What does the Law require? Medicare & Workers Compensation

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1 Medicare & Workers Compensation Ian Fraser Centers for Medicare & Medicaid Services (CMS) What is a Workers Compensation Medicare Set Aside (WCMSA)? A WCMSA is a financial agreement that allocates a portion of a workers compensation settlement to pay for future medical services related to the workers compensation injury, illness, or disease. These funds must be depleted before Medicare will pay for treatment related to the workers compensation injury, illness or disease. 2 What does the Law require? Medicare is required by statute (42 U.S.C. 1395y(b)) to seek reimbursement for conditional payments related to the settlement. Further, Medicare is prohibited from making payment where payment has been made (that is, where the beneficiary obtains a settlement, judgment, award, or other payment). Medicare remains the secondary payer until the settlement proceeds are appropriately exhausted. 42 CFR requires that all WC settlements must adequately consider Medicare s interests, and that, 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. 3 1

2 Are Medicare Set Asides required when settling a Workers Compensation Claim? No. There are no statutory or regulatory provisions requiring that a WCMSA proposal be sent to CMS for review. However, submission of a WCMSA proposal is a process recommended by CMS to ensure that the parties settling workers compensation claims are taking Medicare s interest into account when settling. In many situations, the parties to a WC settlement choose to pursue a CMS approved WCMSA amount in order to establish certainty with respect to the amount that must be appropriately exhausted before Medicare begins to pay for care related to the WC settlement. 4 CMS Review of WCMSA is Recommended When: Claimant is currently entitled to Medicare (Part A, Part B, or both) and the total settlement amount >$25,000 Claimant is reasonably expected to become entitled to Medicare within 30 months and the total settlement amount >$250,000 NOTE: these review thresholds are not intended to create a safe harbor. Parties should consider Medicare s interest regardless of CMS review. 5 What will happen if I settle my case with a WCMSA but not obtain CMS approval? If a WC settlement meets CMS workload review thresholds, and the settling parties stipulate a WCMSA but do not receive CMS approval, then CMS is not bound by the set aside amount stipulated by the parties, and it may refuse to pay for future medical expenses in the case, even if they would ordinarily have been covered by Medicare. However, if CMS approves the WCMSA and the account is later appropriately exhausted, Medicare will pay related medical bills for services otherwise covered and reimbursable by Medicare regardless of the amount of care the beneficiary continues to require. 6 2

3 Denied or Disputed Liability CMS will approve a Zero ($0) Set Aside) when: Carrier has not made any indemnity or medical payments on the claim Medical documentation demonstrates that no future treatment needed and settlement does not include money for future medicals Court of competent jurisdiction has ruled on the merits of the case that carrier is not responsible for treatment related to the claim 7 Submission Cover Letter The cover letter is required with your WCMSA submission. It is used to present CMS with a high level overview of all of the information that is included in the WCMSA proposal. Consent to Release Form Is the claimant s signed authorization for CMS, its agents and/or contractors to discuss his or her case/medical condition with the parties identified on the authorization in regard to the WC settlement that includes a WCMSA. 8 Submission continued Rated Age Information or Life Expectancy Is a discount life insurance companies apply to structured settlement annuities when an annuitant has a reduced life expectancy. Each rated age must be on company letterhead for each insurance company (or companies) that made the rating and for each settlement broker that obtained them from the insurance company. All rated age sources shall be independent, in fact and appearance, of the submitter, carrier, and claimant. Life Care/Future Treatment Plan A Life Care Plan is document that provides a comprehensive assessment, data analysis, and research in an organized concise plan for current and future needs with associated costs for individuals who have experienced catastrophic injury or have chronic health needs. Current treatment should be supported by a minimum of two years or, if less, date back to the date of the work related injury of medical documentation and a comprehensive payment history from the WC Carrier (including indemnity payments and any relevant past treatment, such as a surgery). 9 3

4 Submission continued WCMSA Administration Agreement The WCMSA can be administered either by the claimant (i.e., selfadministered, if permitted under state law) or by a third party trustee, such as a guardian or trust company. The settling parties should include that information in this section Medical Records Include the first report of injury, medical records of major surgeries, and medical records for the last two years or if less, date of injury, of treatment, no matter how long ago those last two years were or who paid for the services. Also include depositions from medical providers. 10 Submission continued Payment History Send an all inclusive payment history (that is, medical, indemnity, and expenses) from all carriers, third party administrators (TPAs), employers, pharmacies, and prescription drug suppliers dated within the last six months of submission, showing all payments made (including payment date, payee, date of service, and amount) for at least the last two years of treatment. 11 WCMSA Funds WCMSA funds can only be used to pay for medical care or prescriptions related to your workers compensation claim You can use your WCMSA even if you're not yet enrolled in Medicare You can only use the funds in your WCMSA to pay for items and services that would otherwise be covered by Medicare 12 4

5 Additional Use for WCMSA Account Funds You can pay for these if directly related to the WCMSA account Document copying charges Mailing fees/postage Any banking fees related to the account Income tax on interest income from the set aside account You may not use the WCMSA account to pay for Administrative fees Expenses for administration of the WCMSA Attorney costs for establishing the WCMSA Medicare premiums, copayments, and deductibles 13 WCMSA Funding Lump sum payment (easier to monitor) Single payment intended to pay for all future medical expenses and disability benefits related to the WC claim Medicare makes no payments for claim related medical expenses until all WCMSA funds are exhausted Structured settlement Initial deposit to cover first surgical procedure or replacement and 2 years of annual payments Subsequent annual deposits 14 Managing Your WCMSA Funds Keep the following in mind when you manage your WCMSA If you aren't sure what type of services Medicare covers, call Medicare before you use any of the money that was placed in your WCMSA Keep records of your workers' compensation related medical and prescription drug expenses, including what items and services you got and how much money you spent on your work related injury, illness, or disease Notify Medicare annually of the amount you spent from your WCMSA account and also when you have completely exhausted the WCMSA account 15 5

6 Managing Your WCMSA Contact the Benefit Coordination & Recovery Center (BCRC) for Questions about annual attestations Annual accountings To notify when all funds are spent 16 Self administration Resources Self Administration Toolkit to help people manage their WCMSA CMS.gov/Medicare/Coordination of Benefits and Recovery/Workers Compensation Medicare Set Aside Arrangements/WCMSA Overview.html 17 WCMSA Reference Guide The WCMSA Reference Guide is a resource for attorneys, vendors and life care planners that submit WCMSA proposals to CMS For an in depth understanding of WCMSA documentation requirements and how CMS reviews WCMSA proposals visit CMS.gov/Medicare/Coordination of Benefits and Recovery/Workers Compensation Medicare Set Aside Arrangements/Downloads/May WCMSA Reference Guide Version 22.pdf 18 6