Recently in a case in Arkansas dealing with the Longshore and Harbor Workers' Compensation Act, a Federal Court ruled that Medicare’s interests were considered and protected based on a Medicare Set-Aside (MSA) allocation despite the fact that the settlement was over the $25,000.00 threshold and the Center for Medicare and Medicaid Services (CMS) refused to review it.

Evidence before the court showed that the Medicare vendor who prepared the MSA had repeated conversations and correspondence with CMS representatives who decided not to review the MSA submission. However, the value of the settlement ($1,000,000.00) clearly exceeded the $25,000.00 threshold. The Court stated:

“It is apparent to the Court from the aforereferenced CMS correspondence and affidavit from attorney (for Medicare vendor) that regardless of the details and potential deficiencies in the original submission, that CMS has decided it will not, for whatever reason, review or reconsider the proposed MSA, which response or lack thereof potentially jeopardizes what otherwise appears to be a reasonable settlement in the best interests of Billy Smith to accept and complete.”

After further review of the evidence, the Court found that the parties had done all that was reasonable and prudent and within their ability and authority to do to protect Medicare's potential interest in the settlement. As such, despite the lack of CMS review of a settlement above the $25,000.00 threshold, the Court held that Medicare’s interests were protected.

Read the full opinion here: Smith v. JLH Marine Terminals Of Arkansas

The Medicare Secondary Payer Charitable Foundation(MSPCF), a not-for-profit organization, recently announced that it will provide free professional Medicare Set Aside (MSA) Administration for qualified beneficiaries nationwide. MSPCF will accept any CMS approved MSA over $25,000.00, from any vendor, payer, claimant or attorney, beginning October 1, 2011, subject to the terms and conditions of the master trust and joinder agreements. In addition to offering a variety of low or no cost education and advocacy services, MSPCF proposes to offer a solution to the high cost of for profit professional administration and the difficulty faced by injured beneficiaries attempting to self administer their MSA Arrangements. The MSPCF will provide qualified beneficiaries all of the same services currently provided by for profit administrators, free of charge. The MSPCF will retain MEDVAL, a MSP compliance and professional administration firm, to service the individual sub trust accounts.

The Board of Trustees of the MSP Charitable Foundation will hold a one hour conference call to take place at 2:00 pm E.S.T., on September 15, 2011. To be added to the attendee list, or for additional information, email info@mspcf.org. Following the conference call, the master trust agreement and terms and conditions will be released to the general public.

The Centers for Medicare and Medicaid Services (CMS) has released a new policy memorandum dated May 11, 2011 (May 11, 2011 memo) pertaining to workers’ compensation Medicare Set Asides (MSA). CMS’ policy memorandum does not set forth any substantive changes regarding its MSA review thresholds and process, but instead reiterates and clarifies its MSA proposal review thresholds. Those thresholds remain as follows:

CMS recommends that it review MSA proposals when either (1) the claimant is currently a Medicare Beneficiary, AND the total settlement amount is greater than $25,000.00; OR (2) the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date AND the total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to exceed $250,000.00.

Submission of an MSA proposal to CMS for review and approval is a recommended process, and is not mandatory under any statutory or regulatory provisions. CMS reviews certain workers’ compensation settlements in order to protect Medicare’s interests under the Medicare Secondary Payer Statute, which is codified at 42 U.S.C. § 1395y. An MSA should not be submitted to CMS when settling a workers’ compensation claim with medical benefits remaining open. Furthermore, CMS will not review new MSA proposals if the thresholds are not met.

Finally, ALL claimants, employers, insurers, and their representatives need to be aware that there is no "safe harbor" threshold, and the thresholds set forth by CMS are guidelines only. The parties must still consider Medicare’s interests in ALL workers’ compensation cases and ensure that Medicare is the secondary payer to workers’ compensation. Additional information can be found at http://www.cms.gov/WorkersCompAgencyServices.

ArvinMeritor, Inc. v. Clifton Johnson:

CMS’ new policy memorandum addresses the separate issues of (a) off label and/or unlabeled outpatient drug uses and (b) rated ages in relation to the agency’s Workers’ Compensation Medicare Set-Aside (MSA) program. 

Through the May Memo, CMS sets forth new guidelines regarding when off label and/or unlabeled drugs are covered by Medicare Part D and, thus, includable as part of a workers’ compensation MSA proposal.  In addition, CMS has rescinded its previous rated age policy and announced that the MSA submitter will now need to include very specific rated age “certification statement."

For full details, please visit NuQuest BridgePointe Settlement News.

www.alabamaworkerscompblawg.com 

In December of 2009, Medicare filed a lawsuit in the U.S. District Court for the Northern District of Alabama seeking to recover conditional payments it made to medical providers on behalf of the plaintiffs involved in a $300 million global settlement. The lawsuit cites Medicare Secondary Payer provisions in federal law that allow Medicare to recover past and future medical expenses from all parties, insured and self-insured, involved in a liability claims award or settlement that includes Medicare eligible individuals.

The settlement was entered into in 2003. By filing the lawsuit some 7 years later, Medicare is indicating that it is willing to reach back and go after any medical costs it considers owed. Of interest, is that Medicare simultaneously named insurers, settlement beneficiaries and plaintiffs attorneys in one lawsuit. This means that if Medicare’s interests are not considered, all parties to a settlement are left exposed to an action for recovery by Medicare.

