The Increasing Role of Medicare in Claims
Medicare’s interests must be considered and protected when settling any workers’ compensation case whether or not the Applicant is a Medicare recipient.
An Applicant is Medicare eligible if they are more than 65 years old, they have been on Social Security Disability for 24 months or are suffering from end state renal disease.
An MSA with submission to CMS approval is required when (1) Applicant is a Medicare recipient and the settlement is $25,000 or more or (2) Applicant has a reasonable expectation of becoming a Medicare beneficiary within 30 months of the date of settlement and the settlement is $250,000 or more.
Settlement value is based not only on the specific value of the settlement but also includes indemnity benefits, attorney fees, future medical, repayment for conditional payments and previously settled portions of the claim.
Even when the claim is denied on legal grounds (i.e. AOE/COE), a zero allocation should be sought. In this instance you are informing Medicare of your position on this case and confirming that you are not shifting the burden of payment.
The Medicare Set Aside needs to include future industrial medical expenses as well as prescription drug costs. As of June 1, 2009, CMS is independently reviewing prescription drugs utilizing the Redbook Drug References to evaluate the sufficiency of the submitted prescription proposal. CMS places the greatest weight on the opinion of the primary treating physician. As such, it is important that CMS be provided with complete medical records including prescription records for the previously two years of treatment. You must cover all reasonably probable and predictable future prescription drug needs even if the Applicant is not currently utilizing these prescriptions. CMS will project a lifetime of prescription drugs at the Redbook cost for the drugs the Applicant is taking unless the primary treating physician’s reports indicate otherwise. You must ensure that your MSA vendor is actively objecting to these life expectancy drug calculations if there evidence that the Applicant is not likely going to continue using such prescriptions for the rest of their life.
Once the figure is determined, allocation of the MSA value is up to your discretion. The Code of Federal Regulations does not mandate what particular type of administration should be used. As such, the MSA can be paid as a lump sum with self-administration or through professional administration. However in either instance, the MSA monies must be placed in an interest bearing account and the monies must be used for industrially related medical expenses. The administrator, whether self-administered or professionally administered, must keep records of the payments with annual accounting forwarded to the assigned Medicare contractor.
Also do not forget about Medicare Conditional Payments which are in essence medical liens for services provided before settlement. Medicare will make payments under the condition they will be repaid by the work comp carrier once it is demonstrated they should have been the primary payer. These liens can be more expensive than an MSA. These payments must be resolved prior to settlement because Medicare is entitled to recovery pursuant to 42 CFR §411.47. Medicare can bring an action for double damages against any entity responsible for payment. Medicare must be paid within 60 days of the demand else interest will apply regardless of whether the value is disputed.
Therefore it is important for you to discover whether the Applicant is Medicare eligible as soon as possible. If the Applicant is Medicare eligible, you must determine whether Medicare has issued any conditional payments. If so, verify the charges by confirming payments were related to the injury, there are not duplicate payments and that care was appropriate and provided by an authorized physician. These liens can be negotiated so make sure you take the time to research the payments before resolving the lien.