Don’t Forget About Us!!
Medicare was established by Congress in 1965 to pay medical expenses for persons aged 65 or disabled. Initially, Medicare paid virtually all expenses for eligible participants. However, in 1980, in an effort to curb inappropriate Medicare spending, Congress passed the Medicare Secondary Payer Act. The Medicare Secondary Payer MSP was designed to prevent cost shifting to Medicare from other parties who might be responsible for, or caused, the beneficiary’s injury or illness. Under the Medicare Secondary Payer Act, responsible parties are called “primary payers” – those that should pay before Medicare based upon their insurance coverage– and include providers of liability insurance, self-insurance, no–fault insurance and Workers’ Compensation (WC has been primary since the original 1965 Medicare Act).
In July of 2001, the Centers for Medicare & Medicaid Services CMS introduced the Workers’ Compensation Medicare Set-Aside WCMSA program, which recommended the review and approval of certain types of settlements by CMS. While this program has been successful for CMS over the last 8 years, it has only scratched the surface of Medicare’s recovery potential under the MSP. In search of additional revenue to fund the rapidly depleting Medicare Trust Fund, Congress created Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 MMSEA. Medicare’s recovery rights under the MSP remain unchanged, but they now have the means to enforce them in all instances under this new law.
With passage of Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (also referred to as SCHIP or MIR), Congress updated the rules and, beginning in January 2011, CMS required primary payers to provide data allowing Medicare to recover payments that should have been paid by primary payers (commonly referred to as conditional payments or Medicare liens) and ensure that any additional future medical costs are covered by primary payers or the claimant’s settlement proceeds, not Medicare. Failure to comply with MIR will result in significant civil penalties for the primary payer, but failure to ensure MSP compliance as part of the resolution of the claim opens one up to additional exposure and penalties post settlement.
When is a Medicare Set Aside Allocation MSA needed?
A MSA is needed on Workers’ compensation claims if a claimant is entitled to Medicare benefits AND the un-commuted value of the settlement of the claim is $25,000 or greater. A claimant becomes entitled to their Medicare benefits when they meet one of the following three criteria:
- Claimant is 65 years of age or older
- Claimant has been receiving Social Security Disability Income (SSDI) benefits for at least 24 months
- Claimant has End Stage Renal Failure or Lou Gehrig’s disease
Since the inception of the Medicare Query Function MQF in 2009, many in the industry have treated this tool as Medicare’s “Final Word”. However, the MQF only identifies those individuals who are currently entitled to Medicare benefits but fails to identify another segment of claims where MSP compliance is required, thus opening themselves to additional exposure.
A MSA is also needed when a claimant is “reasonably expected” to be entitled to their Medicare benefits within 30 months of Settlement/Judgment/Award AND the un-commuted value of the settlement of the claim is $250,000 or greater. A claimant is “reasonably expected’ to become entitled to their Medicare benefits when they meet one of the following three criteria:
- Claimant is 62 ½ to 64 years of age
- Claimant has been receiving Social Security Disability Income (SSDI) benefits for less than 24 months
- Claimant has applied for SSDI benefits (applicable even if claimant’s application is denied)
If lost time from work exceeds 12 months, request a Social Security Disability Income SSDI verification to confirm the Social Security eligibility status in conjunction with the results from the MQF.
When is a Claim Settlement Allocation CSA recommended?
A CSA is recommended on those Workers’ compensation claims when a claimant is entitled to Medicare benefits or is “reasonably expected” to be entitled to Medicare benefits within thirty months of settlement, BUT the un-commuted settlement values do not exceed $25,000 or $250,000, respectively. A CSA is also recommended in liability settlements where the settlement exceeds $20,000.
An allocation is recommended in the above claims, but CMS approval is not required as the settlement value does not meet CMS Review Guidelines. Many in the industry have been misguided by the CMS memorandum, often times over emphasizing the value of the settlement rather than the Medicare/Social Security eligibility to determine the level of exposure and compliance.
The July 11, 2005 CMS Memorandum clearly indicated that MSP compliance is required even though CMS’ Work Review Thresholds are not met (no safe harbors). This is further echoed in the April 25, 2006 CMS Memorandum.
Medicare Risk Assessment Tool
Those needing assistance in determining the level of compliance in any claim may access our FREE Medicare Risk Assessment tool at www.gouldandlamb.com. This valuable tool calculates the level of MSP exposure as well as provides recommendation for the steps which should be taken to mitigate MSP exposure.