Presenting a live 90-minute webinar with interactive Q&A. Today s faculty features:

Transcription

1 Presenting a live 90-minute webinar with interactive Q&A Workers' Compensation Claims and the Medicare Secondary Payer Act Meeting Reporting Requirements, Satisfying Liens, and Structuring Set-Asides in Settlements TUESDAY, DECEMBER 11, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: John Cattie, Head, Future Cost of Care Practice, Garretson Group, Charlotte, N.C. Bradford Peterson, Partner, Heyl Royster Voelker & Allen, Urbana, Ill. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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5 WORKERS COMPENSATION CLAIMS AND MSPA Brad Peterson Heyl, Royster, Voelker & Allen Urbana, Illinois John V. Cattie, Jr. Garretson Resolution Group Charlotte, NC 5

6 MSPA (1980) Payment may not be made where (ii) Payment has been made or can reasonably be expected to be made under a workers compensation law or plan... or under an automobile or liability policy... or no fault insurance. 6

7 A primary plan s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan s insured, or by other means. 7

8 A lump sum compromised settlement is deemed to be a workers compensation payment for Medicare purposes, even if the settlement agreement stipulates that there is no liability under the workers compensation law of plan. 42 CFR

9 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. For example, if the parties to a settlement attempt to maximize the amount of disability benefits paid under workers compensation by releasing the workers compensation carrier from liability for medical expenses for a particular condition, even though the facts show that the condition is work-related, Medicare will not pay for treatment of that condition. 42 CFR

10 CONDITIONAL PAYMENTS Prior payment by Medicare for injury related condition Conditional payments search Rights and responsibilities letter CMS demand letter CMS final demand letter 10

11 Future Medical Treatment MSA S 11

12 IDENTIFYING THE ISSUE 12

13 Classes of Beneficiaries I. Claimant Medicare Eligible II. Claimant To Be Medicare Eligible Within 30 Months (Future Beneficiaries) 13

14 30 Month Threshold Factors to be considered: a) Receiving Social Security Disability b) Applied for Social Security Disability Benefits; c) Denied Social Security Disability Benefits but anticipates appealing that decision; d) In the process of appealing and/or re-filing for Social Security Disability Benefits; e) 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or f) End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD. 14

15 Settlement Thresholds Current Medicare Beneficiary $25,000 Future Medicare Beneficiary $250,000 Mandatory or Advisory? Only Relate to Approval Process 15

16 Cases That Meet The Threshold CMS will review the settlement CMS requires a set-aside of a sufficient amount of money to protect Medicare from having to pay future injury related medical expenses. 16

17 Medicare Set-Aside Arrangements Self administered by Claimant FDIC interest bearing account Pay only Medicare covered expenses Annual accounting to Medicare May be structured 17

18 When Set-Aside Funds Exhausted Medicare Will Pay Injury Related Medical Expenses 18

19 CONTRACT LANGUAGE Acknowledge Medicare s interest MSA amount MSA approved or to be approved Terms of self-administered MSA Open medical if MSA rejected 19

20 CONTRACT LANGUAGE If no MSA explain why Record keeping requirements 20

21 SETTLE NOW NOT LATER Settle claim before petitioner reaches 62 ½ years of age 21

22 SETTLE NOW APPLY LATER Petitioner waits to file SSDI claim until after settlement of workers compensation claim 22

23 APPEAL DENIED Await settlement until pending SSDI appeal is denied 23

24 NO FUTURE TREATMENT NO MSA MSA only where future treatment reasonably anticipated Caveat: CMS Memo 4/22/03 and settlement only for past medical expense 24

25 ZERO ALLOCATION Acquire MSA proposal with zero allocation based upon highly disputed facts and substantial compromise 25

26 SETTLEMENT BELOW MSA THRESHOLDS Negotiate settlement below $25,000/$250,000 thresholds to avoid time and expense of CMS approval 26

