Strategies Tried to Avoid MSAs
For CMS to honor the court's decision or ruling, it must be solely the court's or work comp board's decision, not the court or work comp board approving a settlement agreement entered into by the claimant and insurer. CMS will not accept the terms of the court or work comp board approved settlement if the amount of the future medical payments are inadequate to cover all future medical expense. CMS takes the position that if Medicare's interest are not protected, then Medicare will not pay for medical services related to the work comp claim until the work comp related medical expenses have exhausted the entire WC settlement, including what was designated as indemnity. If Medicare determines it has paid for a work comp related medical expense, it will seek reimbursement from the claimant and/or the medical provider.
2. Occasionally you will have the claimant who really does not want to deal with Medicare or who thinks he can outsmart CMS. The claimant will be willing to waive his interest in any future medical care related to his work comp settlement to reduce or eliminate the portion of the MSA related to medical. The claimant can even go so far as to sign an affidavit or some other legal document asserting Medicare will not be billed for any medical services not included in the MSA.
This approach will not work. The Regional Offices (RO) of CMS will not approve work comp claim settlements agreeing not to bill Medicare for future work comp related medical care.
3. Another approach taken by some work comp claimants is to refuse to enter into a settlement involving the CMS or a MSA. They take the approach if no one tells CMS about their work comp claim, they will settle now and even settle for a little less. Do not go there!
The CMS position is you are still responsible to comply with the law. When CMS finds out about the work comp claim (and they will), CMS will pursue recovery for the payments they have made for work comp related medical service. When the claimant refuses to settle because of the potential for CMS involvement, your insurer should notify the CMS RO. The RO will send the claimant a certified letter asserting their interest in the WC settlement. The RO will quote the statute's book and verse to the claimant.
Again, CMS will take the position that if Medicare's interest is not protected, they can refuse to pay for medical services related to the work comp claim until the work comp related medical expenses have exhausted the entire WC settlement, including what was designated as indemnity.
4. A favorite approach of some claimant attorneys is to go the structured settlement route in an effort to circumvent the CMS and the need for a MSA. For example, they put forth that the cost to purchase the structured settlement is $200,000 and that the claimant is not yet enrolled in Medicare. The proposed structured settlement is $50,000 now and $20,000 per year for 15 years, or a total payout by the structured settlement of $350,000 ($20K X 15 yrs = $300,000, + $50K).
This will not work either if the claimant has a “reasonable expectation” of enrolling in Medicare within the next 30 months. CMS will not look at what is paid today for the structured settlement ($200K), but at the total amount to be paid to the claimant over the life of the structured settlement ($350K).
5. Then there is the claimant and his attorney who want the all cash settlement for $250,000.00 and not one penny more (as it would then be greater than $250K and subject to a MSA). However, the insurer (and probably the attorney as well) think the true value of the work comp settlement is $275K. To protect themselves the insurer or the attorney asks the CMS to issue a letter certifying that a MSA is not necessary.
CMS will not issue such a letter. You can still settle for $250K and the claimant will not be subject to protecting Medicare's interest, if at the time of the settlement the claimant has not applied for Medicare and does not have “reasonable expectations” of doing so in the next 30 months. (workersxzcompxzkit)
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
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