March 11, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
Medicare Secondary Payer compliance issues in workers’ compensation cases are generally straightforward when the parties seek review of the Workers’ Compensation Medicare Set-Aside (WCMSA) proposal and proposed settlement by the Centers for Medicare and Medicaid Services (CMS). Oftentimes the employer/carrier will elect to fund the CMS-approved WCMSA in connection with the settlement. If the settlement also includes the injury-related, non-Medicare covered future medical expenses and other incidental damages, the injured employee’s attorney has fully maximized his/her client’s recovery for future medicals. But what about situations where an employee will require future injury-related, Medicare-covered treatment, but the CMS workload review threshold has not been met? Or the CMS determination is much higher and the employer refuses to fund it? Is it reasonable for the employer/carrier to demand that the entire settlement be used to fund a WCMSA?
Let’s consider the under-threshold scenario first. Although CMS review of a WCMSA is purely voluntary, it is recommended by CMS. At the moment, CMS is willing to review a proposed settlement involving a current Medicare beneficiary that exceeds $25,000.00. If the proposed settlement involves a claimant with a “reasonable expectation” of Medicare entitlement within 30 months of settlement, CMS is willing to review a proposed settlement that exceeds $250,000.00. Section 8.1 of the WCMSA Reference Guide (Version 3.2) cautions that the CMS internal workload review thresholds 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.” The Reference Guide then goes on to give an example where a failure to include the cost of current injury-related Medicare covered drugs for life may result in exposure for injury-related payments up to the total value of the settlement.
Although some employer/carriers may only offer an MSA when the proposed settlement meets the CMS internal workload review threshold, it is important for the practitioner to consider whether their client is likely to need post settlement injury-related, Medicare-covered treatment. If so, the settlement should include funds for this treatment to avoid an improper cost shift of these expenses to Medicare. The decision to either include or omit a WCMSA should also be properly documented. In cases where the injury victim has a chronic injury-related condition, yet is neither on Medicare, nor has a reasonable expectation of Medicare entitlement within 30 months, a future medical allocation that projects from the age of Medicare entitlement forward may be prudent.
Now let’s look at a situation where the CMS-approved WCMSA is unacceptable to the employer/carrier. This may occur, for example, when a WCMSA proposal in the amount of $20,000.00 is submitted to CMS for review and CMS returns a counter higher proposal of $60,000.00. Rather than funding the CMS-approved WCMSA, the employer/carrier provides settlement documents that describe the previously agreed upon gross settlement amount of $40,000.00 as the WCMSA. This approach however deprives the injured employee of any free-spending funds.
In this situation, the practitioner may instead request that the defense obtain a certified WCMSA to fund the future medical in the case. The certified WCMSA would more likely be in line with the original WCMSA proposal of $20,000.00 or possibly lower. By securing a certified MSA, the burden of defending the reasonableness of the lower WCMSA would be placed on the vendor should the WCMSA funds be prematurely exhausted. Given the issuance of a higher CMS approval letter, the certified WCMSA would have to be professionally administered in order to extend the life of the funds.
Synergy’s team is available to assist you in overcoming Medicare Secondary Payer compliance challenges in your workers’ compensation and liability cases. Contact our team at 877.960.2131 or on our website.