27 LIABILITY ISSUES FOR PETITIONER (EMPLOYEE) Double Damages plus interest Loss of Medicare benefits if Medicare not protected on future medical care (MSA) Petitioner s counsel subject to liability as recipient of settlement proceeds Cont d 27

28 Require exhaustion of total settlement amount SOL 3 years (6 years petitioner s counsel) 28

29 LIABILITY ISSUES FOR RESPONDENT Conditional payments double damages plus interest Same penalty for failure to protect Medicare on future medicals No liability defense counsel as does not receive 3 rd party payment Professional liability to insurer/client 29

30 MMSEA Section 111 (Mandatory Insurer Reporting)

31 MSP Reporting Obligations - What Has Changed? The Medicare, Medicaid and SCHIP Extension Act of 2007 ( MMSEA ) COBC RRE HICN CMS MSA TPOC ORM 31

32 New Concerns for Defendants: MMSEA Common reactions to MMSEA: Overreaction or reasonable belt & suspenders? Not settling/paying without putting Medicare s name on the check Not settling/paying unless plaintiff agrees to set up a Medicare Set Aside account Confusion over who is liable for any future Medicare issues Defendant paying Medicare directly (and negotiating the reimbursement claim) Adding overly-strict language to the settling release 32

33 New Concerns for Defendants: MMSEA Common reactions to MMSEA: Overreaction or reasonable belt & suspenders? Not settling/paying without putting Medicare s name on the check Not settling/paying unless A quick plaintiff note agrees to set up a Medicare Set Aside account Each of these topics will be covered in today s presentation. Confusion over who is liable for any future Medicare issues For more in-depth analysis as well as practice tips, be sure to review your handout. Defendant paying Medicare directly (and negotiating the reimbursement claim) Adding overly-strict language to the settling release 33

34 MMSEA - 42 U.S.C. 1395y(b)(8) To satisfy MSP REPORTING obligations, Insurers ( RRE s ) must engage in a two-step process: Step 1: Determine whether a claimant (including an individual whose claim is unresolved) is entitled to Medicare benefits. Step 2: If the claimant is determined to be entitled, submit certain information about the claimant to the Secretary of Health and Human Services 34

35 MMSEA What must be reported? Information is to be reported for claims related to liability insurance (including self-insurance), no-fault insurance, and workers compensation where the injured party is (or was) a Medicare beneficiary and medicals are claimed and/or released or the settlement, judgment, award, or other payment has the effect of releasing medicals * *Per Chapter III, Section of Version 3.4 of the User Guide 35

36 MMSEA: A Verification Tool Q: What s the first step every insurer should take? A: Verify claimant s Medicare status with CMS QUERY ACCESS System RRE tool to determine claimants Medicare Entitlement Status RRE provides limited data (SSN/HICN, 1st initial of first name, 1st 6 characters of last name, gender and DOB) Confirms entitlement status (Match versus No Match) Tip Query only requires 5 data points and not all

37 MMSEA: A Verification Tool Q: If Query Access only take 5 data points, when should the other data points be provided? A: Technically not required until after a settlement occurs with a Medicare beneficiary 37

38 Claimant Entitlement Verification: Case Law Seger v. Tank Connection, LLC, 2010 WL (D.Neb) Hackley v. Garafano, 2010 WL (Conn.Super.) Smith v. Sound Breeze of Groton Condominium Association, Inc., 2011 LEXIS 194 (Conn.Super.) Donlan v. Connecticut College, 2012 LEXIS 1679 (Conn.Super.) Plaintiff refused to provide relevant info regarding Medicare enrollment Court found that defense met its burden of proving relevance of information requested (i.e., MMSEA) Court determined plaintiff suffers no harm from providing information and orders plaintiff to provide HICN or SSN and other identifying information to defense In Smith and Donlan, Court also issued protective order, limiting the use of such information to compliance under MMSEA Section

