Winter 2010 SBH Work Comp Quarterly
PDF FormatCenters for Medicare & Medicaid Services (CMS) Myths and Realities
By Norm Cole
Myth #1: If a settlement meets the CMS review threshold, it must be submitted to CMS for approval.
Reality:
CMS will review proposed Workers’ Compensation Medicare Setaside Agreements (WCMSA) if the claimant is not yet receiving Medicare but there is a reasonable expectation claimant will become a Medicare recipient within 30 months of the settlement and the settlement amount is over $250,000.00 or claimant is a Medicare recipient, regardless of the amount of the settlement. Technically, the review is limited to the adequacy of the WCMSA; i.e., whether it adequately protects Medicare’s interests. CMS does not care about the language of a DCS or CDA as long as the WCMSA protects Medicare’s interests. But there is no legal requirement to submit a WCMSA to CMS for approval, even if it meets the review threshold. Whether or not the agreement meets the review threshold, it must consider and protect Medicare’s interests.
Myth #2: CMS insists on full recovery of its interests, even when there is a significant chance the workers’ compensation claim denial will be affirmed.
Reality:
If Medicare has actually paid for medical expenses which the compensation carrier or employer would have paid if the claim had been accepted, Medicare will insist on full reimbursement. If settlement money is available and is not used to reimburse Medicare for its actual expenses, the Medicare Secondary Payer Recovery Contractor (MSPRC) will demand reimbursement. This is where Medicare has focused its enforcement effort. They really care about reimbursement for paid costs.
Obviously, it is important to find out how much Medicare has paid and what has been paid before distributing settlement proceeds. The MSPRC can be contacted at 1-866-677-7294, MSPRC WC, PO Box 33831, Detroit, MI 48232-3831. Because of disclosure and privacy rules, it is much easier for the worker’s attorney to get this information. MSPRC has an on-line tutorial (at http://www.msprc.info/index.cfm?content=main) which the worker’s attorney should access and follow to eventually secure an itemization of Medicare’s conditional payments.
A WCMSA sets aside money to pay for future medical expenses Medicare would pay in the absence of a responsible workers’ compensation insurer or employer. Reimbursement for conditional payments is not part of a WCMSA. CMS says publicly the WCMSA must be fully funded to be acceptable, but they have been known to compromise. The amount of the settlement apportioned to fund future medical expenses in lieu of Medicare’s payment for these expenses must consider and protect Medicare’s interests. If there is a legitimate risk of receiving nothing from the compensation claim, Medicare’s interests could be protected by apportioning a portion of the settlement amount to the WCMSA. It depends on the circumstances. If the agreement meets the CMS review threshold, the proposed compromise settlement could be submitted to CMS seeking its approval of an otherwise less than adequately funded WCMSA. Or, the parties could fund the WCMSA based on their own formula and not bother sending it to CMS. This, after all, is what would be required if a settlement did not meet the review threshold, so it also could be done if the settlement meets the review threshold. The allocation must be reasonable, whether or not it is submitted to CMS for approval!
Myth #3: A WCMSA is not acceptable unless it includes a separate bank account, an administrator and a long list of specific terms and requirements.
Reality:
In a complicated claim involving a significant settlement amount, it might be prudent to establish a WCMSA with all the bells and whistles preferred by CMS − but this is not a legal requirement. The insurer and employer must consider and protect Medicare’s interests. Sometimes it might be sufficient to create a self-administered setaside agreement in a DCS. The DCS would require claimant to acknowledge Medicare’s interest, use a designated amount of the settlement proceeds to pay for future medical expenses which otherwise would be submitted to Medicare, and keep an accurate accounting in the event Medicare requires an accounting. Remember – Medicare really cares about conditional payments (reimbursement for what they have already paid). Medicare is less concerned about future payments not yet claimed. If the settlement is reasonable and the allocation of the settlement amount to medical services is consistent with the risk of litigating the claim and not a consequence of an effort to prevent Medicare from securing its appropriate share, Medicare should be satisfied.
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