Thirty-three years following enactment of the Medicare Secondary Payer (MSP) Act and 12 years after the Centers for Medicare and Medicaid Services (CMS) issued its first workers compensation Medicare set-aside (WCMSA) memorandum, CMS has finally published a WCMSA Reference Guide (WCRG).
Enacted in 1980, the MSP Act requires certain insurers, including liability, automobile, no-fault and workers compensation insurers, to make payment first for services to Medicare beneficiaries regarding claimed injuries, with Medicare responsible only as a “secondary payer.”
CMS, the agency responsible for administering Medicare policies, failed to take practical steps to enforce the MSP rules until 2001 when it issued the first of several policy memorandums addressing WCMSAs. These policy memorandums created a format, checklists and procedures for seeking approval for WCMSAs to "protect Medicare's interests" when workers compensation cases are settled. The WCRG states: "The WCRG follows all CMS policy memorandums currently in effect. The memorandums are published on the CMS website."
Although CMS and its field offices have also issued informal guidance about the use of MSAs in liability cases, nothing comparable exists to the CMS WCMSA memoranda. As a result, there is no uniform position or consensus among tort practitioners as to whether and when MSAs are required in liability cases.
The WCRG continues a series of Medicare legislative and regulatory compliance initiatives which also include the Medicare, Medicaid and SHIP Extension Act (MMSEA) and the Strengthening Medicare and Repaying Taxpayers Act (SMART Act).
Published by CMS on March 29, 2013, the 88-page WCRG (including Appendices) applies only to workers compensation cases. Its intended purpose: to help WCMSA professionals, beneficiaries and other stakeholders "understand CMS' [WCMSA] amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval."
This blog post provides excerpts from the WCRG addressing and summarizing non-structured settlement specific issues. For a more complete understanding, read the entire 88-page WCRG. Subsequent S2KM blog posts will summarize and discuss WCRG structured settlement issues including rated age information requirements for determining WCMSA beneficiary life expectancy.
- Medicare's interests:
- "Any claimant who receives a WC settlement, judgment,or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account."
- "If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received a portion of a third party payment either directly or indirectly."
- "Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted."
- Compromises: "CMS does not compromise or reduce future medical expenses related to a WC injury."
- WCMSA statutes and regulations: "There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review."
- What are WCMSAs: "A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare. When a proposed WCMSA amount is submitted to CMSfor review and the individual or beneficiary obtains CMS’approval, the CMS-approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment."
- Benefit of WCMSA: "The primary benefit [of submitting a WCMSA] is the certainty associated with CMS reviewing and approving the proposed amount with respect to the amount that must be appropriately exhausted."
- Goal of WCMSA: "The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be insured for all medical expenses otherwise reimbursable by Medicare for work-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment,or award to cover that cost."
- Creating a WCMSA: "Generally there are four steps involved in creating a CMS-approved WCMSA:
- "Analysis of the claim and medical information in order to determine the amount of money required for the fund.
- "Negotiation of a tentative settlement and preparation of draft settlement documents to settle the WC case incorporating terms for creation and administration of the WCMSA (CMS is not a party to the settlement).
- "Obtaining approval from CMS regarding the settlement and the proposed WCMSA.
- "Finalizing the settlement and funding the WCMSA."
- WCMSA funding:
- "CMS has no process to accept up-front cash payments in lieu of a CMS reviewed WCMSA."
- "WCMSAs may be funded by a lump sum or may be structured, such that a fixed amount of funds are provided each year for a fixed number of years."
CMS Review of WCMSAs - excluding structured settlement and rated age issues which S2KM will be address in subsequent blog posts.
- Introductory note: CMS introduced a WCMSA internet portal in November 2011 for submission of WCMSA proposals.
- Review threshold: "CMS will review a proposed WCMSA amount when the following workload review 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 anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00."
- "A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:
- "The claimant has applied for Social Security Disability Benefits.
- "The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision.
- "The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits.
- "The claimant is 62 years and 6 months old.
- "The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD."
- Review not required: "It
is unnecessary for the individual or beneficiary to obtain CMS approval
for a proposed WCMSA amount if all of the following are true:
- "The facts of the case demonstrate that the injured individual is only being compensated for past medical expense
- "There is no evidence that the individual is attempting to maximize the other aspects of thesettlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and
- "The individual's treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury. However, if Medicare made any conditional payments for WC-related services furnished prior to settlement, then Medicare will recover those payments. In addition, Medicare will not pay for any WC-related services furnished prior to the date of the settlement for which it has not already paid."
- Review process:
- "If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS 'established policies and procedures."
- "When a WCMSA is submitted for approval, CMS must have certain documentation available to complete a review of the proposal. Table 1 lists the documents normally submitted with a WCMSA proposal."
