Workers Compensation & Medicare Set-Asides"

Transcription

1 Workers Compensation & Medicare Set-Asides" Presented by: Betty Gregware, CSSC Mutual of Omaha & Toni Warbington, CSSC EPS Settlements Group

2 W/C vs. Tortfeasor Liability" No provision to bring suit against employer (don t have to prove liability) No need to settle Section 130 amended 8/5/97 to assign 104(a)(1) Each state has laws (statutes) may prohibit/limit assignability Statutory Benefits Indemnity (wages) Medicals Rehabilitation

3 W/C Options for Carriers/Employer" Pay indemnity each period and pay medicals as incurred Fund indemnity with Reinsurance/Annuity and pay medicals as incurred Full Compromise & Release

4 Products for W/C" Reinsurance Agreement (ceding company is the owner no guarantee fund 2 & 3 Party Agreements) Annuity Buy and Hold (ceding company owns) Assignment (transfer ownership to Assignee only allowed if case if filed after ) Non-qualified assignment (transfer ownership to Assignee for claims filed prior to )

5 Provisions for W/C " Cash/Installment refund (front end some providers require ceding co to own the annuity with this option) Commutation Endorsements/Riders (back end) To ceding company To beneficiary of injured party To ceding company upon elimination of liability remarriage

6 W/C Indemnity Opportunity" Substitution of benefits advantages Rated age Cap future obligations (mortality) Transfer payment administration Reserve release Reversionary payment Compromise Same as substitution Change payments to meet future needs, lift out of the statute Needs Board Approval

7 W/C Medical Opportunity MMI has been reached - Compromise" Rated age Reserve release Need to fully consider future medical obligations covered and not covered by Medicare Determine if MSA needs to be established

8 Request Allocation" If the injured party is currently receiving Medicare benefits and the total settlement amount exceeds $25k OR If there is a reasonable expectation that the injured party will receive Medicare benefits within 30 months of the date of settlement and the total amount of the settlement exceeds $250k

9 Medical Set Aside Accounts (MSA)" Money set aside to pay injury related Medicare allowable expenses (can be self or professionally administered) Allocation is prepared Centers for Medicare and Medicaid Services (CMS) approves allocation MSA established with seed money Periodic payments can fund MSA annually

10 Obtaining Allocation & CMS Approval" Contact allocation individual or company Provide information and rated ages Receive allocation future obligations Provide periodic payment plan Upon acceptance, provide draft SA and request allocation to be submitted to CMS W/C Board approval can be obtained now or after CMS approval is obtained (need to resolve any differences) *Wording important-insurers risk

11 W/C Documentation" Application/Reinsurance Agreement Substitution/Letter(s) establish indemnity payments or inform claimant of company who will be making payments in the future required by some states SA/Addendum spread and flex/bridge language important Compromise/Order & CMS approval letter (if case submitted to CMS for approval) Commutation Rider/Endorsement is provided (if applicable)

12 Questions?" Next topic MSA

13 THREE LITTLE LETTERS THAT CAN STRIKE FEAR IN YOUR HEARTS " M S A Just the le)ers MSA can cause the strong to become weak and the steadfast to go running for the hills. MSA stands for Medicare Set- Aside, hopefully the following informaaon will provide you a foundaaon on the topic, which is gray at best.

14 The Medicare Secondary Payer Act" In 1980 Congress enacted the Medicare Secondary Payer (MSP) Statute (42 USC 1395y), giving Medicare rights as Secondary Payer. The regulations prohibit Medicare from making a payment where there is a primary payer involved. It will allow Medicare to conditionally pay and get reimbursed later.

