When it comes to Medicare Secondary Payer (MSP) compliance, we usually make a distinction between workers' compensation and liability insurance claims. Different elements of MSP compliance come into effect depending on the insurance-type classification. Sometimes certain insurance categories can cause confusion. For example, the Longshore and Harbor Workers’ Compensation Act (LHWCA), which covers more than half a million employees, qualifies as workers' compensation. Other federal programs, such as the Jones Act and the Federal Employers Liability Act (FELA), are viewed as liability insurance types under the MSP Act.
What are the basic MSP obligations you need to consider with these programs? The LHWCA provides and regulates compensation and medical benefits to certain maritime employees, including most dockworkers and employees working on the navigable waters of the United States or adjoining areas. Injuries typically occur while loading, unloading, repairing, or building a vessel or while occupied on a pier, dry dock, wharf, or shipping terminal. All of these are compensated under the LHWCA, as is occupational disease.
Administered through the Office of Workers’ Compensation Programs, LHWCA pays benefits either through an authorized self-insured employer, an authorized insurance carrier, or a special fund administered directly by the Division of Longshore and Harbor Workers’ Compensation, Office of Workers’ Compensation Programs within the U.S. Department of Labor. Benefits include reduced salary and compensation for related medical expenses. Settlements, which must be approved by the deputy commissioner or an administrative law judge, can occur at any time during the claim and can address permanency and medical benefits.
Because the LHWCA qualifies as workers' compensation, this program is afforded the same requirements and is affected by the same MSP guidelines as other workers' compensation programs. For example, qualifying claims are required to be reported to the Centers for Medicare and Medicaid Services (CMS) under the Mandatory Insurer Reporting guidelines.
Medicare will pay conditionally for medical treatments for employees covered under LHWCA but will later seek reimbursement for all payments that the LHWCA plan should have paid. As with traditional workers' compensation plans, conditional payment letters based on LHWCA claims should be reviewed in detail to determine what’s related to the injury and which payments Medicare should actually pay.
Furthermore, LHWCA claims that meet workload review thresholds specified by CMS may have a Medicare Set-Aside (MSA) completed and submitted to CMS for approval. CMS regional offices will review LHWCA claims with the same scrutiny as other workers' compensation plans; however, they use the fee schedule of the U.S. Department of Labor’s Office of Workers’ Compensation Programs as opposed to state fee schedules.
Contrast this treatment with that of FELA or Jones Act claims. The Medicare Secondary Payer policy manual (chapter 1, section 10.4) regards these federal acts as liability insurance. This means such cases should be treated differently from LHWCA claims, at least with regard to MSP. First, it’s important to report the claims correctly as “liability” insurance-type claims when complying with Section 111 of the MMSEA. Insurance type seems like a simple thing to get right, but we’re constantly answering questions from those who have been reporting FELA or Jones Act claims incorrectly.
These claims still have a conditional payment component, but given their insurance type, CMS may be more likely to seek recovery from the Medicare beneficiary. Keep in mind that Medicare and its contractors generally will not realize that it’s a Jones Act/FELA case; it will look like a liability case to them. Lastly, with regard to Medicare Set-Asides, the CMS Workers’ Compensation Review Contractor (WCRC) will not review Jones Act or FELA cases as liability cases. It seems simple when you think about it, but a Jones Act/FELA case is not subject to review under the Workers' Compensation Medicare Set-Aside program.
Longshore, FELA, and Jones Act claims, while similar in some respects, are treated quite differently by CMS. Therefore, insurers should be mindful of all opportunities to mitigate undue risks with such claims when reporting, evaluating for potential conditional payment “liens,” and submitting MSAs (if all apply).