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Most of us in the workers’ compensation industry
are familiar with the CMS Medicare set-aside review thresholds for
workers’ compensation claims. However, there is still some confusion
– especially for third-party liability cases – about the
applicability of the thresholds. The following guidelines explain
the thresholds, both for workers’ compensation settlements and in
third-party liability settlements.
Medicare Set-Aside
Review Thresholds – Workers’ Compensation Cases
Over the past six years, CMS has implemented
several Medicare set-aside review thresholds because of their
workload. These thresholds apply to workers’ compensation cases
only. The review thresholds are as follows:
1. If a workers’ compensation claimant is eligible for
Medicare at the time of settlement of a workers’ compensation claim,
and the total settlement amount is greater than $25,000, CMS will
review the settlement and any proposed Medicare set-aside to
determine whether its interests have been appropriately considered.
2. If a workers’ compensation claimant is not currently a
Medicare beneficiary, but may be eligible for Medicare within 30
months of the settlement date, CMS will review if the total
settlement amount is greater than $250,000.
We receive numerous inquiries every week asking whether anything
must be done to protect Medicare’s interests in cases that do not
meet CMS’ review thresholds. The answer is “Yes!” The
review thresholds are just that, review thresholds. In the
settlement of workers’ compensation claims that fall below the
thresholds, CMS will not review the settlement. However, parties
still have a legal obligation to avoid a burden shift to Medicare,
and a Medicare set-aside analysis is the best tool for compliance.
The Medicare Secondary Payer Act still requires Medicare’s interest
to be reasonably considered in cases falling below the review
thresholds.
To protect Medicare’s interests in cases falling
below the review thresholds, the best way to ensure compliance with
the Medicare Secondary Payer Act is to perform a Medicare set-aside
analysis in the same manner as would be performed in any case above
the threshold. During the analysis, a Medicare set-aside allocation
can be determined, earmarking a portion of the settlement proceeds
to pay for future medical expenses related to the underlying
workers’ compensation claim. The allocation should be documented in
the settlement agreement and the claimant should be advised of his
duty to properly administer the funds. Finally, CMS should be put on
notice that a settlement was completed that contained a Medicare
set-aside allocation. Although CMS will not likely review the
settlement, the parties can be assured that they have properly
complied with the Medicare Secondary Payer Act.
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Liability Cases
The Medicare set-aside review thresholds are irrelevant in
third-party liability cases. What is relevant is that the Medicare
Secondary Payer Act still requires that a settlement not shift the
burden of the plaintiff’s future medical expenses to Medicare.
Similarly to workers’ compensation cases, a Medicare set-aside is
the best vehicle to ensure compliance. The Medicare set-aside has
become a common and effective tool in resolving workers’
compensation claims and lends itself to similar application in
third-party cases. While the types and nature of claims in a
liability case may differ from workers’ compensation cases, the same
basic settlement principles apply – settlements address both medical
and non-medical damages.
As noted above, the review thresholds only apply to workers’
compensation cases. CMS has not yet announced review thresholds for
liability cases (though some practitioners have mistakenly applied
the workers’ compensation thresholds to third-party cases). Lack of
review thresholds for liability cases do not imply that Medicare’s
interest do not need to be considered, rather, they imply that
Medicare will not review settlements for adequacy.
Until CMS arrives at review guidelines for third-party liability
cases, the most prudent course of action is for parties is to
address settlements in a similar manner as workers’ compensation
cases. To protect Medicare’s interests, the best way to ensure
compliance with the Medicare Secondary Payer Act is to perform a
Medicare set-aside analysis. During the analysis, a Medicare
set-aside allocation can be determined, earmarking a portion of the
settlement proceeds to pay for future medical expenses related to
the underlying injury. The allocation should be documented in the
settlement agreement and the claimant should be advised of his duty
to properly administer the funds. The one caveat is that the
allocation will need to account for the additional causes of action
and damages pled in the underlying lawsuit and the fact the
settlement likely results from a compromise. Finally, CMS should be
put on notice that a settlement was created with a Medicare
set-aside allocation (as would be done in a workers’ compensation
case).
Please contact
Henry Kohnlein
for further information.
This article was taken from Protocols'
blog.
To read and comment on this and other articles, click
here.
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A
team from Protocols® attended and exhibited at the 2007 Risk Insurance
and Management Society (RIMS) conference in New Orleans on April 30,
2007. This year’s RIMS conference drew more than 700 first-time
attendees. This was a great opportunity for Protocols® to speak with
others in the industry and to meet other vendors and service
providers. In addition, the team took advantage of the New Orleans
cultural offerings by attending notable restaurants and enjoying
local jazz and blues. |
The 2007
conference drew more than 9,000 risk practitioners, and featured 160
educational sessions and 400 speakers. Also, the conference
featured 435 exhibitors, of which 122 were new to the RIMS annual
conference. Next year's conference is planned to be held in San
Diego. For more information, please visit RIMS'
website.
Please contact
Erin Wallace
for further information.
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During
the RIMS conference, Protocols® held a raffle for several prizes.
The following attendees are the lucky winners:
Portable DVD Player
Paul Alexander
Burlington Electric Department in Burlington, VT
Manager of Risk Management and Governmental Affairs |
Nintendo
Wii
Chris
Boroski
Duke University in Durham, NC
Corporate Risk Manager
Apple
iPod
Carmen
Haskell
AutoZone in Memphis, TN
Risk Manager
Please contact
Erin Wallace
for further information.
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Our Staff
Spotlight intends to help our clients get to know the people behind
Protocols. This month's spotlight focuses on
Emily Gardner,
one of Protocols' newest case managers. Emily was born in
Tulsa, Oklahoma and moved to Littleton, Colorado at an early age. She
graduated from Metro State in 2005 with a B.S. in Criminal Justice
and Criminology. When out of the office, Emily enjoys going out to
eat, shopping, being outdoors, and traveling. Emily recently went on
a cruise to Cozumel, Belize, Costa Maya, and Nassau.
Please contact
Emily Gardner
for further information.
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