WORKER'S COMPENSATION MEDICARE SET-ASIDES (WCMSA)
According to CMS:
“All parties in a Workers’ Compensation (WC) case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving WC cases that include future medical expenses. The recommended method to protect Medicare’s interests is a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA), which allocates a portion of the WC settlement for future medical expenses. The amount of the set aside is determined on a case-by-case basis and should be reviewed by CMS, when appropriate. Once the CMS determined set aside amount is exhausted and accurately accounted for to CMS, Medicare will agree to pay primary for future Medicare covered expenses related to the WC injury.”
Future Medical Services
The burden of future medical expenses in WC cases may not be shifted to Medicare. 42 C.F.R. § 411.46 and § 411.47 provide that Medicare’s interest must be considered in WC settlements, when future medical expenses are a component of the settlement. Because Medicare does not pay for an individual WC related medical services when the individual receives a WC settlement that includes funds for future medical expenses, it is in the best interest of the individual to consider Medicare at the time of settlement. For this reason, CMS recommends that parties to a WC settlement set aside funds, otherwise known as Workers’ Compensation Medicare Set-aside Arrangements (WCMSAs) for all future medical services related to the WC injury or illness/disease that would otherwise be reimbursable by Medicare.
What is the Legal Basis for Medicare Set-Asides in Worker's Compensation Settlements?
42 CFR 411.46 – Lump-sum payments.
(a) Lump-sum commutation of future benefits. If a lump-sum compensation award stipulates that the amount paid is intended to compensate the individual for all future medical expenses required because of the work-related injury or disease, Medicare payments for such services are excluded until medical expenses related to the injury or disease equal the amount of the lump-sum payment.
(d) (2) If the settlement agreement allocates certain amounts for specific future medical services, Medicare does not pay for those services until medical expenses related to the injury or disease equal the amount of the lump-sum settlement allocated to future medical expenses.
What are the Ethical and Legal Considerations regarding Medicare Set-Aside Arrangements?
According to CMS, when an attorney’s client effectively ignores Medicare’s interests in a WC case, the attorney should consult their national, state, and local bar associations for information regarding their ethical and legal obligations. Additionally, attorneys should review applicable statutes and regulations, including, but not limited to, 42 CFR 411.24(e) and 411.26.
What are CMS's Review Thresholds for WCMSAs?
According to CMS:
“It is not in Medicare’s best interest to review every WC settlement nationwide in order to protect Medicare’s interests per 42 CFR 411.46. A WCMSA is not necessary when resolution of the WC claim leaves the medical aspects of the claim open.
A WCMSA may be submitted to CMS for review in the following situations:
The claimant is currently a Medicare beneficiary, and the total settlement amount is greater than $25,000, 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.”
What happens if the Client is a Medicare Beneficiary, but the Settlement is Less Than $25,000?
According to CMS:
CMS review thresholds were “created based on CMS’ workload and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases.”
How Does CMS Define "Reasonable Expectation"?
“An individual has a “reasonable expectation” of Medicare enrollment if any of the following situations apply:
(a) The individual has applied for Social Security Disability Benefits;
(b) The individual has been denied Social Security Disability Benefits but anticipates appealing that decision;
(c) The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits;
(d) The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or
(e) The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.
To the extent a WC settlement meets both of the criteria (i.e., the settlement is greater than $250,000 AND the claimant is reasonably expected to become a Medicare beneficiary within 30 months of the settlement date), then a CMS-approved Medicare set-aside arrangement is appropriate.”
Can a Claimant waive his/her Right to Medicare to avoid a WCMSA?
“There is no means by which a claimant can permanently waive his or her right to certain specific services related to a WC case and, thereby, reduce the amount of a WCMSA. CMS cannot approve settlements that promise not to bill Medicare for certain services in lieu of including those services in a Medicare set-aside arrangement. This is true even if the claimant/beneficiary offers to execute an affidavit or other legal document promising that Medicare will not be billed for certain services if those services are not included in the Medicare set-aside arrangement.”
What if the Claimant has Group Health, a Managed Care Plan or VA Coverage?
“A WCMSA is still recommended where the claimant is covered under other private health insurance, the Veterans Administration, or Medicare Advantage (Part C). Other coverage could be cancelled, or the claimant may elect not to use such a plan. A WCMSA is primary to Medicare Advantage and must be exhausted before using Part C benefits on the WC illness or injury.
What Effect does a WCMSA have on Medicaid Eligibility?
“Workers’ Compensation Medicare Set-aside Arrangements (WCMSAs) are not subject to any special treatment under Medicaid resource rules. WCMSA funds should be evaluated to determine if they meet the legal definition of a resource for Supplemental Security Income (SSI) and, therefore, Medicaid purposes, i.e., ‘cash or other assets that an individual owns and could convert to cash to be used for his or her support and maintenance.’ The funds must be in interest-bearing accounts. These funds may meet the SSI/Medicaid resource definition. There may be cases in which funds in a WCMSA are placed into trusts, possibly trusts that could satisfy the definition of ‘special needs trusts’ under Section 1917 of the Social Security Act. In those cases, the funds might not be a countable resource, however, that result would be based solely on Medicaid, not Medicare rules.”
When is a Medicare Set-Aside Not Recommended?
According to CMS:
“A WCMSA is not necessary under the following conditions because when all three are true, they indicate that Medicare’s interests are already protected:
(1) The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);
(2) There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and,
(3) 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 work-related services furnished prior to settlement, then Medicare requires recovery of such payments. Additionally, Medicare will not pay for any services furnished prior to the date of the settlement for which it has not already paid.”
How long will it take for completion of a Medicare Set-Aside Allocation report?
Once the information needed for completion is received, you will receive the Medicare Set-Aside report from us within 10 business days. Rush reports are also available upon request for an additional fee.
How long does it take to obtain CMS approval for Workers' Compensation cases?
As of 2020, CMS is taking approximately 30 to 45 days to review and approve an allocation submitted to them for approval, absent a development letter. It is important to plan ahead and get the process moving forward if it is determined that a Medicare Set-Aside arrangement is needed.
What happens if Medicare's interests with respect to future medicals in a WC settlement, judgement or award that includes an amount for future medical are not considered?
“If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received any portion of a third-party payment either directly or indirectly- a right to recover, or take back, that payment. CMS also has a subrogation right with respect to any such third-party payment…. Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted.”
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