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By Settlement Solutions, October 31, 2011 1:27 pm

The recent trend of settlement parties seeking a court’s determination on whether Medicare’s interests have been protected as part of a settlement continues. Even in cases which clearly meet CMSCenters for Medicare and Medicaid Services review thresholds, sometimes CMSCenters for Medicare and Medicaid Services will not review the proposed MSAMedicare Set-Aside for undetermined reasons and the parties have to then look to the courts for guidance. In Billy Smith v. Marine Terminals of Arkansas, a case out of the United States District Court for the Eastern District of Arkansas, Billy Smith (Smith) filed both a Longshore and Jones Act claim for his injuries.

Smith sued Marine Terminals of Arkansas, Inc. (Marine Terminals) for damages associated with a permanent and disabling injury to his right hand while working as a truck driver aboard a floating barge owned and operated by his employer. Smith originally asserted a Jones Act claim against his employer; however, that claim was dismissed based upon Smith’s alleged status as a seaman on defendant’s Motion for Summary Judgment. Smith had also filed an alternative claim based on vessel negligence under the Longshore and Harbor Workers’ Compensation Act, which survived summary judgment. Therefore, only Smith’s Longshore and liability claims survived.

As an aside, maritime cases can be a confusing matter when it comes to MSAsMedicare Set-Asides. A Longshore and Harbor Workers’ Compensation Act claim is considered to be a workers’ compensation claim. A  Jones Act case is considered to be a liability claim by CMSCenters for Medicare and Medicaid Services. This distinction is important for CMSCenters for Medicare and Medicaid Services submission purposes. The water can become even muddier when an injured worker files both a Longshore and a Jones Act claim and is Medicare eligible; thus, resulting in the need for an MSAMedicare Set-Aside to be included as part of the settlement, and possibly have the MSAMedicare Set-Aside reviewed and approved by CMSCenters for Medicare and Medicaid Services.

Because Smith was a recipient of Social Security disability benefits, and was also Medicare eligible, the court concluded that Medicare’s interests must be protected. Smith, through his counsel, hired an MSPMedicare Secondary Payer Act compliance provider to determine a proposed MSAMedicare Set-Aside and to submit the MSAMedicare Set-Aside to CMSCenters for Medicare and Medicaid Services for consideration of settlement. The MSPMedicare Secondary Payer Act provider determined that $14,647.00 was a reasonable allocation to cover the projected lifetime cost that was expected to be incurred by Smith for treatment of his accident-related injuries that would otherwise be covered by Medicare.

Because Smith’s remaining claim was a Longshore claim, a workers’ compensation MSAMedicare Set-Aside was appropriate and CMSCenters for Medicare and Medicaid Services’ workers’ compensation review thresholds would have applied. It is not clear whether the $25,000 review threshold (current Medicare beneficiary) or the $250,000 threshold (reasonable expectation of Medicare eligibility within 30 months) should have applied, since the opinion states that Smith was currently Medicare eligible, and it is not clear whether Smith was an actual Medicare beneficiary at the time of settlement. Regardless, because Marine Terminals settled with Smith in the amount of $1 million dollars, the settlement far exceeded both review thresholds and CMSCenters for Medicare and Medicaid Services should have reviewed the proposed MSAMedicare Set-Aside.

When the parties submitted the MSAMedicare Set-Aside to CMSCenters for Medicare and Medicaid Services, CMSCenters for Medicare and Medicaid Services decided not to review the MSAMedicare Set-Aside submission, citing the $25,000 review threshold. This was likely a mistake on the part of the reviewer at CMSCenters for Medicare and Medicaid Services. It appears the reviewer may have noted the MSAMedicare Set-Aside of $14,647.00 and decided the MSAMedicare Set-Aside did not meet the review threshold without calculating the “total settlement amount”  as the basis for whether the MSAMedicare Set-Aside should be reviewed. Or, the reviewer may have noted the prior Jones Act claim which was included as part of the settlement, and deemed the MSAMedicare Set-Aside to be liability instead of workers’ compensation, therefore declining to review the MSAMedicare Set-Aside. One will never know the true reason why the MSAMedicare Set-Aside was not reviewed; however, because the CMSCenters for Medicare and Medicaid Services submission process is voluntary, and CMSCenters for Medicare and Medicaid Services does not guarantee review and approval of any MSAMedicare Set-Aside, CMSCenters for Medicare and Medicaid Services may decline to review an MSAMedicare Set-Aside if their workloads so dictate.

Despite the fact that CMSCenters for Medicare and Medicaid Services would not review the MSAMedicare Set-Aside, the court determined that the MSPMedicare Secondary Payer Act provider’s determination of the MSAMedicare Set-Aside was reasonable and competent and ordered that amount to be set aside for Smith’s future care that would otherwise be reimbursable by Medicare. Though Smith represented that Medicare had not made any conditional payments, the court ordered that Smith be responsible to reimburse Medicare if any conditional payments had been made. Between establishing the MSPMedicare Secondary Payer Act provider’s MSAMedicare Set-Aside and considering any possible conditional payments made by Medicare, the court found that Medicare’s interests were reasonably considered and protected in the settlement of the matter.

