These articles have been published in "The Advocate", a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, March - April 2009 issues, @2009 by Steven J. Bruzonsky, Esq.
MEDICARE SET-ASIDES, PART 1 WORKMEN's COMPENSATION CLAIMS
(This is the first part of a two part series on Medicare Set-Asides. The first part in this issue concerns set-asides in workmen's compensation cases. The second part in the next issue will discuss whether set-asides are encouraged or required for personal injury or medical malpractice claims which do not involve workmen's compensation work-related injuries.
For more Medicare and Medicare Advantage lien information, please see my prior "Liens Corner" articles: Medicare and Medicare+Choice Balance Billing,October 2006; Federal Medicare+Choice Lien Claims,November 2006; Does Medicare Have a Lien Against Wrongful Death Actions in Arizona, January 2007; and Medicare Liens: A Brief Primer, three part series June, July-August, and September 2008 issues.)
The Medicare Secondary Payer (MSP) regulations, 42 C.F.R. §§ 411.20 -- 411.54, implement the language of the Medicare MSP statute, 42 U.S.C. § 1395y(b)(2) "Exclusions from Coverage and Medicare as Secondary Payer", which sets forth Medicare lien rights against personal injury and workmen's compensation claims.
A portion of the MSP regulations are specifically devoted to workman's compensation claims at 42 C.F.R. §§ 411.40 -- 411.47. The MSP regulations recognize that workmen's compensation (WC) claims may include payment of a lump sum or future payments intended to compensate for future work-related medical benefits. A method is prescribed to apportion the amount of a lump sum settlement that represents payment for future work-related medical benefits. And the regulations indicate that Medicare payments for such future work-related medical services are excluded until the WC payments are exhausted.
The Centers for Medicare & Medicaid Services (CMS) encourages the use of set-asides in WC cases. A WC set-aside (WCSA) is a fund created as part of a WC settlement which is used to pay future work-related medical expenses, instead of Medicare paying those medical expenses. Centers for Medicare & Medicaid Services (CMS) has a great deal of information available at its website (http://www.cms.hhs.gov/) on all things Medicare related. A search for "set aside" at the website gives the following webpage, "Workers Compensation Medicare Set-aside Arrangements (WCMSAs)" (http://www.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp) which gives a lot of information concerning set-asides in the WC context. This page also includes weblinks to additional web pages concerning WCMSAs' submissions, administration, related topics and Part D (prescription drug coverage) & WCMSAs. The CMS info will at times reference CMS Memorandums concerning WCMSAs.
At these webpages, CMS states:
(1) "Workers Compensation Medicare Set-Aside Arrangements (WCMSAs)
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.
(2) "CMS Review Threshold 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. (Ref: 7/23/01 Memo Q1(c)) 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."
(3) "Current Medicare Beneficiaries Injured individuals who are already Medicare beneficiaries must always consider Medicare's interests prior to settling their WC claim regardless of whether or not the total settlement amount exceeds $250,000. That is, ALL WC PAYMENTS regardless of amount must be considered for current Medicare beneficiaries. However, CMS no longer reviews new WCMSA proposals for Medicare beneficiaries where the "total settlement amount" is $25,000 or less (i.e., low dollar threshold Medicare beneficiaries). In order to increase efficiencies in our process, and based on available statistics, CMS instituted this workload review threshold. However, CMS wishes to stress that this is a CMS workload review threshold and not a substantive dollar or "safe harbor" threshold. Medicare beneficiaries must still consider Medicare's interests in all WC cases and ensures that Medicare is secondary to WC in such cases. In other words, if the total settlement amount is $25,000 or less, the parties to the settlement are still required to consider Medicare's interests. The recommended method to protect Medicare's interests is to enter into a Medicare Set Aside arrangement to protect Medicare's interests, even though CMS will not review the proposal. (Ref: 7/11/05 Memo Q1 and 2)"
(4) "WCMSAs in Cases Where There are Both a WC Claim and a Third Party Liability Claim (Ref: 4/21/03 Memo Q19) Third party liability insurance proceeds are also primary to Medicare. To the extent that a liability settlement is made that relieves a Workers' Compensation (WC) carrier from any future medical expenses, a CMS approved Workers' Compensation Medicare Set-aside Arrangement (WCMSA) is appropriate. The WCMSA would need sufficient funds to cover future medical expenses incurred once the total third party liability settlement is exhausted. The only exception to establishing a WCMSA would be if it can be documented that the claimant does not require any further WC claim related medical services. A WCMSA is also not recommended if the medical portion of the WC claim remains open, and WC continues to be responsible for related services once the liability settlement is exhausted.
(5) "When a Medicare Set-Aside is Not Recommended (Ref: 4/21/03 Memo Q20)
A WCMSA is not recommended if ALL of the following apply:
(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." If you handle WC claims, there are various companies and law firms that for a fee can assist you in handling WC set-aside arrangements and getting them approved when required by Medicare. A quick web search indicates that many companies handle this, and here are a few:
Garretson Firm Resolution Group (513-794-0400)
Gullen & Associates (888-571-5436)
Crowe Paradis Services Corporation (866-630-2772)
(The second part will be in next issue. The second part discusses whether set-asides are encouraged or required for personal injury or medical malpractice claims which do not involve workmen's compensation work-related injuries.)
MEDICARE SET-ASIDES, PART 2 PERSONAL INJURY & MEDICAL MALPRACTICE
(This is the second of a two part series on Medicare Set-Asides. The first part concerning Medicare Set-Asides for workmen's compensation claims was in the previous issue.)
Does Medicare encourage or require the use of a set-aside fund if your client's non-workmen's compensation (WC) personal injury (PI) or medical malpractice (MM) settlement considers or includes future accident-related medical expenses?
