CMS Approval No Longer Required in NJ Workers’ Compensation Settlements

On July 11, 2012, Peter J. Calderone, Director & Chief Judge of the NJ DWC, issued a memorandum regarding “Medicare Conditional Payment and Set-Aside Issues.” For a copy of the memorandum, please click here.

The memorandum stated that based upon recent CMS announcements and the position of the United States Justice Department in recent litigation in the New Jersey Federal District Court that the NJ DWC sought to revise its involvement in the application of the MSP on two issues:

1) whether to continue to require parties to obtain CMS approval of an MSA, and

2) whether to continue to require a specific NJ DWC Medicare Attachment to settlement documents.

Regarding the first issue, the NJ DWC recognized that although CMS approval of a WCMSA is a recommended process, it is not required. A WorkCompCentral (subscription required) article which discusses this NJ DWC memorandum referenced recent proposed regulations in Maryland which were revised to reflect CMS’ policy that approval of a WCMSA would be a recommended process but not required for approval of a workers’ compensation settlement in Maryland.

Prior to the recent change in regulations, Maryland was thought to be the only state that required CMS approval. Judge Calderone stated that NJ’s rule kept a low profile because the state limits settlements to contested claims. For PMSI’s previous blog regarding Maryland’s regulations, please click here.  Additionally, a CMS memo dated May 11, 2011 reiterates the policy of CMS that approval of a WCMSA is a recommended procedure for those settlements which meet review threshold.

Judge Calderone stated in his memorandum that the NJ DWC would no longer require CMS approval; however, he still advised seeking CMS approval: “Please note that the advantage of a CMS approved WCMSA is finality and assurance from CMS that the set-aside meets CMS standards and will not be challenged later. A non-approved set-aside could create uncertainty and the possibility of a later denial of Medicare benefits to a petitioner.”

Regarding the second change, the NJ DWC recognized that more national carriers have developed their own language regarding compliance with the MSP. Additionally, Judge Calderone noted, “[t]he parties may reach an agreement that is suitable for their particular situation such as naming one of the parties responsible for finalizing the CMS conditional payment process and/or allocating responsibility for any payments to CMS. While it is important that settlements or judgments reference the status of the CMS process, it is best left to the parties on how they want to resolve remaining issues with CMS.”

While this memorandum only affects workers’ compensation settlements in NJ, PMSI applauds this decision by the NJ DWC. It is clear that NJ will continue to encourage parties’ compliance with the MSP and will still be reviewing settlements to ensure steps are being taken toward compliance, particularly the inclusion of an MSA and conditional payment reimbursement in those settlements occurring with Medicare beneficiaries. NJ’s policies on MSP obligations appear to be more in sync with CMS policies and procedures and now allow for more flexibility in how parties to a settlement seek to be compliant. As an additional benefit, this memorandum should clear up the NJ DWC’s backlog of 2,500 cases which Judge Calderone attributes to delays in CMS approvals of set-asides.

PMSI will continue to follow this issue in NJ as well as any other states that implement policies and procedures regarding the implementation of MSP compliance rules at the state level.

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