Now What? Handling Below Threshold Cases in Work Comp
DECEMBER 13, 2023
Considering Medicare’s interests in below CMS workload review threshold cases continues to present a challenge to effective settlement compliance. This is compounded by urban myths and legends that continue to influence decision-making and cause conflict between parties. Now is the time to understand what steps must be taken to move cases toward settlement.
Medicare Secondary Payer Act: Back to the Basics
The Medicare Secondary Payer (MSP) Act was passed into law in December 1980[1] to ensure the solvency of the Medicare Trust Fund. It was largely unenforced until July 2001, when the Centers for Medicare and Medicaid Services (CMS) issued their first policy memorandum regarding compliance with the Act.[2]
While CMS has taken various positions since then, there has been one ongoing constant – Parties must consider Medicare’s interests in ALL workers’ compensation (and other personal injury) settlements and not shift the burden of future medical care.
The Voluntary Medicare Set-Aside Review Process
Based on a flood of requests for CMS to review Medicare Set-asides (MSAs) in workers’ compensation settlements, steps were taken to consolidate procedures under the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide. Current standards state that CMS will review an MSA if the following facts are present:
The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00; 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 or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.[3]
The Guide also warns stakeholders as follows:
If a threshold is met, a WCMSA can be submitted to CMS for approval; and
These thresholds are created based on CMS’ workload, and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must stillconsider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases. (Emphasis added)
The quandary interested stakeholders find themselves in is what to do when their settlement does not meet the CMS review thresholds.[4] However, they want to take steps to consider Medicare’s interests and protect their client(s).
Handling Below Review Threshold Cases
All interested stakeholders should first look to the mandate established in the MSP Act – consider Medicare’s interests in all settlements. Federal regulations that discuss workers’ compensation settlements should also be taken into account:
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.[5] (Emphasis added).
Failure to consider these red flags can lead to problems for all. Now is the time to scrutinize all settlements and consider using an MSA, even if it means not submitting it for review and approval. Factors to consider should include:
Age/Medicare Status of Employee: The employee’s age should be reviewed. The closer someone gets to becoming a Medicare beneficiary (65 years old), the more likely you may need an MSA in your settlement.
Nature and Extent of Injuries: There also must be a close review of the severity of the work injury and whether it is permanent. Temporary injuries likely will not need extensive future medical care.
Type of Settlement: Settlements that close out all future medical care and treatment should receive a higher level of scrutiny as it creates more likelihood that Medicare would become the primary payer post-settlement.
When in doubt, work with a compliance attorney trained in this area of the law to protect yourself and your client(s).
Conclusions
MSA Source is here to assist all interested stakeholders in considering Medicare’s interest and protect you and your client(s). Our compliance attorney is available to consult on cases before settlement, assist in helping you navigate the Medicare maze, and provide practical solutions – especially in below-review threshold cases. Now is the time to consider MSA Source as part of your compliance solution.
[1] Pub. L. 96–499, Title IX – H.R. 7765—Omnibus Reconciliation Act of 1980); as confided in 42 U.S.C. §1395y(b)(2). The MSP Act has been described as “the most completely impenetrable texts within human experience.” Cooper Univ. Hosp. v. Sebelius, 636 F.3d 44, 45 (3rd Cir. 2010).
[2] This CMS policy memorandum is sometimes referred to as the Patel Memorandum.
[3] The most recent workload review thresholds are set forth in Section 8.1 – Review Thresholds, of v3.9, on May 15, 2023.
[4] CMS workload review thresholds are subject to change. Updates are published in the WCMSA Reference Guide.
[5] 42 C.F.R. §411.46(b)(2).