In William Shakespeare’s play Hamlet, Prince Hamlet of Denmark agonizes over his sanity and speaks one of the most famous lines in English literature, “To be, or not to be, that is the question!” While the Prince Hamlet could not have known about the perils of the Medicare Secondary Payer Act, he clearly could understand the tribulation of claim handlers as they ponder the issue of submitting a Medicare Set-Aside (MSA) for review and approvalWhat Does CMS Require?
According to 42 C.F.R. §411.46 (b) (2), “If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized.” An MSA is a tool that can be used to comply with the Medicare Secondary Payer Act and its regulatory framework.
Although Medicare’s warning is serious, it is important to be clear that CMS review of an MSA is never required. If at the time of settlement, the injured worker is not a Medicare beneficiary, the injured worker or party does not have a reasonable expectation of becoming eligible for Medicare benefits, or if the settlement does not close out future medical care and treatment that is otherwise covered by Medicare, an MSA may not be necessary. Caution still needs to be used after careful review to determine if the settlement shifts the burden onto Medicare.
CMS Review Provides Certainty
By obtaining approval from the Centers for Medicare and Medicaid Services (CMS) prior to final settlement, all parties receive certainty from future government action or non-recognition of a settlement. CMS has stated that in workers’ compensation cases, they will only review settlements that meet the following review thresholds:
- The individual is a Medicare beneficiary at the time of settlement and the total settlement is greater than $25,000, OR
- The individual is not a Medicare beneficiary at the time of settlement, but the “total settlement” is over $250,000 AND there is a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date.
Settlements not meeting these review thresholds should still consider and protect Medicare’s interests in order to comply with the Medicare Secondary Payer Act.
Items to Consider in Your Cases
Every workers’ compensation case is unique and should be analyzed in its facts and merits. Medicare Secondary Payer compliance starts with identifying claimants who are Medicare eligible or will be Medicare eligible in the near future. The following additional steps can also be taken:
- Have file materials reviewed to determine what services a claimant may require in the future and the projected cost of the treatment. Special consideration should be given to services, treatment modalities and prescription medications covered by Medicare.
- Proper preparation for mediation/arbitration and hearing. This includes investigation of Medicare’s conditional payments and considering Medicare’s future interests. Failing to consider these matters in advance can lead to delay in reaching a settlement. Given recent case law developments, it is essential that every aspect of Medicare Secondary Payer compliance is discussed and memorized as part of a settlement. While you cannot plan for every contingency, it is important these matters are discussed so valuable time is not wasted in post-settlement litigation and enforcement.
- Determining in advance whether the parties want to seek Medicare approval of a MSA or take other steps to comply with the Medicare Secondary Payer Act. This should be discussed with your clients and the other stakeholders in a settlement. Once a plan is determined, it is important to cooperate and communicate with all parties in the preparation of a MSA, and its review and approval.
Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool. As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/. Contact: [email protected].
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