Medicare Secondary Payer compliance remains a hot-button issue in many workers’ compensation programs that will never go away. For far too long, members of the claim management team have been receiving their Medicare Set-aside allocation report and not paying careful attention to the details. The result is that many programs end up paying too much in terms of the amount of money set aside for future medicals. Now is the time for claim handlers to be proactive and keep in mind after reviewing their report.
To Submit, or Not to Submit – That is the Question!
The Workers’ Compensation Medicare Set-aside (WCMSA) review and approval process are voluntary – it is never required. When the parties agree to submit a Medicare Set-aside through this process, it is essential to remember that you agree to abide by CMS’ process and procedures. It is a rigid process that is determined through the CMS reference guide. Failure to properly follow these procedures will result in delay.
Before submitting a case for review and approval, it is vital to consider the objectives of the settlement. Factors can include:
- Whether time is of the essence and parties can wait three to four weeks for a determination;
- Contingencies of CMS issues a counter-higher letter where an increased amount is required to satisfy Medicare’s interests;
- The risk tolerance of the parties. Remember that the injured employee and their attorney carry a higher risk compared to defense interests; and
- There is no appeals process to dispute an adverse determination by CMS.
Submission of a Medicare Set-aside should only occur after these factors are contemplated and discussed thoroughly.
Not Taking Steps to “Reduce” the Allocation
It is also essential that the claim management team members look for ethical options to reduce a Medicare Set-aside allocation. This should also include ensuring a service provider who is preparing the allocation report has the necessary information:
- Rated Age Calculation: Medicare Set-aside allocations are written based on the life expectancy of the employee. When that person suffers from a co-morbid condition, the life expectancy is reduced. This is a recognized method by CMS and should be considered in all cases where applicable.
- Reduce Prescription Drug Usage: Members of the claim management team should seek to reduce an allocation by ween an employee of expensive medicals at least six months before receiving an allocation. If successful, these drugs will not be included in a final allocation report.
- Medical Fee Schedule and Treatment Parameters: Various workers’ compensation statutes have best practices for future medical care built into state or regulation. This includes the pricing of various medical services.
Taking these items into consideration is a must for any Medicare Set-aside allocation. Always check your report to ensure these mechanisms were employed by the service provider preparing the allocation.
Stop Over Submitting Reports to CMS
The voluntary review and approval process as outlined by Medicare has always been voluntary. The exposure is not setting aside any money or not submitting “enough” generally lies with the injured employee, notwithstanding the deep pockets of the insurance carrier. In many instances, the defense interests pay a settlement “tax” by blindly submitting allocations for CMS approval and not seeking to be safe but aggressive in their settlement tactics.
Here are some areas to consider not submitting an allocation to CMS for voluntary review and approval after discussing the issue with counsel and making a reasoned decision:
- Zero Allocation Approvals: The concept is a $0 allocation is a legal fiat created by CMS policy. There is “demonstrated responsibility” for a case once it is settled. CMS policy overlooks this legal requirement. It will accept cases as not having future liability when it is ultimately denied, and no prior medical/indemnity benefits have been paid to or on behalf of the employee. While there is generally certainty in submitted these cases for review and approval, it costs additional money to have a service provider generate submission. Time is also lost in terms of settling the case by this largely unnecessary step.
- State Imposed Limitations on Liability: Several states have Statues of Limitation that exclude the insurance carrier from making payments for medical care following a work injury. Georgia is one instance where the defense interests are limited to paying for only 400 weeks of medical care for “non-catastrophic” injuries. Although the law does not provide a compensation judge to certify such injured, CMS has not missed the opportunity to require such corroboration, which violates undisputed case law.
- Complex Cases: CMS often has difficulty understanding submissions that involve multiple dates of injury or instances where some injuries are admitted, and others are denied. If submitting cases of this nature, it is crucial to be as clear and concise as possible.
It is also vital to ensure the case fits within the CMS workload review thresholds. Other strategies should include the use of structured settlements.
Members of the claim management team need to develop a relationship with a good Medicare compliance service provider. Once this is established, claim handlers must understand Medicare submission processes and their reports. This includes being aware of tactics to ethically reduce a Medicare Set-aside and ensure it is being done efficiently.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.
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