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1. MMSEA reporting makes approval unnecessary for Medicare beneficiaries.
Reporting under the Medicare, Medicaid and S-Chip Extension Act, aka “section 111 reporting”, started January 1, 2010 for workers compensation claims where there is “Ongoing Responsibility for Medical” for a Medicare enrollee. Carriers and self-insureds now report certain data at the beginning of the claim. This data includes the claimant’s Medicare HICN (Health Insurance Claim Number), date of incident and the applicable ICD (International Classification of Diseases) codes. The result is that if a claimant treats non-industrially and presents a Medicare card for proof of insurance, when the provider bills Medicare, the invoice will be rejected.
One of the motivators for obtaining approval of an MSA at the conclusion of a claim is presumably to escape Medicare reimbursement liability. However, if an MMSEA report was previously submitted, no reimbursement liability can arise because any bill to Medicare for treatment for the reported person, date of occurrence and ICD code, will be rejected.
2. Approval is not and never has been required
3. Approval does not protect you from liability
4. The Approval process is unnecessarily torpedoing your settlements.
The CMS approval process has become so time-consuming that by the time approval comes back, settlement is no longer possible. I had one file that was at CMS 10 months without resolution; then the claimant died. Disclaimer: since the electronic submission portal was opened to general use on 12/11/2011, review times on claims submitted through the portal seem to be shorter.
CMS is not following their own rules in setting amounts which “adequately protect their interest.” I recently had CMS Approval come back on a $160,000 settlement of both indemnity and medical claims; CMS asked for $285,000.
The self-attestation annual report form requires the following:
I acknowledge and understand that failure to follow any of the Medicare requirements for the use of this money will be regarded as a failure to reasonably recognize Medicare’s interests and that Medicare will deny coverage for all my medical treatments and prescription drug expenses due to work-related injuries up to the total workers’ compensation settlement amount.
“Up to the total workers’ compensation settlement amount”? That would have been a $125,000 savings right there!
Both CMS and the MSA allocation companies seem to ignore the commutation vs. compromise distinction set out in the original 7/23/2001 Patel memo which is the grandfather of the MSA behemoth we find ourselves battling today. If the settlement is a compromise of the amounts claimant has demanded, then the MSA should reflect that the future Medicare-eligible expenses may not be fully funded, because whether such expenses are claim-related is in dispute.
42 CFR 411.47 explicitly provides for the proportionate determination of the MSA for a compromise settlement and provides instructions on how to do it:
“i) Determine the ratio of the amount awarded (less the reasonable and necessary costs incurred in procuring the settlement) to the total amount that would have been payable under workers’compensation if the claim had not been compromised.
(ii) Multiply that ratio by the total medical expenses incurred as a result of the injury or disease up to the date of the settlement. The product is the amount of the workers’ compensation settlement to be considered as payment for medical expenses.”
Remember that this references the amount to be awarded for medical expense, not indemnity.
Practice tip: be sure to include a statement in the settlement documentation that this is a compromise settlement, not a pure commutation.
So here’s my pitch. Do get an MSA Allocation report. Do create a Set-Aside in accordance with the report, taking proportionality into account. Structure the MSA to make sure the benefits are paid over the claimant’s anticipated lifetime. Consider custodial administration for claims where it is cost-effective. (This depends on the amount of the MSA and the life expectancy of the claimant.) Seek CMS approval for settlements with a gross amount in excess of $250,000.
The opinions expressed in this essay are those of the author alone and not of any organization with which she may be affiliated.