The Centers for Medicare and Medicaid Services (“CMS”) recently issued a Workers’ Compensation Medicare Set-Aside (“WCMSA”) Reference Guide (the “Guide”) which provides a framework of the WCMSA process from start to finish. A WCMSA allocates a portion of the workers’ compensation settlement for all future work-injury-related medical expenses that Medicare would cover. The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred 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.
1) The Review Process is Voluntary, Not Mandatory. The Guide repeatedly states that there is no requirement that a WCMSA be sent to CMS for review and approval:
“There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review.”
“An individual or beneficiary may consider seeking CMS approval of a proposed WCMSA amount for a variety of reasons. The primary benefit is the certainty associated with CMS reviewing and approving the proposed amount with respect to the amount that must be appropriately exhausted. It is important to note, however, that CMS approval of a proposed WCMSA amount is not required.”
Bottom Line: Parties do not need CMS approval to resolve a workers’ compensation claim, but an individual/beneficiary may choose to seek CMS review/approval of his or her WCMSA figure to ensure compliance and avoid potential sanctions, such as CMS seeking the entire settlement proceeds to pay for future injury-related care.
2) WCMSA Concerns are Claimant Issues, Not Carrier Issues. The Guide reiterates that claimants, not insurance carriers, should address the WCMSA process, stating that “[a]ny claimant who receives a [workers’ compensation] settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account.” CMS advises that if Medicare’s interests with respect to future medical costs are not considered, CMS may recover from “any entity that received… a third party payment.”
Because claimants are the entities that receive payments, and insurance carriers are the entities that send payments, CMS is placing the burden on claimants to address Medicare’s future interest. While it is common for workers’ compensation insurers to institute risk management procedures to prevent sanctions from CMS for failure to comply with the Medicare Secondary Payer Act (MSP), including the carrier absorbing the cost of determining the MSA figure, it is conceivable carriers may want to revise those policies in light of this guidance from CMS. Additionally, since claimants are the ones who risk losing future Medicare benefits as sanctions for non-compliance, it is in claimants’ interests to ensure the WCMSA issue is handled properly.
Keep in mind that CMS requires an executed Consent to Release form before it will review/approve any WCMSA proposal. So insurance carriers (or their MSP vendors) only have an opportunity to participate in the review process, if the Plaintiff provides an executed Consent to Release Form.
Bottom Line: CMS is clarifying the future medicals issue as one claimants, not defendants or insurance carriers, should address.
3) All Parties Must Address Conditional Payments. While CMS clarifies the burden of addressing future medical expenses the agency is also offering a detailed explanation of its secondary payer rights under the MSP for past and future medical expenses. CMS explains its’ priority right of reimbursement for conditional payments made in the workers’ compensation context. When the workers’ compensation prompt payment rules have been met and Medicare has paid for claim-related care before the beneficiary has obtained a settlement or judgment those Medicare payments are “conditional payments.” The MSP requires CMS to seek reimbursement for any conditional payments made, and all parties face potential sanctions from CMS if those payments are not reimbursed. Although many parties in workers’ compensation cases don’t address conditional payment reimbursement, based on the Guide, parties from this point forward should verify and resolve any Medicare conditional payments, even if they “know” that the workers’ compensation carrier has been paying the bills. Having a document from CMS indicating that the agency has not made any conditional payments brings certainty to the MSP recovery process for past medical expenses.
Bottom Line: CMS reminds parties in workers’ compensation cases to verify and resolve any conditional payments from Medicare.
The Guide’s wording is consistent with the Garretson Resolution Group’s advice to settling parties on MSP compliance over the years. If you are seeking a comprehensive MSP compliance solution to increase your internal efficiencies, we can help. We will continue to review and monitor CMS guidance in the MSP area to further enhance our compliance process, and allow you to focus on other core issues in the file.
Click here to read the Guide on the CMS website. If you have questions or need additional information, please contact John V. Cattie, Jr. at Garretson Resolution Group at 704.559.4300 or at jcattie@garretsongroup.com.
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