39 MMSEA: A Verification Tool How has the MMSEA changed what defendants / insurers (a/k/a RRE s) now need to settle cases? CMS will request 50+ data points from RREs: Injured Party data (name, contact info, DOB, SSN, HICN) Primary Plan data (type, name, contact info, policy #, claim #, limits) Policy Holder data (name, self-insured) Injured Party/Claimant Attorney data Injury data Resolution data (settlement, amount, claim resolution) Please contact me for Data Points Letter 39

40 MMSEA Reporting - Total Obligation to Claimant (TPOC) (does not apply to Workers Compensation or No-Fault) TPOC Date 10/1/2011 through 3/31/2012 4/1/2012 through 6/30/2012 7/1/2012 through 9/30/ /1/2012 through 9/30/ /1/2013 through 9/30/2014 Mandatory Reporting Required Voluntary Reporting Allowed Reporting will be rejected (for MMSEA) Over $100,000 Over $5,000 $5,000 and under Over $50,000 Over $5,000 $5,000 and under Over $25,000 Over $5,000 $5,000 and under Over $5,000 N/A $5,000 and under Over $2,000 N/A $2,000 and under 10/1/2014 onward Over $300 N/A $300 and under 40

41 MMSEA Tip #1: Collaborate & Stipulate to these data points. Make sure the Final Demand from Medicare is truly final Data reported by RRE should be consistent with how plaintiff described injury when opening tort recovery record with Medicare This data ultimately goes into claimant s common working file at Medicare You want that to be correct 41

42 MMSEA Tip #1: Collaborate & Stipulate to these data points. Make sure the What Final will Demand happen from if you Medicare don t? is truly final Data reported by Medicare RRE repaid should but be not consistent 100% satisfied. with how plaintiff described injury when opening tort recovery record with Medicare This data ultimately goes into claimant s common working file at CMS will consider file open, and may seek reimbursement. Medicare You want that to be correct Common working file includes extra medicals reported by RRE. But those expenses remain unpaid, leading to more work to fix later. 42

43 MMSEA - Do liability claims where all exposure ends before 12/5/80 have to be reported? NO, but only if all of the following apply: All exposure or ingestion ended, or the implant was removed before 12/5/80; and Exposure, ingestion, or an implant on or after 12/5/80 has not been claimed and/or SPECIFICALLY released; and There is either (a) no release for the exposure, ingestion, or an implant on or after December 5, 1980; or (b) where there is such a release, it is a broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after 12/5/80. 43

44 Seven Essential Documents Document Conditional Payment Letter Final Demand Letter Evidence of Satisfaction/Payment MSA Documentation MSA Disclosure Form MMSEA 111 Data Points Compliant Release Language Source MSPRC MSPRC MSPRC Varies (3 rd party, treating DR.) Internal ( for form) Internal ( for form) Internal ( for language) 44

45 Collaboration in Practice: MSP Release Language 6 step process to ensure MSP Compliance: 1. Settlement agreement contains representations and warranties; 2. Plaintiff shares evidence that tort recovery record has been opened with Medicare (i.e., results of entitlement search); 3. Defendant pays settlement proceeds to counsel; 4. Counsel agrees to hold back all net proceeds until conditional payment amount received from Medicare (not necessary to hold back attorney fees/expenses because Medicare allows offsets for those [see Haro]); 5. Counsel then holds back conditional payment amount plus reasonable buffer (as agreed by parties) and distributes balance; and 6. After final resolution with CMS, plaintiff provides proof of satisfaction back to defendant to document defendant s file. 45

46 Medicare Set-Asides in Workers Compensation Matters

47 Agenda I. Statutory Guidance II. Regulatory Guidance III. Administrative Guidance IV. Considerations in Determining Whether to Set Up an MSA V. Calculating the WCMSA Allocation Amount VI. Sample Docs VII. WCMSA Case Law 47

48 MSP Reimbursement for Future Medicals What About Future Payments? (Do I need one of those set asides?) MEDICARE REIMBURSEMENT CLAIM MEDICARE SET ASIDE? Q: What s my MSP obligation re: future medicals? A: Determine IF a Medicare Set Aside (MSA) is appropriate under your case/claim specific facts and DOCUMENT THE FILE accordingly. 48

