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Under the Medicare law, as enacted in 1965, Medicare was the primary payer for services except those covered by Workers’ Compensation (WC). In 1980, Congress enacted the first of a series of provisions that made Medicare the secondary payer to certain additional primary plans. The purpose was to shift costs from the Medicare program to private sources of payment. These provisions are known as the Medicare Secondary Payer (MSP) provisions.

A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. These funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease.

When Medicare is the secondary payer, the provider, physician, or other supplier, or beneficiary must first submit the claim to the primary payer. The primary payer is required to process and make primary payment on the claim in accordance with the coverage provisions of its contract.

A recent change to a Medicare Secondary Payer Manual brings Medicare Set-Asides into play for doctors and other medical service providers, who as of March 24 are obligated to direct bill those trusts.

According to an Allen Koba blog article on this development, just a year after Medicare’s Workers’ Compensation Medicare Set-Aside Reference Guide update strenuously emphasized the utility of MSAs in protecting Beneficiary entitlements post settlement, the Centers for Medicare and Medicaid Services now put MSA policy in motion with this recent directive.

This change is consistent with Medicare’s WCMSA policy and previous guidance that allocations of future medical expenses should be properly funded and spent down in order to protect entitlements. Previous versions of this Manual illustrated primary insurance as opposed to secondary insurance, but made no specific reference to Medicare Set-Asides.

Paramount to this change is the obligation to identify which Beneficiaries should have a Medicare Set-Aside, which can be accomplished through a series of direct inquiries to the patient as well as a review of the Common Working File for an indicator of a WCMSA’s existence. Medicare added Section to chapter 3 of the Medicare Secondary Payer Manual, which includes the following:

– – Specific questions providers must ask every Medicare Beneficiary to determine whether a Medicare Set-Aside exists.
– – Details to check the HETS 270/271 response for a “w.” This indication notifies providers that a WCMSA record exists.
– – The process for billing Medicare as primary insurance upon Medicare Set-Aside exhaustion.

The key takeaway from this update is that providers are required to determine whether Medicare is a primary or secondary payer for each inpatient admission of a Medicare beneficiary and outpatient encounter with a Medicare beneficiary prior to submitting a bill to Medicare. It must accomplish this by asking the beneficiary about other insurance coverage.

Section 20.2.1 of the Update provides and outline of questions which provides important points of data to gather from Medicare beneficiaries that are helpful for providers to determine who has primary payment responsibility for a claim or set of claims by asking the questions upon each inpatient and outpatient admission

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