November 9, 2022Share
Workers’ Compensation and Medicare: 5 Tips to Ensure Compliance
By: Leah S. Dargy
Navigating Medicare statutes and regulations can seem daunting and may seem like a roadblock to finalizing the settlement that all parties have been working so diligently to achieve. Fortunately, with the right guidance, Medicare’s interests can be adequately protected, and compliance can be achieved, with minimal stress.
What is Medicare? Medicare is a federal health insurance program comprised of three parts: (1) Part A, which is free to all who qualify, and includes coverage for inpatient hospital care, skilled nursing facilities, and hospice care; (2) Part B, which covers doctor’s visits, flu shots, and other preventative health care services, and (3) Part D, which covers prescription drugs. The three parts are packaged into Medicare Advantage Plans, in which private companies authorized by Medicare package the three parts for a monthly premium; this is sometimes referred to as “Part C.”
Only certain individuals qualify for Medicare coverage, including people who are over 65 that paid Medicare taxes for at least ten years, disabled people who have received social security disability benefits for at least 24 months, and people with end-stage renal disease or ALS.
Medicare and Workers’ Compensation. Medicare is governed by the Social Security Act, which is a federal law, and as such, takes precedence over all state laws and all private contracts (think insurance policies and settlement agreements!). “Medicare Secondary Payer,” is a term generally used when the Medicare program does not have the primary responsibility to pay for medical benefits, as is outlined in the Act. Workers’ compensation insurance is the primary payer for healthcare items or services related to job-related illness or injury claims.
Tip #1: Know the Law: The Act provides, “Payment… may not be made… to the extent that… payment has been made or can reasonably expect to be made under a workers’ compensation law or plan of the United States or a State…” The Act addresses what happens when a payment is inadvertently made by Medicare when that item or service should have been covered by workers’ compensation: “A primary plan… shall reimburse the appropriate Trust Fund.” It doesn’t get much clearer than that!
Tip #2: Know the Risks! Medicare (or “the Trust Fund” as written in the statute) will request reimbursement for payments inadvertently made for claim-related services and give 60-days for either payment to be made or information to be provided explaining why the workers’ compensation carrier is not liable for the payment. If payment determined to be due is not made, interest will be charged. To recover payment for an item or service, the United States may bring an action against any or all entities that are or were required or responsible to make payment. Potential defendants include the workers’ compensation employer, the carrier, the claimant, and counsel for each of those parties. Finally, the United States may collect double damages against any such defendant.
The Center for Medicare and Medicaid Services (CMS) has published guidelines for workers’ compensation carriers, explaining the steps that should be taken to ensure compliance with the Medicare Secondary Payer laws. Those guidelines center around when a Medicare Set-Aside (MSA) is necessary. You can find the guidelines here: https://www.cms.gov/files/document/wcmsa-reference-guide-version-37.pdf
What is a Medicare Set-Aside? A MSA allocates a portion of the workers’ compensation settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare. This process involves providing CMS with a history of the claim, the medical records, and any correspondence from authorized physicians on what future care is anticipated. That information is used to develop a monetary value for the future care required by the claimant that Medicare would otherwise cover if Medicare was the primary payer. The MSA amount established and approved by CMS must be appropriately exhausted before Medicare will begin to pay for the claimant’s care related to a work-related injury.
Tip #3: Know When an MSA is indicated: CMS will only review a proposed MSA amount when the following thresholds are met: the claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00 or the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the settlement amount is greater than $250,000.00.
Who has a “reasonable expectation of Medicare enrollment,” you ask? Well, CMS has answered that question for us as well. A claimant has a reasonable expectation of Medicare enrollment within 30 months if they have applied for Social Security Disability benefits, they were denied Social Security Disability benefits but anticipate appealing that decision, the claimant is 62 and 6 months old, or the claimant has end stage renal disease or ALS.
Okay, we know when a MSA is indicated, but do we really need one? The short answer is “no.” Submitting a proposed MSA amount for review by CMS is never required. However, having CMS review the MSA has its perks, and not having them review it (or not having an MSA at all) has its risks!
Tip # 4: Know the Risks! CMS’ voluntary, yet recommended, MSA review process is the only process that offers both Medicare beneficiaries and workers’ compensation entities finality with respect to obligations for medical care required after a settlement. When CMS reviews and approves a proposed MSA amount, CMS stands behind that amount. Without CMS approval, Medicare (1) may deny future medical claims related to the injury or (2) pursue recovery for related past medical claims that Medicare paid, with a right of recovery capped at the full amount of the settlement. The risk to the claimant of not having CMS approval of an MSA for an injury covered by Medicare in the future leads most Claimant attorneys to demand CMS review of an MSA when the review threshold is met.
Now that we’ve covered what to do in situations where the review threshold is met, you may be thinking, “Okay, if a Claimant is on Medicare but the review thresholds aren’t met, we don’t need an MSA, right?” Wrong. Just because the review threshold is not met, and CMS will not review (or approve) an MSA, doesn’t mean one isn’t required.
Tip #4: Even when a claim doesn’t meet CMS’ review threshold, still consider Medicare’s interests! The risks can be high, as is illustrated by this example, provided by CMS:
A 47-year-old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. BUT not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.1
Medicare’s interests need to be considered anytime there is a possibility a claim may be made for Medicare to pay for some, or all, of the future medical care stemming directly from a compensable accident. Luckily, CMS has provided clear guidelines to ensure compliance, and when they don’t seem so clear, remember, we’re just a phone call away!
Contact Leah S. Dargy at:
Phone: (561) 684-5956
DISCLAIMER: This article is provided as a courtesy and is intended for the general information of the matters discussed above and should not be relied upon as legal advice. Neither Kelley Kronenberg, nor its individual attorneys or staff, are responsible for errors, omissions and/or typographical errors – always seek competent legal counsel.