Set asides are going to be part of our lingo in a big way as a result of the Medicare, Medicaid and SCHIP Extension Act of 2007. The amendments this law made to the Medicare Secondary Payer Statute (42USC section 1395y) will deal with reporting requirements and SET ASIDE amounts that payers of workmen's comp, liability insurance, auto insurance (no-fault insurance) and self insurance plans must consider. What does this have to do with consumers? If a person seeks government payments under Medicare, then of course, we're all aware of coordination of benefits, Medicare will pay after other insurance plans pay what they are required to cover. This has been true for Workman's comp payments as well, but often did not occur. Stiffer penalties for all in the form of "damages" will help cover the cost of the federal government going after these payments.
While the laws are way complicated, the idea is simple, if you get money that includes an amount that is supposed to cover the cost of future medical costs, that money needs to be SET ASIDE to pay for those medical services. No brainer, right? Well, lots of times that money gets awarded in sums that do not designate or deduct the amount of the money intended for medical costs and then, IF the person is eligible for Medicare, Medicare pays the medical bill and does not dip into that awarded money. No more. Providing for multiple times actual damages and a daily fine, Medicare will now require more filing of paperwork that describes such monies and Medicare will determine a "reasonable" amount of the money that must be set aside for medical costs.
For individuals, this will mean that workmen's comp payments and other insurance liability awards must be reduced to leave sufficient money for these set asides, and that the paperwork for such set asides gets filed.
While the new provisions have not gone into effect, they also include payments for drugs under the drug plan. For consumers the important thing is to keep the IDEA in mind...if there is some other entity that is paying you for any portion of medical costs, Medicare must be notified and certain portions of that money must be set aside to pay for medical costs before Medicare. This idea is familiar to us through coordination of benefits and actually makes sense, if money is received that was awarded for the cost of medical services, this money must be used before Medicare will pay. There are many other provisions, but for today, the idea of these new provisions
which we'll no doubt hear more about as the 2009 dates get closer are important to be aware of.