This case is yet another example of how achieving full MSPMedicare Secondary Payer Act compliance may not always be clear, and in the absence of CMSCenters for Medicare and Medicaid Services’ blessing on a settlement, where parties will look to the courts to adjudicate whether Medicare’s interests have been properly considered.

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By Settlement Solutions, October 26, 2011 2:14 pm

CMSCenters for Medicare and Medicaid Services has issued an alert which provides for an option for certain liability settlements below $5000 to pay a fixed percentage of their settlements starting on November 7, 2011. A Medicare beneficiary who elects this process will simply pay 25% of his/her total liability settlement instead of using the traditional recovery process.

 Additionally, the alert provides the following criteria to utilize this fixed payment option (ALL criteria must be met):

1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant.)

2. The total liability settlement, judgment, award, or other payment is $5000 or less.

3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.

4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

A full explanation, including instructions on how and when to elect this option, will be available on the MSPRCMedicare Secondary Payer Recovery Contractor - responsible for verification of conditional payments website on November 7, 2011. The alert also states that if a beneficiary elects this option, he/she will be forfeiting the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount.

This fixed payment option seems to have its pros and cons. It will be a helpful option for those seeking to settle small liability claims quickly and do not want to utilize the traditional recovery process which can take several months. However, the downside is that parties to a settlement may end up paying more by electing this option instead of using the traditional recovery process. Parties to a liability settlement of $5000 or less which meet the above criteria will have to weigh their options and decide what is more important to them- obtaining the exact recovery amount or settling more quickly. 

This alert may be a reaction to the the Congressional hearing from June 22nd of this year, in which the Chief Financial Officer of CMSCenters for Medicare and Medicaid Services, Deborah Taylor, was highly scrutinized for CMSCenters for Medicare and Medicaid Services’ collection practices of nominal conditional payment amounts in which the collection costs exceed the recovery amount.  The alert could also be a reaction to the proposed SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 which seeks reform of the MSPMedicare Secondary Payer Act, specifically as it relates to conditional payment recovery. As an aside, the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 was introduced in the Senate last week on October 17th and has gained large bi-partisan support in the House of Representatives.

To view the alert on the MSPRCMedicare Secondary Payer Recovery Contractor - responsible for verification of conditional payments website, please click here.

To view the Press Release regarding the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 being introduced into the Senate, please click here.

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By Settlement Solutions, October 24, 2011 5:12 pm

This post serves as a follow up to our original blog on September 13, 2011 regarding the new proposed Maryland regulation affecting workers’ compensation settlements as it relates to ensuring that Medicare’s interests are protected before a settlement will be approved.

The new proposed regulation is much less stringent than the last version and seems to harmonize with CMSCenters for Medicare and Medicaid Services directives by allowing for approval of settlements without mandating CMSCenters for Medicare and Medicaid Services review and approval of an MSAMedicare Set-Aside.  However, there continues to be opposition to the proposed regulation.

An article posted on WorkCompCentral (subscription required) earlier this month noted that the American Insurance Association (AIAAmerican Insurance Association) filed their opposition to the new version of the regulation. The AIAAmerican Insurance Association argued that the compromise did not alleviate the concerns originally expressed, that the proposed MSAMedicare Set-Aside regulation would create undue delays in the approval of settlements and would also leave attorneys with the responsibility of obtaining CMSCenters for Medicare and Medicaid Services approval of MSAsMedicare Set-Asides.

Furthermore, it is noted in the article that Bruce Wood, Associate General Counsel and Director of Workers’ Compensation for the AIAAmerican Insurance Association, points out that the amount of state settlements dropped 33% between 2009-2010, according to the Commission’s 2010 annual report. It is clear that the AIAAmerican Insurance Association feels these statistics would only worsen upon passage of the proposed MSAMedicare Set-Aside Regulation.

A meeting will be scheduled in the next few months to discuss comments received on the compromise proposal.  The comment period ended on October 11, 2011.

The Workers’ Compensation Section of the Maryland Association for Justice is backing the revised proposed regulation.  If the regulation is approved, it will then be submitted to the Maryland General Assembly’s Joint Administrative, Executive, and Legislative Review Committee (AELRMaryland General Assembly’s Joint Administrative, Executive, and Legislative Review Committee).

The new Maryland MSAMedicare Set-Aside proposed regulation does not seem to require anything that the MSPMedicare Secondary Payer Act does not itself require, other than actual identification of the consideration of Medicare’s interests in the settlement documents.

To view the proposed legislation please click here and refer to page 49, Title 14, Subtitle 09.

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By Settlement Solutions, October 21, 2011 9:29 am

At PMSI, the pursuit for knowledge and insight drives us every day. Sharing knowledge not only helps our customers but also the industry as a whole. Because of that, we have started a video series of thought leadership, ExpertInsights, which serves as a resource of information from our subject matter experts to business executives in the workers’ compensation industry. In these videos, we address topics of current discussion, such as Mandatory Insurer Reporting, predictive risk modeling, controlling workers’ compensation spend and more. It is our goal to deliver our knowledge to the industry through these videos and raise the level of performance in our industry.

Please take a few minutes to view our current videos at www.PMSIonline.com/ExpertInsights and remember to check back often as new videos are posted.