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Medicare, MSAs, the SMART Act, and your taxes

I’ve long avoided getting into the Medicare Set-Aside issue for a bunch of reasons; it’s highly esoteric, requires deep knowledge, is ever-changing, can get pretty nasty and getting educated about MSAs would come with a high opportunity cost – I wouldn’t be able to do any real work for a couple months.

But never one to waste an opportunity to stick my neck into the noose, here goes.  First, my admittedly ill-informed view.

CMS’ failure to a) make rational decisions pertaining to future costs and treatment and b) provide intelligent guidance to P&C payers is a travesty. 

For CMS to assume that any current treatment will continue forever, at current prices, with current (brand) drugs, when any sane person knows that is absolutely NOT going to happen, is nuts.

Passage of the SMART Act helps address several key problems, but there is still much to be addressed before insurers can feel comfortable settling claims – comfortable that they aren’t getting screwed, comfortable that CMS isn’t going to come back and ask for more money, comfortable that the process, methodology, and calculations are actually somewhat stable – if not rational.  Certainty is the goal here, and we’re still well short of that.

Leaving aside the debacle that has been CMS’ attempt to implement a law passed by Congress (with little guidance as to how to actually implement Congress’ wishes), there’s a different issue that deserves mention – why MSAs?

Their purpose is to ensure that taxpayers don’t have to pay for care that should be covered by another entity.  And I’m very much OK with that.  As a taxpayer and contributor to Medicare’s funding, I don’t want my tax dollars spent on care that should be paid for by someone else.  I doubt anyone does.

Therein lies the rub.  Reality is, for decades, we taxpayers have been footing the bill for medical care consumed by workers comp claimants, to the tune of tens/scores/hundreds of millions of dollars (pick one).  That was great for those on the hook for WC claims and premiums, not great for taxpayers.

So, on the one hand, I think everyone (except maybe CFOs at and owners of P&C carriers) supports the IDEA of the Secondary Payer Act.  On the other hand, making the idea a reality has been a(n) mess/disaster/embarrassment. But on the third hand, it is necessary.

I know, commenting on something so obvious may seem like a waste of pixels.  But it’s good to know CMS is actually trying to save taxpayers’ dollars.

Now if they could only figure out how.





One thought on “Medicare, MSAs, the SMART Act, and your taxes”

  1. Come on Joe – you were almost there. Lead the charge! CMS isn’t capable of creating a solution but the insurance industry is. We need to stop writing big checks and setting them lose into the free economy under the auspice of “self-administration.” We need to create solutions that don’t involve CMS, capture the $2B in MSA funds paid annually and covers the care that Medicare isn’t supposed to. This is the risk management industry. Let’s finally start managing the risk!

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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