October Updates

Several changes that may impact your settlement approach in workers’ compensation and liability claims are being implemented in October. The changes involve Medicaid recovery, the ability to close out active medical care under the Arizona WCA provisions and CMS’ addition of a liability or no-fault MSA field to its Common Working File. Highlights of the changes are summarized below. Please refer to our earlier blog postings for a more in-depth analysis of the topics.

Medicaid Recovery

Medicaid, just like Medicare, is a secondary payer when a third party has a legal obligation to pay certain medical benefits to a beneficiary under the programs.  Before October 1, 2017, Medicaid’s recovery of its payments from the third party settlement was limited to the portion of the settlement that was allocated for future medical expenses.  With the October 1, 2017, implementation of the Bipartisan Budget Act of 2013, section 202, also known as the Medicaid Secondary Payer Act, Medicaid will now be allowed to recover its costs from a beneficiary’s total settlement. Given the various state reporting requirements relative to Medicaid beneficiaries, whether through data exchanges or intercepts, we can expect an increase in the amount of reimbursement efforts that will be undertaken by states Medicaid departments.  The anticipated decreases in federal contributions to the Medicaid programs will further fuel the recovery efforts.

Medicaid liens should be addressed in settlements and awards.  From a practical aspect, the ability to recover from the whole settlement will put Medicaid in a stronger lien negotiating position. Early negotiation efforts, however, that focus on the uncertainty of potential trial results absent settlement, will increase the ability to secure significant Medicaid lien reductions. A systematic claims’ handling approach for cases involving Medicaid liens, in addition to Medicare and Medicare Advantage liens, is recommended in order to prevent future issues with these entities.

Arizona’s Repeal of Section 23-941.01

Arizona’s repeal of Section 23-941.01 that limited the parties’ rights to settle out future medical care in undisputed claims will take effect on October 31, 2017.  This provision had prohibited the closure of active medical care, such as surgery, in undisputed claims and only allowed the release of future supportive medical maintenance benefits.

The amended Section 23-041.01 provision allows represented employees to settle future medical but requires the settlement to include the following attestation:

  1. “The employee understands the rights settled and released by the agreement and was represented by counsel.
  2. The employee has been provided information from the carrier, special fund or self-insured employer that outlines any reasonably anticipated future medical, surgical and hospital benefits relating to the claimant the projected cost of those benefits and that provides an explanation of how those projected costs were determined.
  3. The employee understands that monies received for future medical treatment associated with the industrial injury should be set aside to ensure that the costs of such treatment will be paid.
  4. The parties have considered and taken reasonable steps to protect any interests of Medicare, Medicaid, the Indian Health Service and the United States Department of Veterans Affairs, including establishing a Medicare Savings Account if necessary.
  5. The parties have conducted a search for and taken reasonable steps to satisfy any identified medical liens.”

When a claimant is unrepresented, the Administrative Law Judge will meet with the claimant to make specific findings regarding whether the above paragraphs are satisfied. Additional requirements and provisions for handling disputed claims are also set forth in the complete amendment.

The repeal will be effective from and after October 31, 2017. (Title 23, Chapter 6, article 3, Arizona Revised Statutes)

As of October 31, 2017, workers’ compensation claims in Arizona may completely close out all future medical rights under certain circumstances. This change presents a new opportunity for final resolution of many workers compensation claims. In order to pursue this, we recommend that the parties secure a future injury-related medical treatment allocation, identify and negotiate liens and fund the future medical allocation in connection with the settlement.

CMS’ addition of a liability or no-fault MSA field to its Common Working File.

As of October 1, 2017, CMS’ Common Working File will now reflect the existence of liability or no-fault MSAs in the system. Medicare Administrative Contractors will be instructed to deny payment of any submitted claims that pertain to the liability or no-fault MSA.

CMS’ addition of a liability or no-fault MSA in its Common Working File further suggests CMS’ interest in offering an eventual review of liability and no-fault MSAs.

NuQuest is available to assist in all types of lien resolution. Our product line also provides a variety of innovative future medical allocations that suit the needs of the claim. Further information is available upon request.

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