The language of the Medicare MSP (Medicare Secondary Payer) statute, 42 U.S.C. § 1395y(b)(2) "Exclusions from Coverage and Medicare as Secondary Payer" is broad enough to require set asides or credits for future accident-related medical care, in lieu of that care being paid by Medicare. This is the authority for Medicare to require set-asides for certain WC claims (as discussed in the previous issue).
Medicare specifically discusses, in the portion of the Medicare Secondary Payer (MSP) regulations, 42 C.F.R. §§ 411.40 -- 411.47, devoted to WC claims, that Medicare payments for future work-related medical services covered by WC are excluded until the WC payments are exhausted. There is no similar discussion in the MSP regulations concerning future accident-related medical expenses covered by a non-WC PI or MM settlement.
The Centers for Medicare & Medicaid Services (CMS), through use of written Memoranda and by posting website (http://www.cms.hhs.gov/) information, has formally encouraged the use of set-asides for all WC claims involving either an award of future medical expenses or a lump sum payment which considers future medical expenses; and CMS has also mandated set-asides in certain WC claims (as discussed in the previous issue.) There is no similar discussion of set-asides, or future accident-related medical expenses, in any CMS Memoranda or website information for non-WC PI or MM claims.
Why is this issue of whether set-asides are encouraged or required for non-WC PI and MM settlements being raised now?
A few local Arizona trial lawyers recently brought this question to my attention after seeing an advertisement for a webseminar by a lien resolution firm which may indicated that the firm handles set-asides, of course for a fee, not only for WC claims, but also for PI and MM claims. My online research then showed that of the lien resolution companies which advertise such work concerning Medicare liens (there are many), that a few state in their websites that they process Medicare set-asides in WC, PI or MM cases. Now this sort of advertisement can be a bit vague, because set-asides are required in WC-related PI or MM claims (as discussed in the previous issue).
The Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) places extensive reporting requirements, and substantial penalties and liability for noncompliance, on insurers and self-insured for all PI, MM and WC claims for purposes of Medicare lien collection. (as discussed in the September 2008 "Liens Corner" article). But this new law, and regulations currently being drafted by CMS to implement the new law, says nothing about future accident-related medical expenses or set-asides. Review of the CMS website (http://www.cms.hhs.gov/) information, including Federal Register notices and a number of town hall meetings transcripts concerning implementation of the MMSEA, reveal NOTHING about future accident-related medical expenses or set-asides as a concern in non-WC PI and MM settlements.
In a non-WC PI or MM claim, contact the Medicare Secondary Payer Recovery Center (MSPRC) (as discussed in the July-August 2008 "Liens Corner" article), and once the MSPRC gives you the final lien amount and notice (once the case is settling or has settled), you pay the lien. The MSP Manual, Chapter 7, § 188.8.131.52, then states that upon receipt of payment, Medicare will issue a "general release", which is "an agreement which waives Medicare's right to change the amount of money it is accepting in satisfaction of its claim, and precludes Medicare from later asserting a claim against any outstanding amount not included in the satisfaction".
"Once the beneficiary agrees to pay Medicare the amount that Medicare will accept in satisfaction of its claim (full amount, or amount remaining after an appeal or waiver determination), it is the lead contractor's responsibility to obtain the appropriate signatures on a general release after the settlement. A general release as applied to Medicare is an agreement which waives Medicare's right to change the amount of money it is accepting in satisfaction of its claim, and precludes Medicare from later asserting a claim against any outstanding amount not included in the satisfaction, e.g., monies remaining in the case of a partial waiver (See Exhibit 7 - Release Agreement Form.) The beneficiary agrees to the amount in question and is released from further obligation to repay. Medicare has no obligation to pay for any services related to the injury furnished before the date of the settlement that were not brought to Medicare's attention in writing before the settlement was reached." Medicare Secondary Payer Manual, Chapter 7, § 184.108.40.206.
If you run into the situation that an insurer insists that the non-WC PI or MM settlement should include a set-aside to cover future accident-related medical expenses, I suggest that you educate the insurer as discussed above; that you advise the insurer that you already have a formal Medicare compliance process ongoing with the MSPRC; and that the Medicare Secondary Payer Manual, Chapter 7 provides Medicare has or will give you a "final" lien amount and that once you pay that amount, that Medicare will issue a "general release" and close the file in perpetuity.
Here in Arizona, we are in the San Francisco Region, Division of Medicare Financial Management, CMS. Last November, after I inquired regarding the subject of non-WC PI and MM set aside requirements if any, Tom Bosserman, of that office, advised me by e-mail that CMS "has no current plans for a formal process for reviewing and approving liability Medicare set-aside arrangements", though he went on to state that "there is an obligation to inform CMS when future medicals were a consideration in reaching the Liability settlement, judgment, or award as well as any instances where a Liability settlement, judgment, or award specifically provides for medicals in general or future medicals."
My impression is that our Dallas Medicare region would like to encourage plaintiff attorneys, as they handle non-WC PI or MM settlements which include consideration of future medical expenses, to set up set-aside arrangements so that Medicare will not have to foot the bill for future accident-related medical expenses.
But Medicare has implemented no formal procedure, regulation or even Memorandum, to formally require this in non-WC PI or MM cases. Once you pay the "final" lien amount, Medicare issues a "General Release". If CMS desires to revise the MSP regulations to require consideration of future medical expenses and set-asides for non-WC PI and MM claims, they will first have to give Federal Register Notice and the process will take many months before final revised regulations are issued. Keep in mind the substantial additional bureaucracy and practical difficulties that would be necessary for Medicare to implement future medical expenses and set-aside considerations for non-WC personal injury and medical malpractice settlements. Its so much easier in the WC arena to consider future medical expenses and set-asides, as WC claims are often adjudicated specifically awarding future medical expenses.