My Two Cents:

At this point, Medicare appears to only be focusing on the big multiparty settlements where it stands to recover at least seven figures. However, you cannot ignore the fact that Medicare may have the resources and manpower to pursue the smaller settlements several years down the road. With the new mandatory reporting requirements in place, we are now all on Medicare’s radar!

Representative John Tanner, of Tennessee’s 8th Congressional District, recently reintroduced the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2009. The bill has been assigned HR 2641. The bill is a reintroduction of HR 2549 from the 110th Congress with important modifications that were made to assure that the legislation is revenue neutral in impact. The primary changes include:

1) reduced the threshold provision below which WC settlement agreements would be exempt from $250,000 to $25,000 or less, so as to more closely mirror the current CMS guideline below which WCMSA’s are not to be submitted for review;

2) Added a cap on the "safe harbor" provision permitting the payment of 10% of the settlement to Medicare as an option to meet set-aside requirements to limit the option to cases involving settlements not to exceed $250,000 in value; and

3) Extended the number of days within which HHS would be required to provide notice of Medicare conditional payments owed from 60 to 90 days.

On April 3, 2009, the Centers for Medicare and Medicaid Services (CMS) issued a formal memorandum stating that it will start independently pricing future prescription drug treatment costs/expenses in Workers' Compensation Medicare Set-Aside (MSA) proposals beginning June 1, 2009. Per CMS, prescription drug amounts will be independently priced and calculated by CMS using average wholesale price (AWP) for all completed MSA submissions received on or after June 1, 2009, where the future treatment plan for a workers' compensation injury includes prescription drugs. CMS will accept the use of Generic Part D prescription drugs using AWP pricing, when applicable; however, CMS will not use or recognize any other pricing, discounting, or calculation methods when determining the adequacy of the prescription drug amounts in these MSA proposals.

Here is an update to ”http://www.alabamaworkerscompblawg.com/template_permalink.asp?id=118” a post made late last year about the Protocols v. Leavitt case. In this case a company and a law firm that provided consulting services for the settlement of workers’ compensation claims had brought a declaratory judgment action against the Secretary of the U. S. Department of Health and Human Services and the Administrator of Centers for Medicare and Medicaid Services (CMS) claiming that CMS’ sixth policy memorandum opinion misinterpreted the Medicare statute and regulations and exposed the plaintiffs to unexpected liabilities arising out of settlements they had previously structured. The U.S. District Court for the District of Colorado initially granted the defendants motion for summary judgment, but was subsequently reversed and remanded by the 10^th Circuit Court of Appeals.

United States of America v. Paul J. Harris, United States District Court, Northen District of West Virginia, Civil Action No. 5:08CV102:

In this pending case, the U.S. government is pursuing reimbursement for conditional payments made by the Centers for Medicare and Medicaid Services ("CMS") to a personal injury claimant. Specifically, Medicare made conditional payments for medical treatment in the amount of $22,549.67. Although the third party settlement was for only $25,000.00, CMS agreed to accept $10,253.59 to settle its claim. When the amount was not paid, this lawsuit was filed against the claimant’s attorney. The claimant’s attorney filed a Motion to Dismiss, arguing that he could not be held individually liable under 42 U.S.C. Sec. 1395y(b)(2) when he merely distributed the settlement funds to his client. The Court disagreed and entered an Order denying the Motion to Dismiss. The Court concluded that the government had a right to recover from any entity that received a primary payment, including an attorney. The federal regulation, as well as the Medicare as a Secondary Payer Statute ("MSP"), make it clear that "any entity" includes a beneficiary provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment. This case has yet to be decided on its merits. Should the facts support the government’s claim, the claimant’s attorney could be forced to pay double what was originally owed.

BACKGROUND:  On July 11, 2005, the Centers for Medicare and Medicaid Services (CMS) released its sixth policy memorandum with answers to frequently asked questions (FAQ’s) on Workers’ Compensation Medicare Set-Aside Arrangements. The fifteen new FAQ’s clarified two existing policies; amended or replaced three previously published FAQ’s; and introduced ten new CMS policy statements. Among the new statements was CMS’ policy that CMS would not compromise the amount projected for future medical expenses. CMS’ position was that the "compromise" language in 42 C.F.R. §411.47 only applied to overpayment of past medical expenses.

In 2007, a company and a law firm that provided consulting services for the settlement of workers’ compensation claims brought a declaratory judgment action against the Secretary of the U. S. Department of Health and Human Services and the Administrator of CMS (Protocols v. Leavitt). The law suit claimed that the above referenced memorandum opinion misinterpreted the Medicare statute and regulations and exposed the plaintiffs to unexpected liabilities arising out of settlements they had previously structured. The U.S. District Court for the District of Colorado granted the defendants motion for summary judgment because the plaintiffs lacked constitutional standing (they had not suffered the requisite injury).

HOT OFF THE PRESS:  On December 11, 2008, the 10^th Circuit Court of Appeals issued an Order reversing the district court. In support of its opinion, the circuit court noted that the only issue relevant to standing was whether CMS is now taking a position that is contrary to the plaintiffs’ past settlement practice thus exposing them to possible (contingent) liability.

I will continue to monitor this case and post any new developments.