Written By: Corey Meaux
One of your obligations to remember when settling your workers’ compensation claim it to reasonably consider Medicare’s interest. This is an absolute obligation under Federal law and derives from 42 U.S.C. 1395y et seq. and 42 C.F.R. section 411.10 et seq. It is known as the “Secondary Payer Act,” and it states, among other things, that if there is a primary source for future medical payments (such as a workers’ compensation settlement), Medicare will not pay for injury-related treatment until those funds have run out.
The most common and well-known way to reasonably consider Medicare’s interest is by obtaining a CMS (Centers for Medicare and Medicaid) approved Medicare Set-Aside (MSA). However, there is a major misconception that these MUST be done to meet your obligation. You may reasonably set aside a specific amount of the settlement in your settlement documents by clarifying how much is being set aside and how you came to that conclusion. For example, if the treating physician confirms that the claimant will need a particular medication for 5 years, along with office visits, x-rays, and physical therapy, you can calculate what these will cost and provide that specific calculation in your settlement documents. This is obviously less secure than a CMS approved MSA because you’re calculating the total rather than CMS; however, it is still an option available to you. This is specifically useful when you’re settling for less than $25,000.00.
With Federal funding being cut all the time, we all know that CMS has been given less and less funding over the last two decades. Therefore, they will be looking closer at workers’ compensation settlements in the future to ensure that they are able to save as much as possible. So, you must protect yourself based on new regulations that have gone into effect on April 4, 2025. Medicare will now require workers’ compensation settlement payers (i.e. you) to also report Medicare Set-Aside amounts in any settlements involving Medicare beneficiaries. The following date must be reported:
- MSA Amount – This is the amount of money to be set aside. This can be zero dollars. In January CMS updated its zero MSA criteria and beginning in July, CMS will no longer review zero-dollar MSA proposals.
- MSA Period – This is the term of the MSA. Any MSA obtained from a reputable MSA provider will clearly indicate the MSA period. This field is required if the MSA amount is greater than $0.00.
- Lump/Annuity Indicator – If the MSA is greater than $0.00, the claims payer must indicate whether the MSA will be paid as a lump sum or a structured settlement annuity.
- Seed Money – If annuity is selected, the claims payer must report the seed amount. Note, this should be the seed amount included within the settlement.
- Annual Payment – This is the amount of money to be paid annually in the corresponding years following the payment of seed money.
Mandatory MSA reporting requirements apply to any Medicare reportable workers’ compensation payment to the claimant. This means that a full and final settlement of medical benefits greater than $750.00 being paid to a Medicare beneficiary must be reported. These requirements do not apply in a number of common situations, including an indemnity only settlement where medical will remain open. Claims involving individuals who are not yet Medicare beneficiaries are also not reportable.
There are no changes to the CMS submission process at this time. CMS will still review any claim involving a Medicare beneficiary with a total settlement amount greater than $25,000.00, as well as settlements with claimants with a reasonable expectation of enrollment in Medicare within 30 months and a total settlement value greater than $250,000.00. Keep in mind that MSA reporting applies to all reportable workers’ compensation settlements with Medicare beneficiaries – so anything greater than $750.00. In all such settlements, documenting the decision making around future medicals is vital and necessary. Even if it’s zero dollars, you must report that to Medicare. For cases that had previously settled for $24,999.00 or less to avoid the CMS review process, you must still indicate how much of that settlement will be used for future medical expenses and provide the costs upon which you base that amount. We have one client that has made it mandatory for every single settlement over $750.00 to fully protect themselves – even with cases where we know reporting is not necessary. Therefore, for a $20,000.00 settlement, we will indicate (for example) that $5,000.00 of those funds will be paid for potential future medical expenses related to the workers’ compensation claim.
Remember, it’s always better to be safe than sorry. While CMS will typically first go after the claimant or their attorney to make sure they are properly protected, you don’t want to risk them coming after you after you’ve settled a claim for a significant amount. If you ever have any questions regarding the new CMS regulations, or adequately protecting Medicare’s interests, do not hesitate to call us at Parker & Landry.
