payments until the contractor responsible for monitoring the individual's case can verify that the funds apportioned to the period, including any carry-forward amount, have been completely exhausted as set forth in the Medicare set-aside arrangement.

37 Components of an Allocation Provides lifetime allocation amount Social Security/Medicare status Claim notification Comprehensive Medical Summary details past, current and future care needs Financial Analysis a line by line analysis of future care costs based on established fee structures Rated Age obtained by various life companies

38 Calculating Seed Money (1) The seed money for the Medicare Set-aside Arrangement must include an amount equal to the amount of monies calculated to cover the first surgery procedure and/or replacement and two years of annual payments. (2) The remainder of the approved amount should be divided by the remainder of the claimant s life expectancy (or a shorter defined period of time if CMS has agreed to a shorter time period). (3) Subsequent annual deposits into the Medicare Set-aside Arrangement are to be based upon a set anniversary date which cannot be more than one year after the settlement date. In a structured Medicare set-aside arrangement, if funds are not exhausted during a given period, then the excess funds must be carried forward to the next period. The threshold after which Medicare would begin to pay claims related to the injury would then be increased in any subsequent period by the amount of the carry-forward.

39 Calculating Seed Money Example: A structured set-aside is designed to pay $20,000 per year over the next 10 years for an individual s Medicare covered services. Medicare would begin paying covered expenses in any given year after this $20,000 is exhausted. However, in 2012 the injured individual needs only $15,000 to cover all related expenses. The administrator would need to carry-forward the excess $5,000 into Therefore, in 2013 a total of $25,000 of Medicare covered expenses would need to be spent for services otherwise reimbursable by Medicare before Medicare would begin to cover any accident related expenses, but only for the balance of This carryforward process continues until the accumulated carryforward plus the payment for a given year is exhausted.

40 Set Aside Example Calculating Seed Money for MSA s Claimant: John Doe Step 1 Total estimated future medical services covered by Medicare $ 199, Step 2 Identify cost of first surgery and first procedure/replacement $ - Step 3 Subtract Step 2 from Step 1 $ 199, Step 4 Step 5 Step 6 Divide above by Life Expectancy to get annual costs LE 44 $ 4, Multiply annual costs by 2 2 $ 9, Seed money to be deposited upon settlement is equal to the sum of Steps 2 and 4 $ 9, Subtract seed money from total Set Aside Amount (Step 1) and divide by life expectancy minus 1 to calculate minimal annual deposit for the balance of claimant s life. $ 190, Life Expectancy $ 4, Total Seed Money $ 9, Annual Deposits $ 4,420.43

41 Medicare Set-Aside Options Medicare Set-Aside Trusts (MSATS) Formal Trust with Trustee Fiduciary rules apply Trustee may hire third party administrator Usually for large accounts or used in combination with SNT Medicare Set-Aside Custodial Accounts Administered by Custodian Less formal, smaller accounts Self-administered accounts Administered by Claimant, no agreement necessary Same accounting rules apply Most claimants will not comply

42 MSA Administration Fees Since the cost to administer the MSA cannot be paid from the MSA account, a separate structured annuity is purchased to fund annual administration fees. Administrative fees/expenses for administration of the MSA and/or attorney costs specifically associated with establishing the MSA cannot be charged to the set-aside arrangement. The CMS will no longer be evaluating the reasonableness of any of these costs because the payment of these costs must come from some other payment source that is completely separate from the MSA funds.

43 SCHIP HAPPENS!!! Why All the Concern About MSAs for PI Cases Now? Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) amended the Medicare Secondary Payer (MSP) provisions of the Social Security Act (Section 1862(b) of the Social Security Act; 42 U.S.C. 1395y(b)) to provide for mandatory reporting for group health plan arrangements, liability insurance (including selfinsurance), no-fault insurance, and workers' compensation.

44 The New MMSEA Statute Says Nothing About MSAs Despite considerable urban legend to the contrary, the MMSEA statute does not contain any new guidance or requirements related to MSAs. The MMSEA statute requires Responsible Reporting Entities (RREs) to report certain information regarding settlements with Medicare beneficiaries to the Secretary of Health and Human Services. The sole purpose of Section 111 of the MMSEA is to ensure that settling parties fully comply with the Medicare Secondary Payer requirement that is, past Medicare payments must be verified and resolved in all liability, workers compensation and no-fault settlements. Fines and penalties for not reporting.

45 The New MMSEA Statute Says Nothing About MSAs This new law (to date) has nothing to do with identifying Medicare-covered future costs of care, which leads to MSA issues and analysis. At the same time, the fact that the MMSEA statute says nothing about MSA rules for PI cases is not legal authority for the proposition that a MSA is not required in a PI case. Some commentators believe that CMS will eventually use this information to determine if future injury related medical expenses are being paid by Medicare. Prior to MMSEA, CMS could not track these cases.

46 Medicare Set- Aside Fund Sub-Account within SNT MSA is an available resource for SSI/Medicaid eligibility purposes Unless combined with SNT, MSA funds will disqualify claimant for SSI/Medicaid eligibility Must use combination SNT/MSA with payback provision in trust See July 1, 2005 CMS memorandum.

47 Special Needs Trust Requirements Codified at 42 U.S.C. 1396p(d)(4)(A) Established by: Parent Grandparent Guardian/Conservator Court Beneficiary must be under the age of 65 Pay Medicaid claim prior to funding Must be for the sole benefit of the beneficiary Beneficiary must be disabled as defined under Social Security Rules; Payback provision - Death Must acid test

48 Qualified Settlement Funds TIME! To handle liens, MSAs, SNTs, allocation between Plaintiffs Allows Defendant to disengage from litigation quickly Defendant does not have to wait on resolution of allocation issues, liens, trusts, etc. Economic performance at time of QSF funding= Defendant tax deduction QSF Administrator can help negotiate allocation, if needed Helps eliminate Defendant s risk of insolvency Plaintiffs can earn interest while awaiting resolution Plaintiff preserves preferential tax treatment of Qualified Structures

49 Thanks for your attention