49 42 C.F.R (d) Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement ALL settlements must adequately consider Medicare s interest, no shifting of Medicare to be primary payer for past & future medical care. Medicare will not pay for any medical expenses related to an injury after settlement until the time the portion of the settlement allocated to future medical expenses covered by Medicare is fully exhausted. 49

50 42 C.F.R (d) Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement ALL settlements must adequately consider Medicare s interest, no shifting of Medicare to be primary payer for past & future medical care. Medicare will not pay for any medical expenses related to an injury after settlement until the time the portion of the settlement allocated to future medical expenses covered by Medicare is fully exhausted. REMEMBER the basic rule is that Medicare will pay for future injury-related care EXCEPT WHEN proceeds allocated to future medical expenses. 50

51 42 C.F.R (a)(1) Determining amount of compromise settlement considered as a payment for medical expenses. If a compromise settlement allocates a portion of the payment for medical expenses and also gives reasonable recognition to the income replacement element, that apportionment may be accepted as a basis for determining Medicare payments. Since WC matters have 3 buckets of recovery (indemnity/wage loss, past medicals & future medicals), if you know the wage loss component and the WC lien/cp amount, then the balance is the allocated amount to future medicals. MSA amounts should be capped at the amount allocated to future medicals, IF your case passes this test. 51

52 How to Consider/Protect Medicare s Future Interest Screen Assess Value Educate 52

53 Are There Safe Harbors for MSAs? No Safe Harbors In CMS Memo dated May 11, 2011, the following thresholds are provided: Medicare entitled: over $25,000 Reasonable Expectation : over $250,000 Those same memos stress these are WORKLOAD REVIEW thresholds, not safe harbor amounts Therefore, no safe harbors While CMS only reviews MSAs in certain cases, MSAs should be established whenever appropriate 53

54 MSA Case Law CMS Review/Approval Smith (2011 LEXIS 90428) Court found WCMSA for $14,647 was reasonable. Why? Parties agreed to set funds aside for MSA; MSA vendor created allocation totaling $313,095.54; Garretson provides 2 nd opinion; MSA = $14,647; submitted to CMS for review/approval as condition of settlement. CMS declines opportunity to review Why? Joint motion for declaratory judgment to approve settlement. 54 Court ratified what parties had already determined. Therefore, CMS future interests protected without requiring CMS approval.

55 Does Defense Have Any Liability for Future Medicals? Current law only provides double damages to an insurer where conditional payment reimbursement obligations exist but were not satisfied. See 42 U.S.C. 1395y(b)(2)(B). 1395y(b)(2)(B) means that insurers have no liability for failing to make future payment arrangements. That responsibility is, and always has been on the Medicare beneficiary s shoulders. The MSP statute, even its reporting obligations to insurer ( 111(8) of MMSEA), is statutorily looking to past payments made, not future payments to be made. Even an insurer s reporting obligations stops where the person is not a Medicare beneficiary at the time of settlement. 55

56 Educating the Claimant: Funding, Administration and CMS Submission

57 Agenda I. Funding Options II. Administrative Options III. CMS Submission 57

58 Educate & Administer MSA Results Educating Funding Decision Lump Sum versus Annuity, etc. Administrative Decision Self Administration versus Professional Custodian CMS Submission Decision Voluntary not mandatory Informal LMSA procedure versus formal WC approach Time considerations 58

59 Options in MSA Funding Lump Sum MSA fully funded up front Simple Too costly??? Annuity/Structure Purchase payment stream to fund MSA on annual basis Requires coordination with settlement planning company Can maximize net to injured person; minimize cost outlay by defense 59

60 CMS Submission - Are There Safe Harbors for WCMSAs? Educate In CMS WCMSA Memo dated May 11, 2011, the following thresholds are provided: Medicare entitled: over $25,000 Reasonable Expectation : over $250,000 Those same memos stress these are WORKLOAD REVIEW thresholds, not safe harbor amounts Therefore, no safe harbors While CMS only reviews MSAs in certain cases, MSAs should be established whenever appropriate 60

