Repayment of Medicare Conditional Payments

Saturday, March 25, 2006 | 0

The following article was posted recently in the WorkCompCentral Professional Forums. The editors felt this article was of value to the community and thus have republished it here, edited for readability, grammar and spelling.

The subject of Medicare and set asides comes up now and then. Of particular note, is how CMS calculates the need for a review of the settlement... (the following is from their page).

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, and that payout totals for all annuities to fund the above expenses should 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.

In order to determine the total settlement amount when using an annuity, please be advised that Medicare determines the value of the annuity based on how much the annuity is expected to pay over the life of the settlement, not on the Present Day Value (PDV) or cost of funding that annuity.

Example: A settlement is to pay $15,000 per year for the next 20 years to an individual who has a "reasonable expectation" of Medicare enrollment within 30 months. This settlement is to be funded with an annuity that will cost $175,000. The RO will review this settlement because the total settlement to be paid is greater than $250,000 ($15,000 per year x 20 years = $300,000). It is immaterial for Medicare's purposes that the PDV or cost ($175,000) to fund this settlement is less than $250,000.

Injured individuals who are already Medicare beneficiaries must always consider Medicares interests prior to settling their WC claim regardless of whether or not the total settlement amount exceeds $250,000. That is, ALL WC PAYMENTS regardless of amount must be considered for current Medicare beneficiaries.

However, CMS no longer reviews new WCMSA proposals for Medicare beneficiaries where the "total settlement amount" is less than $10,000.

Here is another area that appears to have been overlooked in the past...

Workers' Compensation Medicare Set-aside Arrangements Ethical and Legal Considerations (Ref: 4/21/03 Memo Q12)

When an attorney's client effectively ignores Medicare's interests in a WC case, the attorney should consult their national, state, and local bar associations for information regarding their ethical and legal obligations. Additionally, attorneys should review applicable statutes and regulations, including, but not limited to, 42 CFR 411.24(e) and 411.26.

Structured WCMSAs (PDF, 29 KB) (if you're interested in this, you may have to go directly to the site above).

This site is a great source of information, the links at the left on the below page will take you to all the information you need about WC and Medicare:

http://new.cms.hhs.gov/WorkersCompAgencyServices/04_wcsetaside.asp#TopOfPage

-------------------------------

The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.