1 Workers’ Compensation Medicare Set-aside Arrangements (WCMSAs) Centers for Medicare & Medicaid Services As of 9/16/05

2 WCMSAs (Amount/Proposal) Statutes and Authority Future Medical Requirements Submission Process Final Settlement Agreement

3 The Statute Addressing Workers’ Compensation and Medicare

4 Medicare's Authority to Review WC Cases Section 1862(b)(2) of the Social Security Act at 42 USC 1395y(b)(2) precludes Medicare from paying a beneficiary’s medical expenses when payment has been made or can be reasonably expected to be made under a workers’ compensation plan. Section 1862(b)(2) of the Social Security Act at 42 USC 1395y(b)(2) precludes Medicare from paying a beneficiary’s medical expenses when payment has been made or can be reasonably expected to be made under a workers’ compensation plan. Section 1862(b)(5)(D) and (b)(6) of the Social Security Act at 42 USC 1395y(b)(2) require that CMS and its providers and suppliers ask beneficiaries about payers that may be primary to Medicare. Section 1862(b)(5)(D) and (b)(6) of the Social Security Act at 42 USC 1395y(b)(2) require that CMS and its providers and suppliers ask beneficiaries about payers that may be primary to Medicare.

5 Compromise vs. Commutation Compromise Compromise WC compromise cases are settlement awards for an individual’s current or past medical expenses that were incurred prior to the date of settlement because of a work-related injury or disease. Commutation WC commutation cases are settlement awards or agreements that intend to compensate an individual for future medical expenses required because of a work-related injury or disease. Therefore, settlement awards or agreements that intend to compensate an individual for any medical expenses after the date of settlement are commutation cases.

6 Combined Settlement A single WC settlement agreement can possess both WC compromise and commutation aspects. A single WC settlement agreement can possess both WC compromise and commutation aspects.

7 WCMSAsWCMSAs Apply strictly to WC settlements that involve a commutation aspect (i.e., those settlements intended to award the Claimant for future medical benefits and/or release the WC carrier from future responsibility for medical benefits). Apply strictly to WC settlements that involve a commutation aspect (i.e., those settlements intended to award the Claimant for future medical benefits and/or release the WC carrier from future responsibility for medical benefits).

8 WCMSAs Con’t Decisions regarding WCMSAs are independent of any decision regarding any claims that Medicare may have paid in the past. Decisions regarding WCMSAs are independent of any decision regarding any claims that Medicare may have paid in the past. Any identified claims for past injury-related services (i.e., conditional payments) must be reimbursed to the Medicare Trust Fund. Any identified claims for past injury-related services (i.e., conditional payments) must be reimbursed to the Medicare Trust Fund.

9 WCMSA Review Thresholds Claimants who are entitled to Medicare (Part A, B, or both) when the total settlement amount is $10,000 or greater; Claimants who are entitled to Medicare (Part A, B, or both) when the total settlement amount is $10,000 or greater; Claimants with a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date AND a total settlement of greater than $250, AND A WCMSA is reviewed by CMS in the following two situations:

10 Reasons include but are not limited to: The Claimant has applied for Social Security Disability Benefits; The Claimant has applied for Social Security Disability Benefits; The Claimant has been denied Social Security Disability Benefits; anticipates appealing and/or re-filing for Social Security Disability Benefits; The Claimant has been denied Social Security Disability Benefits; anticipates appealing and/or re-filing for Social Security Disability Benefits; The Claimant is 62 years and 6 months old; or The Claimant is 62 years and 6 months old; or The Claimant has an ESRD condition but does not yet qualify for Medicare based upon ESRD. The Claimant has an ESRD condition but does not yet qualify for Medicare based upon ESRD. What is Reasonable Expectation?

11 As a General Rule If the Claimant is less than 65 years old, and has been receiving Social Security Disability benefits for 2 years or more, they would usually be entitled to Medicare. If the Claimant is less than 65 years old, and has been receiving Social Security Disability benefits for 2 years or more, they would usually be entitled to Medicare. If the Claimant is 65 years or older, they are usually entitled to Medicare. If the Claimant is 65 years or older, they are usually entitled to Medicare. If the Claimant has End-Stage Renal Disease (ESRD), they are usually eligible for or entitled to Medicare. If the Claimant has End-Stage Renal Disease (ESRD), they are usually eligible for or entitled to Medicare.

12 For the status of a claimant’s Medicare entitlement, contact the Social Security Administration:

13 Low Dollar Threshold for Medicare Beneficiaries Effective July 11, 2005, Medicare no longer reviews WCMSAs when the claimant is a Medicare beneficiary and the total settlement amount is less than $10,000. Effective July 11, 2005, Medicare no longer reviews WCMSAs when the claimant is a Medicare beneficiary and the total settlement amount is less than $10,000.  NOTE: This is a workload review threshold and NOT a substantive dollar or “safe harbor” threshold.

