March 11, 2020 –
On March 2, 2020, the New York Workers’ Compensation Board announced that it will no longer approve Section 32 Waiver Agreements that include hold harmless/indemnification language relieving the carrier of liability in the event the claimant fails to properly self-administer or safeguard Medicare Set-Aside (MSA) funds. The Board noted that this language was “unfair” and “unconscionable” given the disparity in bargaining power and financial resources between claimant and insurance carriers.
There has been some speculation that the exclusion of this language will impact whether settling parties will need to utilize the CMS voluntary submission process rather than non-submission options for their MSAs. There are several reasons why this speculation is misplaced.
First, CMS submission of a Workers’ Compensation Medicare Set-Aside, is and remains, a voluntary process. This is clear from a review of the Medicare Secondary Payer Act, the accompanying federal regulations to the Act and by CMS’ own admission as noted in the Workers’ Compensation Medicare Set-Aside Reference Guide (Guide). The Board’s decision did not change this and has in no way mandated MSA submission to CMS for review.
Second, the above language deals only with claimant’s failure to properly self-administer the MSA funds. The current version of the Guide addresses the impact of potential mismanagement of funds in pertinent part as follows:
17.3 Use of the Account
WCMSA funds may only be used to pay for medical services and prescription drug expenses related to your work injury. CMS expects that WCMSA funds be competently administered in accordance with all Medicare coverage guidelines… Please note: If payments from the WCMSA account are used to pay for services other than Medicare-allowable medical expenses related to medically necessary services and prescription drug expenses for the WC settled injury or illness, Medicare will deny all WC-injury-related claims until the WCMSA administrator can demonstrate appropriate use equal to the full amount of the WCMSA.
Third, claimants can improperly self-administer MSA funds regardless of whether the MSA is submitted to CMS for review or a non-submission option is chosen. Significantly, following a CMS submission and approval, most claimants are left on their own to administer the MSA with limited guidance. Claimants who were used to medical expenses being handled by the workers’ compensation claims professional before CMS submission, will need to negotiate fee schedule pricing, manage prescription costs and try not to prematurely exhaust the MSA funds post-settlement. Professional administration and self-administration support services may help claimant successfully manage these funds and to prevent premature exhaustion of the MSA providing the parties with further protection post-settlement.
Although the Board’s decision does not impact the use of non-submission MSA options, it is a good opportunity to take a more critical look at self-administration post-settlement and what is really the best option to help prevent improper management of the MSA funds. For additional information on the NuShield MSA and our self-administration support services or for any of your Medicare compliance needs, please contact the NuQuest Settlement Consultant Team.