For many of you reading this the Center for Medicare/Medicaid Services (“CMS”) may sometimes feel like the bane of your existence. Gone are the good old days when you could settle the claim of an older worker secure in the knowledge that future medical payments for the injuries underlying the claim would be covered by Medicare. I’ve spoken several times this year on this issue, so as a background, here are the high points, before we get to the story about why this stuff really matters in our day to day work.
The Medicare Secondary Payer Act (“MSP”) was passed by Congress to prevent parties responsible for the payment of costs for medical bills, such as defendants in liability lawsuits and employers in workers’ compensation claims, from shifting their obligation to pay for medical costs from themselves to Medicare in the course of a settlement.
In the course of the rule making to enable the act, the Center for Medicare/Medicaid Services was created. CMS is a private organization, contracted to the government for the purpose of coordinating the payment of benefits and recovering benefits paid where a third party is primarily responsible for the payment of the medical bills for an injury. One way to prevent CMS from pursuing a future action for recovery after a claim is settled is by setting up a Medicare Set-Aside (“MSA”) to cover the costs of future medical treatment for the allowed conditions in the settled claim and submitting the MSA proposal to CMS for review.
CMS does not have the resources to review every MSA. Accordingly, it imposed review thresholds based upon an injured worker’s Medicare enrollment status and the amount of the settlement. Under the guidelines, CMS will only review MSA proposals that meet the following criteria:
- The injured worker is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
- The injured worker has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the total settlement amount is greater than $250,000.00
- According to CMS, an injured worker has a reasonable expectation of becoming Medicare eligible within 30 months if he or she has either: applied for Social Security Disability Benefits; been denied Social Security Disability Benefits but anticipates appealing that decision; is in the process of appealing and/or re-filing for Social Security Disability benefits; or is 62 years and 6 months old.
However, CMS has made it very clear that “(a)ny claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account. Medicare’s interests need to be protected in any workers’ compensation settlement, including those outside the review thresholds.” See Section 3.0 of CMS’ Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide. Just because the settlement falls below the threshold limits does not mean that you can ignore Medicare’s interests. It simply means that your Medicare Set Aside Plan will not be accepted by CMS for review prior to the settlement.
Why This Really Matters
Again, those of us who practice in this area are familiar with the MSP by now. However, based upon a seminar talk I gave a few months ago, a lot of practitioners still question whether this is something they actually need to worry about. There are hundreds of thousands of claims settled around the county every year. How is CMS going to hone in on this one little settlement?
The short answer is that they won’t necessarily. However, I personally know an Ohio practitioner who had to deal with CMS questioning a settlement and, according to him; the experience was just above a root canal on his list of least pleasurable life moments. Here is another example of CMS pursuing an attorney for a settlement in which he was involved.
According to a June 18, 2018 press release from the U.S. Attorney’s Office, a Philadelphia personal injury firm recently entered into a settlement agreement with the U.S. Attorney for the Eastern District of Pennsylvania to pay a lump sum of $28,000 for repayment of Medicare conditional payments.
The firm allegedly failed to reimburse this amount to Medicare stemming from nine settlements handled by the firm. According to the release, the firm agreed to enter into a settlement with the federal government for reimbursement of the payments in question, as well as an agreement to:
(1) designate a person at the firm responsible for paying Medicare secondary payer debts;
(2) train the designated employee to ensure that the firm pays these debts on a timely basis; and
(3) review any outstanding debts with the designated employee at least every six months to ensure compliance.
The attorneys involved also acknowledged as part of the agreement that “any failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act.”
U.S. Attorney William M. McSwain reminded practitioners that, “When an attorney fails to reimburse Medicare, the United States can recover from the attorney—even if the attorney already transmitted the proceeds to the client. Congress enacted these rules to ensure timely repayment from responsible parties, and we intend to hold attorneys accountable for failing to make good on their obligations.” (Emphasis added)
Also remember that this right of action by CMS is against the injured worker, injured worker’s attorney, employer’s attorney, and the employer in the claim.