Medicare Set-Asides (MSAs) are generally priced using the state fee schedule for the jurisdiction of the claim. However, it’s critical to distinguish an important group of cases covered by federal regulations, commonly referred to as “longshore” or “Defense Base Act” cases. Those cases must be analyzed and priced differently from other workers' compensation (WC) cases.
The Office of Workers’ Compensation Programs (OWCP) is administered by the United States Department of Labor and offers four programs, including the Federal Employees’ Compensation Program, Energy Employees’ Compensation Program, Coal Mine Workers’ Compensation Program, and Division of Longshore and Harbor Workers’ Compensation (DLHWC) Program. The last program administers both longshore cases and Defense Base Act cases. The programs are responsible for thousands of cases every year. For example, more than 335,000 total claims were paid under the OWCP in 2011, with $4.6 billion paid in medical treatment alone the same year.
The purpose of the DLHWC is to minimize the impact of land-based and maritime employment injuries by ensuring workers' compensation benefits are provided under various statutes. Longshore cases typically involve employees engaged in maritime employment, including harbor workers and anyone involved in longshore operations. The Defense Base Act provides workers' compensation protection to “civilian employees working outside the United States on U.S. military bases or under a contract with the U.S. government for public works or for national defense.”
CMS expects that an MSA for an employee covered by the DLHWC involves the same analysis that any other case requires: Any treatment recommended by the treating physician — with few exceptions — should be included in the allocation. However, the pricing for those cases is different and requires a unique perspective. While a non-OWCP case is priced per the state’s worker's compensation fee schedule rates, an OWCP file is priced based on the claimant’s residential ZIP code, regardless of the state in which the federal court resides. There are a total of 426 pricing regions, called Medical Service Areas, assigned by ZIP code. It’s crucial to specify in the CMS submission that the jurisdiction is OWCP and which ZIP code was used.
It’s also important to ensure that the pricing of OWCP cases is accurate. This effort will assist in reducing the number of development letters and pricing differences in approval letters, resulting in quicker turnaround times from CMS, increased approval ratings, and more efficient settlements.
Finally, it’s important to remember that, similar to any other workers' compensation case, the settlement parties must consider any possible conditional payments made by Medicare during the course of the claim.