- "Submit the gross total settlement amount as a single lifetime number and NOT the settlement amount minus attorney fees, expenses, etc."
- "Once this information is received, the COBC will apply it to the beneficiary's Medicare record and assign the case to the Medicare Secondary Payer Recovery Contractor (MSPRC)."
- "The MSPRC will send the beneficiary a “Rights and Responsibilities” letter that explains Medicare's recovery rights with respect to conditional payments and information regarding what steps the beneficiary should take next."
- "Once the Rights and Responsibilities letter is received, all further inquiries must be made through the MSPRC."
- "If the parties to a WC settlement stipulate a WCMSA but do not receive CMS approval, then CMS is not bound by the set-aside amount stipulated by the parties, and it may refuse to pay for future medical expenses in the case, even if they would ordinarily have been covered by Medicare."
- "If CMS approves the WCMSA and the account is later appropriately exhausted, Medicare will pay related medical bills for services otherwise covered and reimbursable by Medicare regardless of the amount of care the beneficiary continues to require."
- "You can see your case’s status on the WCMSAP, if the case was submitted on the Portal. For cases that were submitted via mail, case status can be obtained by contacting the WCRC."
- "When CMS does not believe that a proposed set-aside adequately protects Medicare’s interests,and thus makes a determination of a different amount than originally proposed, there is no formal appeals process. However, there are several other options available."
Life Care Plans
- "A Life Care Plan is a dynamic document based on published standards of practice, comprehensive assessment, data analysis, and research that provides an organized concise plan for current and future needs with associated costs for individuals who have experienced catastrophic injury or have chronic health needs."
- "A life care plan is appropriate when the claimant’s injury or disease is extensive and serious, e.g., paraplegia, quadriplegia, brain damage."
- "Although submission of a life care plan is optional, you are required to include drug and dosage lists. Include all pricing charts, cost projections, pricing information, and explanatory narratives and analyses."
the parties to a WC settlement present CMS with “life care plans” or
similar evaluations prepared by non-treating physicians to support and
justify their proposed WCMSAs, Medicare will consider accepting such
evaluations if the physician does all of the following:
- "Examines the claimant;
- "Reviews the claimant's medical records;
- "Contacts any of the claimant's treating physicians (if applicable);
- "Is available to answer CMS’ questions;
- "Prepares a report that summarizes the above; and
- "Offers a written medical opinion as to all of the reasonably anticipated future medical needs of the claimant related to the claimant's work injury or illness/disease."
- "Determine the cost of future medical expenses that are directly related to the injury or illness suffered by the worker. This amount can be determined by reviewing medical records and past medical expenditures. The WCMSA must show the amount of money that should be invested to provide the yearly expenses for the worker’s life expectancy."
- "Note: In order to protect Medicare’s interests, a WCMSA should be funded based on the life expectancy of the claimant unless state law specifically limits the length of time that WC covers work-related conditions. The key is that both the principal amount that is to be set aside and the anticipated interest that it will earn must be sufficient to provide for the worker’s future medical treatment and administration fees for the worker’s lifetime."
- "Identify specific types of medical services or items, the frequency and duration of the medical services or items, and the projected costs of the medical services or items related to the work injury or disease that are expected in the future in light of the claimant's condition."
- "When you submit a WCMSA for review, CMS tries to review and decide on proposed settlements within 45 to 60 days from the time that all relevant documents are submitted."
- "Parties to the settlement may settle the indemnity (non-medical-expenses) portion of the claim separately from the WCMSA portion, in order to avoid having indemnity payments continue while CMS is still reviewing the proposal. CMS will still consider the whole claim, including indemnity, in its threshold calculations."
- "Once a WCMSA is established and funded, it must be administered."
- "This can be done by the claimant, by the claimant’s representative payee, appointed guardian, or conservator, or by a professional administrator."
- "The administrator of the account will be responsible for keeping accurate records of payments made from the account."
- "The administrator must establish the WCMSA account, pay Medicare-covered services from the WCMSA account, and provide CMS with a reporting of the expenditures from the WCMSA."
- "Every year, beginning no later than 30 days after the 1-year anniversary of settlement the administrator must sign and send a statement that payments from the WCMSA account were made for Medicare-covered medical expenses and Medicare-covered prescription drug expenses related to the work-related injury, illness, or disease."
Death of the Claimant
- "If a claimant dies before the WCMSA is completely exhausted, the [Regional Office] and [Medicare Secondary Payer Recovery Contractor] will ensure that all claims have been paid."
- "Then any amount left over in the WCMSA may be disbursed pursuant to state law, once Medicare’s interests have been protected."
- "This may involve holding the WCMSA open for some period after the date of death, as providers, physicians, and other suppliers are permitted to submit their initial bill to Medicare for a period of 12 months after the date of service."
- "Often, the settlement itself will dictate the appropriate dispersal of funds up on the death of the claimant."