Medicare Set-Aside Trusts:
Protecting Medicare's Future Interests
The settlement of Medicare conditional payments in workers' compensation proceedings is a confusing and sometimes cumbersome process. With the increasing demands placed on the Medicare system and the recent consolidation of the Medicare's Coordination of Benefits Contractor, the system often results in a workers' compensation settlement grinding to a stand still and frustration among the parties. This article will address the issue of resolution of Medicare conditional payments in workers' compensation claims and helpful tips to assist parties to resolve Medicare's conditional payments in a timely manner.
In the context of a workers' compensation claim, conditional payments arise when Medicare makes payments related to a work injury, when that injury has been denied by the insurance company, or when Medicare mistakenly makes payments for medical treatment. Once Medicare makes these payments, they are classified as conditional payments, or payments that are conditioned upon reimbursement by another party. As a result of this payment, Medicare, through the Centers for Medicare and Medicaid Services (CMS), has a direct cause of action against all interested parties, including the employee's attorney, for reimbursement of payments made under the Medicare Set-Aside Payer Act (MSP).
Early Identification of Potential Medicare Intervention Interests
In order to effectively resolve conditional payments, it is important to identify early on in the process those cases in which a Medicare beneficiary is involved or the employee has a reasonable expectation of Medicare benefits. This includes employees who are over the age of 62 years and six months old, persons who have applied for and been denied Social Security Disability benefits, or employees suffering from End Stage Renal Disease.
Once you have identified the above types of cases, it is important to place Medicare on notice of its potential claim. Notice should then be submitted to the Coordination of Benefits Contractor (COBC) at the following address:
CMS - Medicare Coordination of Benefits Contractor
MSP Claims Investigation Project
P.O. Box 5041
New York, NY 10274-5041
The COBC can also be contacted via telephone at (800) 999-1118.
When contact is made with the COBC, be prepared to have the following information available:
1. The employee's name;
2. The employee's Medicare Health Insurance Claim Number (HICN) or Social Security numbers;
3. The date of alleged illness/ injury along with any relevant ICD-9 codes, if known;
4. The name and address of the workers' compensation insurance company;
5. The name and address of all legal representatives;
6. The name of the insured; and
7. The policy and/or claim number.
Once this information is received by the COBC, Medicare will process the claim and provide it to the Medicare Secondary Payer Recovery Contractor (MSPRC). Effective October 2, 2006, Chickasaw Nations Industries, Inc. - Administrative Services, LLC, is responsible for operating the MSPRC. The MSPRC is responsible for monitoring payments made by Medicare on behalf of the employee and updating Medicare's claim as the case proceeds.
Medicare also has strict requirements on the dissemination of information to parties other than the Medicare beneficiary. It is important to obtain an authorization from the employee for the release of this information early on in the litigation process. It is advisable to send this authorization to injured workers who may be Medicare eligible at the beginning of the claim investigation, at the beginning of discovery, or at the employee's deposition.
Unlike most workers' compensation interveners, Medicare typically does not take the initiative to regularly update the parties to a workers' compensation claim regarding its intervention interest. Parties should keep in contact with Medicare and plan in advance of settlement conferences, pre-trial conferences and hearings, in order to obtain updated Medicare intervention information. Contact inquiries should be directed toward the MSPRC at the following address:
MSPRC - WC
P.O. Box 33831
Detroit, MI 48232-3831
The MSPRC - WC can also be contacted via telephone at (866) 677-7220. When contacting the MSPRC, be prepared to wait through several telephone prompts, and also be prepared to wait for varying periods of time in order to speak with a claims representative.
Representatives at the MSPRC - WC are often unable to access current and updated claim information when you call. However, the MSPRC - WC is often able to generate updated benefit resumes in about 14-30 days and send that information to interested parties, provided they have a signed authorization allowing them to receive this information from the workers' compensation claimant. This is an authorization that can be sent out with written discovery, or at the employee's deposition.
Enforcement Actions Under the MSP
Under the MSP, CMS has the ability to bring a direct cause of action in order to recover payment for items or services paid for by Medicare. Targets of these actions have included in the past various group health plans. However, the federal government has signaled a willingness to also take action against insurance companies, third party payers, employers and even placing liens on attorney's fees.
The MSP also provides for a direct cause of action by a third party to recover Medicare conditional payments on behalf of Medicare. It has been used with success in the past, and certainly will be used in the future by parties against primary plans who fail to consider Medicare's interest. One such action that was filed involved the United Seniors Association, Inc. against Phillip Morris USA pertaining to the alleged effects of cigarette smoke and Medicare conditional payments. Time will only tell if this type of action is successful, and whether it will also be used in the future by enterprising attorneys to recover conditional payments made by Medicare in workers' compensation claims.
With the ever-increasing demands placed on Medicare, the federal government will certainly continue to take an aggressive role in recovery of conditional payments. As a result, parties to workers' compensation actions need to be diligent in ensuring that Medicare's past interests are resolved in a manner consistent with the MSP.
Our Response to the MSP
Arthur, Chapman, Kettering, Smetak and Pikala, P.A. has established a Medicare Set-Aside Practice Group. This practice group includes certified Medicare Set-Aside professionals able to assist a diverse client base in cases where Medicare's past and future interests need to be considered. Further information on this practice group and its members can be found at: http://www.arthurchapman.com/PracticeAreas/Medicare-Set-Aside.asp