14 Low Dollar Threshold for Medicare Beneficiaries Con’t Regardless of the low dollar threshold, Medicare beneficiaries should always consider Medicare’s interest in all WC cases and ensure that Medicare is secondary to WC. Regardless of the low dollar threshold, Medicare beneficiaries should always consider Medicare’s interest in all WC cases and ensure that Medicare is secondary to WC.  NOTE: For current CMS policies and procedures related to WCMSAs, claimants, employers, carriers, and their representatives should regularly monitor the CMS website at:

15 Computing the Total Settlement Amount (TSA) The computation of the total settlement amount includes, but is not limited to, wages, attorney fees, all future medical expenses, and repayment of any Medicare conditional payments. Payout totals for all annuities to fund the above expenses must be used rather than cost or present values of any annuities. The computation of the total settlement amount includes, but is not limited to, wages, attorney fees, all future medical expenses, and repayment of any Medicare conditional payments. Payout totals for all annuities to fund the above expenses must be used rather than cost or present values of any annuities. Also note that any previously settled portion of the WC claim must be included in computing the total settlement amount. Also note that any previously settled portion of the WC claim must be included in computing the total settlement amount.

16 WCMSA Proposal Requirements A Cover Letter A Cover Letter Consent Form Consent Form Rated Age or Life Expectancy Information and Documentation Rated Age or Life Expectancy Information and Documentation Life Care Plan Life Care Plan Medical Records Medical Records Settlement Agreement or Proposed Court Order Settlement Agreement or Proposed Court Order Set-Aside Administrator Set-Aside Administrator Payment History Payment History Current Treatment Current Treatment Future Treatment and Amount of Future Medical Treatment Future Treatment and Amount of Future Medical Treatment Patient Medical Recovery Prognosis Patient Medical Recovery Prognosis Documents to be Submitted for a WCMSA:

17 Cover Letter Claimant Information: Claimant Information:  Name  Address  Phone & Fax Numbers  HICN or SSN  Gender  Date of Birth  Entitlement Information Age at Proposed Settlement Date (PSD) Rated Age if Applicable Life Expectancy Description of Injury Date of Injury ICD-9 Diagnosis Codes/ Descriptions Annuity Starting Date

18 Cover Letter Con’t Cover Letter Con’t Length of Annuity Length of Annuity WCMSA Administrator/Agreement WCMSA Administrator/Agreement Claimant Attorney Claimant Attorney Claimant Employer Claimant Employer WC Insurance Carrier WC Insurance Carrier State of Jurisdiction/Venue State of Jurisdiction/Venue Total WC Settlement Amount Type of Settlement Proposed WCMSA Annual Payout Amount of Annuity WC Fee Schedule or Full Actual Charges

19 WCMSA Sample Submission  It is important to include as much information as possible in the submitter letter rather than simply referring to the attachments so the proposal can be reviewed more quickly.  Sample submission can be found at  NOTE: The sample submission is intended to be used as a sample. Each state has unique forms. The intent of the sample document is to aid submitters in organizing the information that is typically sent to CMS with their WCMSA proposals. It is not the intent in any way for the sample document to make or change policy.

20 Submissions using CD-ROMs Must be in PDF format. Must be in PDF format. Must be in the same order as the requirement checklist. Must be in the same order as the requirement checklist. All documents on the CD-ROM must be identified on the index. All documents on the CD-ROM must be identified on the index. Medical records must be submitted in a logical order. Medical records must be submitted in a logical order. PDF Format

21 WCMSA Basics WCMSA funds should be sufficient to last the remainder of the claimant’s estimated life expectancy (unless documented otherwise). WCMSA funds should be sufficient to last the remainder of the claimant’s estimated life expectancy (unless documented otherwise). WCMSA funds may ONLY be used to pay for injury-related services that would otherwise be covered by Medicare. WCMSA funds may ONLY be used to pay for injury-related services that would otherwise be covered by Medicare. A WCMSA is used for doctor visits, monitoring, blood tests, x- rays, etc., whenever applicable. A WCMSA is used for doctor visits, monitoring, blood tests, x- rays, etc., whenever applicable.

22 Proposed Settlement Date (“PSD”) If the case has already settled, please provide the settlement date. If the case has already settled, please provide the settlement date. If there is a proposed settlement date in the future, please provide that date. If there is a proposed settlement date in the future, please provide that date. If the settlement date is unknown, CMS will default to four months from the date of submission for the PSD. If the settlement date is unknown, CMS will default to four months from the date of submission for the PSD.

