Workers Compensation Case, MSA Threshold Requirement

Posted by John Cattie

Question:
My question concerns the threshold requirement of Medicare Set Asides (MSAs).

CMS states, "Also, any previously settled portion of the workers compensation claim must be included in computing the total settlement amount."

When a C&R settlement is entered into, typically there are no "previously settled portions" (at least in California). So, would one be prudent or required to use the previously paid Temp Disability & Perm Disability Advances, in addition to previously paid medical treatment to ascertain the low threshold for submitting a MSA to CMS?

Thank You,
California Attorney

Answer:
When computing the total settlement amount for CMS submission purposes, we can look to the CMS Memo dated April 25, 2006 for guidance. That Memo tells us that “CMS will only review new WCMSA proposals for Medicare beneficiaries where the total settlement amount is greater than $25,000.” Furthermore, CMS stresses this is a CMS workload review threshold, not a substantive safe harbor amount. When computing the total settlement amount, CMS tells us “that the computation of the total settlement amount includes, but is not limited to, wages, attorney fees, all future medical expenses (including prescription drugs) and repayment of any Medicare conditional payments.”

You have accurately noted that CMS tells us that “any previously settled portion of the WC claim must be included in computing the total settlement amount.” So, if the claim being settled today also had components that were settled previously, it is appropriate to include those amounts when computing the total settlement amount for CMS submission purposes. Though previously paid Temp Disability & Perm Disability Advances would not necessarily be deemed to be a “previously settled portion of a WC claim”, it would be proper to include those amounts for the limited purpose of calculating the total settlement amount for CMS submission. Based on the language of the Memo, such payments would fall under the “but not limited to” provision.

It is important to note, as CMS stresses in its Memos, that the thresholds provided are workload review thresholds, not substantive safe harbor amounts. This means that if the total settlement amount fails to reach the threshold, it means that CMS would not review/approve a MSA proposal in that case. However, it DOES NOT mean that a MSA does not have to be done. MSAs are appropriate in those workers comp cases involving: 1) a current Medicare beneficiary or a person possessing a “reasonable expectation” of Medicare entitlement within 30 months of settlement; 2) a settlement that closes future meds, effectively shifting the burden of future injury-related care from the carrier to Medicare on a permanent basis going forward; and 3) that individual does, in fact, require future injury-related care otherwise covered by Medicare. Finally, please note that submission of MSA proposals to CMS for review and approval is voluntary, not mandatory.

My best,
John Cattie