Workers' Compensation Claims and the Medicare Secondary Payer Act - - PowerPoint PPT Presentation

Workers' Compensation Claims and the Medicare Secondary Payer Act

Meeting Reporting Requirements, Satisfying Liens, and Structuring Set-Asides in Settlements Today’s faculty features:

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TUESDAY, DECEMBER 11, 2012

Presenting a live 90-minute webinar with interactive Q&A

John Cattie, Head, Future Cost of Care Practice, Garretson Group, Charlotte, N.C. Bradford Peterson, Partner, Heyl Royster Voelker & Allen, Urbana, Ill.

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WORKERS’ COMPENSATION CLAIMS AND MSPA

Brad Peterson Heyl, Royster, Voelker & Allen Urbana, Illinois John V. Cattie, Jr. Garretson Resolution Group Charlotte, NC

5

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

• 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

• r services included in a claim against the

primary plan or the primary plan’s insured,

• r by other means.

7

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 § 411.46

8

If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment

• f 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 § 411.46

9

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

Future Medical Treatment

MSA’S

11

IDENTIFYING THE ISSUE

12

Classes of Beneficiaries

I. Claimant Medicare Eligible

• II. Claimant To Be Medicare Eligible Within 30

Months (Future Beneficiaries)

13

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

Settlement Thresholds

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

15

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

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

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

18

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

CONTRACT LANGUAGE

• If no MSA explain why
• Record keeping requirements

20

SETTLE NOW – NOT LATER

• Settle claim before petitioner reaches 62 ½

years of age

21

SETTLE NOW – APPLY LATER

• Petitioner waits to file SSDI claim until after

settlement of workers’ compensation claim

22

APPEAL DENIED

• Await settlement until pending SSDI appeal is

denied

23

NO FUTURE TREATMENT – NO MSA

• MSA only where future treatment reasonably

anticipated

• Caveat: CMS Memo 4/22/03 ‘and settlement
• nly for past medical expense’

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ZERO ALLOCATION

• Acquire MSA proposal with zero allocation

based upon highly disputed facts and substantial compromise

25

SETTLEMENT BELOW MSA THRESHOLDS

• Negotiate settlement below

$25,000/$250,000 thresholds to avoid time and expense of CMS approval

26

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

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• Require exhaustion of total settlement

amount

• SOL 3 years (6 years petitioner’s counsel)

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LIABILITY ISSUES FOR RESPONDENT

• Conditional payments – double damages plus

interest

• Same penalty for failure to protect Medicare
• n future medicals
• No liability defense counsel as does not

receive 3rd party payment

• Professional liability to insurer/client

29

MMSEA Section 111 (Mandatory Insurer Reporting)

31

MSP Reporting Obligations - What Has Changed?

The Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”)

CMS RRE TPOC HICN COBC ORM MSA

32

Common reactions to MMSEA: Overreaction or reasonable “belt & suspenders”?

Not settling/paying without putting Medicare’s name on the check

New Concerns for Defendants: MMSEA

• 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

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Common reactions to MMSEA: Overreaction or reasonable “belt & suspenders”?

Not settling/paying without putting Medicare’s name on the check

New Concerns for Defendants: MMSEA

• 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

A quick note…

Each of these topics will be covered in today’s presentation. For more in-depth analysis as well as practice tips, be sure to review your handout.

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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

MMSEA - 42 U.S.C. §1395y(b)(8)

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

• f releasing medicals” *

*Per Chapter III, Section 6.5.1 of Version 3.4 of the User Guide

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
• f last name, gender and DOB)
• Confirms entitlement status (Match versus No Match)
• Tip – Query only requires 5 data points and not all 50+

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

• ccurs with a Medicare beneficiary

38

Seger v. Tank Connection , LLC, 2010 WL 1665253 (D.Neb) Hackley v. Garafano, 2010 WL 3025597 (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 111.

Claimant Entitlement Verification: Case Law

39

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

MMSEA: A Verification Tool

40

MMSEA Reporting - Total Obligation to Claimant (TPOC) (does not apply to Workers’ Compensation or No-Fault)

TPOC Date Mandatory Reporting Required Voluntary Reporting Allowed Reporting will be rejected (for MMSEA) 10/1/2011 through 3/31/2012 Over $100,000 Over $5,000 $5,000 and under 4/1/2012 through 6/30/2012 Over $50,000 Over $5,000 $5,000 and under 7/1/2012 through 9/30/2012 Over $25,000 Over $5,000 $5,000 and under 10/1/2012 through 9/30/2013 Over $5,000 N/A $5,000 and under 10/1/2013 through 9/30/2014 Over $2,000 N/A $2,000 and under 10/1/2014 onward Over $300 N/A $300 and under

41

• 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

MMSEA

Tip #1: Collaborate & Stipulate to these data points.