15 The Medicare Secondary Payer Act" Types of insurance plans deemed primary to Medicare by the statute: Workers Compensation No-Fault Insurance Automobile Insurance Liability Insurance Self-Insured Plans

16 MSP Timeline" 1965 Medicare enacted Medicare Secondary Payer (MSP) Statute years of inactivity May 2001 U.S. Government Accountability Office (GAO) recommends voluntary/ mandatory reporting process to improve the accuracy of federal benefit payments July 2001 CMS issues the Patel memo creating Medicare Set-Asides (MSAs)

17 MSP Timeline, continued! 2001 to present CMS issues more memos further defining MSA s Medicare modernization Act Expanded the MSP; Clarified Medicare s status as a secondary payer; Strengthened Medicare s right to recover conditional pmts December 2007 Former President Bush signs the Medicare, Medicaid and SCHIP Extension Act of January 1, 2012 Effective date of SCHIP Mandatory Insurance Reporting (MIR) on TPOCs over $100,000 as of June 2012 January 10, 2013 SMART Act Section 111 Reporting - Conditional Payment Resolution

18 Conditional Payments (made by Medicare prior to settlement SMART Act is changing the time line to obtain)" Notice to Medicare - place Coordination of Benefits Contractor (COBC) on notice Request undated Conditional Payment Letter in advance of settlement Carefully review Conditional Payment Letters Determine who will resolve Conditional Payments as part of Settlement Final Demand Letter can only request AFTER settlement (penalty avoidance double damages for conditional payments incurred by Medicare, plus interest)

19 What exactly is an MSA?" A Medicare Set Aside (MSA) is an agreement in which a certain amount of money is allocated and set aside to pay for esamated future Medicare covered expenses that are related to the claimant's injury in an account. Those funds are set aside to be used in the future. AIer the account funds are exhausted in a given year, then Medicare will kick in and cover the claimant s medical costs. Recommended, but never REQUIRED!

20 What is an Allocation report?" A Medicare Set-Aside (MSA) Allocation is a detailed report that recommends how much money out of the settlement needs to be set aside to satisfy the Medicare Secondary Payer (MSP) Statute of The MSA allocation will break down all future medical and prescription drug expenses for the life expectancy of the claimant that would normally be covered and not covered by Medicare. It is based upon an analysis of medical reports from the past several years. An MSA Allocation Report is also a 3 rd party look at future medical treatment which can aid in setting reserves.

21 WCMSAs (Not Liability) "" Current WCMSA review thresholds Claimant is current Medicare beneficiary and the total settlement is greater than $25,000 --OR-- Claimant as a reasonable expectation of Medicare entitlement within 30 months of the settlement date, and the total settlement amount is greater than $250,000 In any case Medicare s interest must be considered

22 CMS Approval" CMS is an acronym for the Centers for Medicare and Medicaid Services which is the administrative arm of Medicare and Medicaid. The MSA allocation and amounts can be submitted and reviewed by them, and they will respond on whether they agree that the amount of money to be set-aside is sufficient. They may respond that they don t agree with the amount, and will state a different amount of what they feel is sufficient.

23 After the MSA Allocation is Completed." At this time, CMS is reviewing workers compensation cases; and liability MSA allocations (in certain regions) but is not requiring that liability cases to be submitted. Some clients choose to submit liability cases to CMS as an extra measure of protection. A draft of the Settlement Agreement (unsigned) will be needed if you would like to submit the case to CMS. The claimant must also sign a CMS release form in order for the case to be submitted to CMS. The CMS release form also allows the MSA vendor to investigate any Medicare liens. * Hint: If you think the injured person may be getting SS or Medicare benefits, send all release forms out as early as possible.

24 When to obtain CMS Approval" After the MSA Allocation has been prepared and accepted by the Defendant/Insurer and Claimant Before W/C Board Approval of the Settlement After W/C Board Approval of the Settlement No right or wrong order to resolution Language is Key!

25 Administration Type" Self Administration of MSA Professionally Administered MSA Can also obtain Medical Custodial Account for non-medicare covered medical expenses

26 How to run a MSA Quote" Provide the plan per the MSA Allocation Report Seed Money needed as upfront cash Annual Payments for the defined number of years or life time annual benefit (can be run as a temp life quote), all depends on the risk tolerance of the claim handler Installment or Cash Refund Administration Fee (if applicable)

27 What the Future Holds?" Determine if Medicare s interests are involved early on Every party is responsible Has Medicare been correctly placed on notice? No legal authority has been cited by CMS Risk Tolerance of the parties involved is the current key to claim resolution Stay tuned for additional information

28 Questions?" Thank you!