61 MSA Case Law CMS Review/Approval Smith (2011 LEXIS 90428) Court found WCMSA for $14,647 was reasonable. Why? Parties agreed to set funds aside for MSA; MSA vendor created allocation totaling $313,095.54; Garretson provides 2 nd opinion; MSA = $14,647; submitted to CMS for review/approval as condition of settlement. CMS declines opportunity to review Why? Joint motion for declaratory judgment to approve settlement. 61 Court ratified what parties had already determined. Therefore, CMS future interests protected without requiring CMS approval.

62 LIABILITY MSA S PROPOSED REGULATIONS 62

63 PUBLISHED FEDERAL REGISTER VOLUME 77, NO. 166 Friday, June 15, 2012 When enacted will codify CMS s position requiring liability Set-Asides 63

64 MUST PROTECT MEDICARE FOR FUTURE MEDICAL EXPENSE, if Current Medicare beneficiary. or, Claimants who reasonably anticipate receiving Medicare covered services for injury after settlement Seven options to protect Medicare Options 1 through 4 apply to all cases Options 5 through 7 apply only to current Medicare beneficiaries 64

65 OPTION 1 Beneficiary chooses to pay all future medical expense until settlement exhausted No annual accounting but periodic audits Medicare will begin covering injury related expenses when settlement funds exhausted 65

66 OPTION 2 Medicare will not pursue future medicals if; A.) Accident, illness or injury occurred 1 year or more before settlement; Claim did not involve chronic illness or major trauma; Claimant does not receive additional settlements nor workers compensation or no fault insurance claim or, 66

67 B.) Settlement less than defined amount (to be determined) Claimant not current Medicare beneficiary Claimant does not expect to become beneficiary within 30 months Claim does not involve chronic illness or major trauma Beneficiary does not receive additional settlements Claimant does not have corresponding workers compensation or no fault insurance claim 67

68 What is chronic illness or major trauma? Serious injury to two or more ISS body regions or, ISS score greater than 15 68

69 BODY REGIONS: Head or neck, face, chest, abdomen, extremities, external 69

70 ISS = INJURY SEVERITY SCORE. 70

71 71

72 CHRONIC ILLNESS Is a condition or disease lasting more than three months. Examples: chronic breathing difficulty, cancer, diabetes, quadriplegia and/or fibrosis. 72

73 OPTION 3 Before or after settlement, physician attests that future medical expense not expected 73

74 OPTION 4 Medicare Set-Aside arrangement prepared and submitted to CMS for review 74

75 OPTION 5 RECOVERY OPTIONS: Settlement $ or less; Settlement below $5, pay 25 percent to Medicare; Settlement $25,000 or less claimant can self calculate amount to protect Medicare for future medical expense 75

76 OPTION 6 UPFRONT PAYMENT: Pay Medicare a lump sum payment to cover calculated cost of future medical; Lump sum payment to Medicare in the amount of a fixed percentage of settlement amount 76

77 OPTION 7 COMPROMISE OR WAIVER: Beneficiary may request CMS compromise or waive recovery 77

78 DOUBT NO LONGER EXISTS AS TO MEDICARE S POSITION! 78

79 PROPOSED REGULATIONS MAY BE SUBSTANTIALLY ALTERED PRIOR TO ADOPTION 79

80 PROPOSED LIABILITY MSA REGULATIONS Apply entirely new standard compared to workers compensation 80

81 PROPOSED REGULATIONS FAIL TO ACCOMMODATE COMPROMISE SETTLEMENTS 81

82 PROPOSED LIABILITY REGULATIONS DO NOT LIMIT SCOPE TO CLASS I AND CLASS II BENEFICIARIES AS DEFINED IN WORKERS COMPENSATION 82

83 Questions? 83 83

84 Thank you! Please keep in touch Phone Website Linked In 84

85 Bradford Peterson Heyl, Royster, Voelker & Allen Urbana, IL