42

• 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

MMSEA

Tip #1: Collaborate & Stipulate to these data points.

What will happen if you don’t?

• Medicare repaid but not 100% satisfied.
• Common working file includes “extra” medicals reported by RRE.
• But those expenses remain unpaid, leading to more work to fix later.
• CMS will consider file open, and may seek reimbursement.

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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.

MMSEA - Do liability claims where all exposure ends before 12/5/80 have to be reported?

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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 (3rd party, treating DR.) Internal (email for form) Internal (email for form) Internal (email for language)

45

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.

Collaboration in Practice: MSP Release Language

Medicare Set-Asides in Workers’ Compensation Matters

47

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

Agenda

48

What About Future Payments? (Do I need one of those set asides?)

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.

MSP Reimbursement for Future Medicals

MEDICARE REIMBURSEMENT CLAIM MEDICARE SET ASIDE?

2000 ---------------------------------------- 2012 2012 2013 2017 2022 2027 2032 2037 2042 2047 2052

49

Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement— 42 C.F.R. §411.46(d)

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.

50

Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement— 42 C.F.R. §411.46(d)

REMEMBER – the basic rule is that Medicare will pay for future injury-related care EXCEPT WHEN proceeds allocated to future medical expenses. 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.

51

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.

42 C.F.R. §411.47(a)(1)

52

How to Consider/Protect Medicare’s Future Interest

Screen Assess Value Educate

53

Are There Safe Harbors for MSAs?

• 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 No Safe Harbors

54

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 2nd 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.
• Court ratified what parties had already determined. Therefore,

CMS future interests protected without requiring CMS approval.

MSA Case Law – CMS Review/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.

Educating the Claimant: Funding, Administration and CMS Submission

57

I. Funding Options II. Administrative Options

• III. CMS Submission

Agenda

58

Educate & Administer MSA Results

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

Educating

59

Options in MSA Funding

• 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

• Lump Sum

– MSA fully funded up front – Simple – Too costly???

60

CMS Submission - Are There Safe Harbors for WCMSAs?

• 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 Educate

61

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 2nd 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.
• Court ratified what parties had already determined. Therefore,

CMS future interests protected without requiring CMS approval.

MSA Case Law – CMS Review/Approval

LIABILITY MSA’S PROPOSED REGULATIONS

62

PUBLISHED FEDERAL REGISTER VOLUME 77, NO. 166

Friday, June 15, 2012

• When enacted will codify CMS’s position

requiring liability Set-Asides

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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

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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

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

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

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

68

• BODY REGIONS:
• Head or neck, face, chest, abdomen,

extremities, external

69

ISS = INJURY SEVERITY SCORE.

70

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CHRONIC ILLNESS

• Is a condition or disease lasting more than

three months.

• Examples: chronic breathing difficulty, cancer,

diabetes, quadriplegia and/or fibrosis.

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OPTION 3

• Before or after settlement, physician attests

that future medical expense not expected

73

OPTION 4

• Medicare Set-Aside arrangement prepared

and submitted to CMS for review

74

OPTION 5

RECOVERY OPTIONS:

• Settlement $300.00 or less;
• Settlement below $5,000.00 pay 25 percent to

Medicare;

• Settlement $25,000 or less claimant can self

calculate amount to protect Medicare for future medical expense

75

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

OPTION 7

COMPROMISE OR WAIVER:

• Beneficiary may request CMS compromise or

waive recovery

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DOUBT NO LONGER EXISTS AS TO MEDICARE’S POSITION!

78

• PROPOSED REGULATIONS MAY BE

SUBSTANTIALLY ALTERED PRIOR TO ADOPTION

79

PROPOSED LIABILITY MSA REGULATIONS

• Apply entirely new standard compared to

workers’ compensation

80

• PROPOSED REGULATIONS FAIL TO

ACCOMMODATE COMPROMISE SETTLEMENTS

81

• PROPOSED LIABILITY REGULATIONS DO NOT

LIMIT SCOPE TO CLASS I AND CLASS II BENEFICIARIES AS DEFINED IN WORKERS’ COMPENSATION

82

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Questions?

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Thank you! Please keep in touch…

• Phone
• Email
• Website
• Linked In

Bradford Peterson Heyl, Royster, Voelker & Allen Urbana, IL 217.344.0060 bpeterson@heylroyster.com