It is no secret that Medicare Secondary Payer (MSP) compliance continues to complicate workers' compensation (WC) claims practice. Unfortunately, far too often Medicare issues (especially the Medicare Set-Aside) end up sounding the death knell for settlement, thereby forcing WC claims payers to keep claims open and incur additional costs.
The key to combating the MSP challenge is good old-fashioned “preparation.” Quite simply, addressing potential MSP issues before mediation or settlement discussions is very often the difference between settling a case sand clearing a permanent spot for it on the claims shelf.
To help better address MSP issues as part of the settlement process, the author presents the following general Medicare checklist:
1. Be proactive. Take control.
MSP compliance (especially the WCMSA) has simply grown too complex for eleventh hour or ad hoc approaches. You need to start thinking about potential Medicare issues early, and they need to be revisited throughout the course of the claim.
2. Do you know your company’s or client’s protocols?
Make sure you have a firm understanding of any applicable protocols. Adjusters should check to see if their company or insureds (if applicable) have any specific MSP protocols that must be followed. Likewise, defense counsel should check with their clients to make sure they are aware of any protocols.
Typical protocol items involve the following: Who will check the claimant’s Medicare and Social Security disability status? Who will be responsible for obtaining and negotiating conditional payment claims? Who will be responsible for reimbursing Medicare? When is a WCMSA applicable? Should specific settlement language be used?
3. Do you know the claimant’s Medicare and Social Security disability (SSD) status?
Determining the claimant’s Medicare and SSD is a critical step in assessing whether MSP issues need to be addressed. Check to see if this has been done. If it has been done and came back negative, look to see how recent that inquiry was, as you may need to do an updated status check.
In terms of obtaining this information, there are a few options:
The Section 111 Query Process system, which can be used only by Responsible Reporting Entities (RREs), provides Medicare status information. RREs can use the system once a month to check a claimant’s Medicare status, and a response is generally provided within 14 days of the submitted inquiry.
One thing to keep in mind is that the Query Process provides Medicare status information only; it does not provide SSD information. Thus, if the Query results come back negative (for example, claimant is not on Medicare), it will likely still be necessary to check the claimant’s SSD status separately. This may be particularly pertinent with respect to determining whether a WCMSA may be applicable.
Another option is to submit a written request for Medicare and SSD status information directly to the Social Security Administration (SSA). The claimant’s authorization is needed to process this request. Response times vary greatly among the various SSA offices nationally.
This information could also be requested directly from the claimant as part of standard discovery practice (for example, interrogatories, production requests, depositions, etc.), as may be permitted per jurisdiction. However, for a variety of reasons, best practices may favor procuring this information from more official sources as noted above.
4. Have you checked for Medicare conditional payments?
If the claimant is a Medicare beneficiary, then it is necessary to determine whether Medicare is asserting a conditional payment claim. If so, has Medicare’s claim been examined for accuracy? Have steps been taken to remove inappropriate claims and/or to argue for other reductions?
Assuming this has been done, check how recent the information is, as it may be necessary to obtain an updated conditional figure from Medicare (and it may then be necessary to go back and challenge/reduce any new amounts).
5. Is a WCMSA applicable?
Determine whether the case meets CMS’ WCMSA review thresholds (assuming the parties have decided to participate in the CMS’ review system). Make sure you have a firm understanding of the thresholds, including how CMS defines the terms “total settlement amount” and “reasonable expectation of Medicare enrollment” to determine whether a settlement falls within the thresholds.
If the settlement meets the review thresholds and will be submitted to CMS for review, have you taken steps to reduce the WCMSA allocation amount before the proposal is sent to CMS?
For example, can prescription costs somehow be reduced? Is there an outstanding recommendation for surgery (or some other costly medical procedure) that may no longer be medically necessary? Do you know the claimant’s non-industrial health history so that a rated age can be obtained to help reduce the claimant’s life expectancy for WCMSA calculation purposes?
Another important issue involves whether the settlement will be finalized before CMS completes its review of the WCMSA proposal. If so, who will be responsible for any counter-higher? Alternatively, will the parties wait for CMS’ response before finalizing settlement? If so, will the settlement be “contingent” upon CMS approving the proposed WCMSA allocation amount?
Here are other issues to address: How will the MSA be funded? Will any type of administration assistance be provided to the claimant? If so, who will be responsible for securing this? Will some form of reversionary interest be considered?
If the case does not meet CMS’ WCMSA thresholds, determine whether a future allocation may still be applicable or prudent. This will largely come down to an interpretation of CMS’ policy statements regarding non-threshold cases. On this point, adjusters should see if their companies or clients have any specific protocols or policy positions regarding non-threshold cases. Likewise, defense counsel should check with their clients regarding this issue.
6. Prepare clear and understandable settlement language.
It is important that all pertinent MSP issues be memorialized as part of the settlement agreement. These provisions should be clear and understandable in terms of the MSP issues addressed, how particular issues will be addressed, and the corresponding obligations of the parties.
While an in-depth analysis into each of the issues and related considerations is beyond the scope of this article, some general items include information regarding the WCMSA (for example, amount, funding, administration, etc.) and who will be responsible for reimbursing any Medicare conditional payments. Consult any applicable protocols and your legal counsel regarding what settlement provisions may be applicable in your particular case.
How ISO Claims Partners Can Help
To discuss any of the above issues in more detail, feel free to contact the author directly. Also, please note that in the coming weeks, the author will be releasing a similar article dedicated to liability claims entitled Preparing for Mediation: Medicare Checklist for Liability Claims.
Finally, please note that ISO Claims Partners offers a host of proactive solutions to help you prepare for settlement, including our Pre-MSA and Pre-MSA Plus services. Click here to learn more.