Rasa Fumagalli, JD, MSCC
Under the Medicare Secondary Payer Act, Medicare is not allowed to make payment where payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan, automobile or liability insurance policy or plan. 42 U.S.C. 1395 y(b)(2 (A)(ii). A Medicare Set-Aside (“MSA”) allocation is a settlement tool that allows parties to fund future injury related care in connection with their settlement, essentially preventing a future conditional payment by Medicare. There is nothing in the MSP Act or Code of Federal Regulations that requires the parties to fund an MSA; the MSA is a legal fiction.
In order to protect Medicare’s Secondary Payer status, the Centers for Medicare and Medicaid Services (“CMS”) has indicated a willingness to review MSAs in workers compensation settlements when CMS’ workload review thresholds are met. The current thresholds allow CMS review when: the claimant is a current Medicare beneficiary and the projected settlement exceeds $25,000.00 or when the claimant has a reasonable expectation of Medicare entitlement within 30 months of settlement and the projected settlement exceeds $250,000.00. CMS has clearly stated that its review process is purely voluntary. If however the parties choose to use the CMS WCMSA review process, CMS’ guidelines and procedures will apply to the review.
CMS’ updated Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Guide”) (Version 2.6, July 10, 2017) sets forth the documents that must be submitted to CMS for review. The projection “formula” for diagnostic studies, Spinal Cord Stimulators, pain pump implants and drugs is also outlined in the Guide. In the event that CMS determines additional information is needed, development letters may be sent seeking additional records or payout information. Once CMS issues a determination letter that notes the amount of the WCMSA that adequately considers Medicare’s interests, the parties may elect to fund the figure. CMS requires a copy of the final settlement documents reflecting the funding of the amount of the CMS determination in order to finalize the figure. Once the determination is finalized, Medicare agrees to become primary upon proper exhaustion of the WCMSA fund. The updated Guide recommends professional administration of the WCMSA funds. CMS’ submission process often results in overfunded WCMSAs, delays and unnecessary document gathering.
Given the voluntary nature of the CMS review process, parties to a settlement should also be aware of alternative approaches for avoiding a cost shift of injury related expenses to Medicare. These approaches may include a non-submitted MSA, a compromise MSA, a zero dollar MSA or the NuShield certified MSA. The NuShield certified MSA projects future injury related Medicare covered treatment based on the last two years of medical treatment and Evidence Based Medicine standards. It provides an assist with the proper administration of the funds in order to extend the life of the funds and assure proper expenditures. The certification that Medicare will become primary upon proper exhaustion and the corresponding hold harmless and indemnification agreement associated with the NuShield certified MSA program, provide the parties with additional peace of mind. Get out of the CMS haunted submission maze by contacting our settlement consultant team for more information.