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Those practicing in the worker's compensation and personal injury arenas should now understand the need to consider and address the interests of Medicare and Medicaid when settling any worker's compensation or personal injury claims. Any third-party liable for injuries to another must assume and provide for the future treatment that is likely to be borne by Medicare. No third-party is permitted to try to transfer liability to Medicare to avoid liability for such future medical costs.
The only way to ensure compliance with federal law and ensure that future obligations are discharged is to prepare a Medicare Set-Aside (MSA) proposal and have that proposal reviewed and approved by Medicare's representative. The Centers for Medicare & Medicaid Services (CMS) is the private contractor hired by the federal government to review and approve the MSA's.
CMS recently issued and released a new memorandum and directive, dated May 20, 2008, affecting the requirements for submission of Medicare Set Aside (MSA) proposals. All MSA proposals for future medical care received by CMS after July 1, 2008, must utilize the life expectancy table prepared by the Centers for Disease Control. The mandatory life expectancy table is "CDC Table 1, Life Table for the Total Population.
This revision could have significant effects on potential worker's compensation and personal injury settlements and will likey increase the potential future exposure that must be paid on these claims. In the past, insurance carriers have hired vendors that will prepare a "rated-age" life expectancy for individual injured parties. These rate ages factored in all illnesses, including the injury for which the MSA is establised. Because these individuals are injured and may be undergoing significant treatment, medication usage, etc., these injured individuals tend to have a lower "rated age" than perhaps the general population does.
CMS' new directive may have the unfortunately effect of increasing the exposure for future medical treatment and making settlements much more difficult in worker's compensation and personal injury cases. While it is obviously a good thing for our society as a whole that those responsible for creating an injury pay for the effects of the injury, using the total population's life expectancy may not be reasonable becasue it likely inflates the actual affects and costs that may be incurred in treating any such injury.
Posted by William H. Grell on June 9, 2008 8:50 AM
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