23 Life Expectancy Evaluates the claimant’s condition as it relates to life span or State law limiting time span that covers WC work related conditions. Evaluates the claimant’s condition as it relates to life span or State law limiting time span that covers WC work related conditions. Life Expectancy is computed using the Center for Disease Control (CDC) Tables 2 & 3. On July 1 st of each year, the updated tables for the following year should be used. (These tables are 2 ½ years behind the current year.) Life Expectancy is computed using the Center for Disease Control (CDC) Tables 2 & 3. On July 1 st of each year, the updated tables for the following year should be used. (These tables are 2 ½ years behind the current year.)  Example:7/1/05 use 2002 CDC Tables 7/1/06 use 2003 CDC Tables

24 Rated Age When submitting one or more rated ages with a request for CMS approval of a WCMSA, the following criteria must be met in order for the rated age to be considered in reviewing the case: When submitting one or more rated ages with a request for CMS approval of a WCMSA, the following criteria must be met in order for the rated age to be considered in reviewing the case:  All rated ages shall be on insurance company or settlement broker letterhead.  All rated ages shall be accompanied by a written justification on how such age was determined.

25 Rated Age Con’t All rated age sources shall be independent, in fact and appearance, of the submitter, carrier, and claimant. All rated age sources shall be independent, in fact and appearance, of the submitter, carrier, and claimant. Any documents on rated ages that contain redacted data will not be considered. Any documents on rated ages that contain redacted data will not be considered. If more than one rated age is submitted, CMS will use the median of all rated ages submitted. If more than one rated age is submitted, CMS will use the median of all rated ages submitted. The median is the value at the center of an ordered range of numbers. For life expectancy purposes, if there is an even number of values, the median is the average of the two middle values, but without rounding. The median is the value at the center of an ordered range of numbers. For life expectancy purposes, if there is an even number of values, the median is the average of the two middle values, but without rounding.

26 Common Medicare-Covered Services Doctor’s visits Doctor’s visits Diagnostic tests Diagnostic tests Steroid injections Steroid injections Hospitalizations Hospitalizations Surgery Surgery Morphine pumps Morphine pumps TENS Units TENS Units Physical Therapy Physical Therapy

27 Common Services NOT currently covered by Medicare Dentures Dentures Glasses Glasses Hearing aids Hearing aids Travel Expenses to medical appointments Travel Expenses to medical appointments Custodial Care Custodial Care

28 Prescription Drugs Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), prescription drug coverage under Medicare will be available starting on January 1, Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), prescription drug coverage under Medicare will be available starting on January 1, In July 2005, CMS issued guidance to Part D sponsors on CMS requirements and procedures for coordination of benefits related to Medicare’s Part D prescription drug coverage. In July 2005, CMS issued guidance to Part D sponsors on CMS requirements and procedures for coordination of benefits related to Medicare’s Part D prescription drug coverage.

29 Prescription Drugs Con’t The CMS is currently developing policy based on that guidance which addresses the inclusion of Part D prescription drugs in a WCMSA as part of a WC settlement. The CMS is currently developing policy based on that guidance which addresses the inclusion of Part D prescription drugs in a WCMSA as part of a WC settlement. Policy will be presented in September 2005 on the CMS Coordination of Benefits website at: Policy will be presented in September 2005 on the CMS Coordination of Benefits website at:

30 For specific Medicare coverage questions, please visit our web site at: or call: MEDICARE ( )

31 How You Can Improve the WCMSA Proposal Process Submit complete case files with your set-aside proposals utilizing the Medicare Set-Aside Proposal Requirements Checklist and/or Sample Submission. Submit complete case files with your set-aside proposals utilizing the Medicare Set-Aside Proposal Requirements Checklist and/or Sample Submission. Respond to letters and telephone requests for information in a timely manner. Respond to letters and telephone requests for information in a timely manner. Limit status calls to offices unless 45 days have elapsed from date of submission of a complete file. Limit status calls to offices unless 45 days have elapsed from date of submission of a complete file. Try not to schedule a hearing date prior to receiving approval of your set-aside proposal. Try not to schedule a hearing date prior to receiving approval of your set-aside proposal. Share the procedures in this presentation with your colleagues. Share the procedures in this presentation with your colleagues.

32 First Report of WC Case Should Be Made To The Coordination of Benefits Contractor (COBC) at the following address: Only past medicals Medicare - Coordination of Benefits Contractor MSP Claims Investigation Project P.O. Box 5041 New York, NY or

33 Address for Submission of WCMSA Proposals for CMS Review All WCMSA proposals submitted for review must be sent to a national, centralized point of receipt at: CMS c/o Coordination of Benefits Contractor PO Box 660 New York, New York Attention: WCMSA Proposal WCMSA U.S. Postal Only

34 P.O. Box 5041 v. Box Past medicals Past medicals Beginning of settlement process Beginning of settlement process Intermediary /carrier involved Intermediary /carrier involved Conditional payments Conditional payments 660 Future medicals End of settlement process Workers’ Compensation Review Contractor (WCRC) involved Set-asides (future services)

35 Useful Website Addresses The CMS: The CMS:  COBC: COBC:  Workers’ Comp: Workers’ Comp:  asp

36 Questions ?