Making Sense of New Reporting Requirements

When it comes to workers’ compensation, is CMS making suggestions or absolute rules?

August 29, 2022 Photo

When it comes to dealing with CMS in a workers’ compensation setting, the changing and sometimes vague requirements make for a challenging process in resolving claims.

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) established new mandatory reporting requirements and included authority for Medicare to impose civil money penalties (CMPs) against entities that fail to comply. The Responsible Reporting Entity (RRE) must report to the Benefits Coordination & Recovery Center (BCRC) all workers’ compensation occurrences that involve a Medicare beneficiary. The Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act) revised section 111 of MMSEA reporting requirement enforcement provisions to state that non-group health plans (NGHPs), which includes workers’ compensation plans, that fail to comply with the reporting requirements may be subject to a CMP of up to $1,000 for each calendar day of noncompliance, resulting in a maximum penalty of $365,000 per individual, per year. The SMART Act also added a section to specifically require rulemaking actions regarding the enforcement of CMP provisions under section 1862(b)(8)(E) of the Act. While the Centers for Medicare and Medicaid Services (CMS) technically has until 2023 to issue a Final Rule for CMS penalty enforcement, the release of a new Medicare Secondary Payer Mandatory Reporting User Guide on January 10, 2022, may be an indicator that CMS is close to issuing the Final Rule.    

Section 111 addresses the total payment obligation to claimant (TPOC) dollar threshold for workers’ compensation claims with no ongoing responsibility for medicals (ORM). As of October 1, 2016, workers’ compensation claims that meet all of the following criteria are excluded from reporting until further notice: the claim is for medical benefits only; the associated lost time for the worker is no more than the number of days permitted by the applicable workers’ compensation law for a medicals only claim (or seven calendar days if the applicable law has no such limit); all payments have been made directly to the medical provider; and the total payment for medicals does not exceed $750. Where there are multiple TPOCs reported by the same RRE on the same record, the combined or cumulative TPOC amounts must be considered in determining whether or not the current reporting threshold is met. It is imperative that a close watch is kept on claimants who have multiple TPOCs to comply with reporting guidelines and, as TPOC amounts less than the specified thresholds may be reported, it is the safest policy to simply report all TPOC amounts for Medicare beneficiaries.

While the reporting requirements are clear, the actions that will result in the imposition of penalties has not yet been finalized. As such, all RREs should review what information has and has not been submitted to ensure any unintentional errors are immediately corrected.

CMS also provides a Reference Guide concerning Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA). CMS very clearly states multiple times throughout the Reference Guide that there are no statutory or regulatory provisions requiring the submission of a WCMSA amount proposal to CMS for review and that approval of a proposed WCMSA amount is not required. Nonetheless, it is important to determine the claimant’s Medicare status before discussing settlement. The claimant is able to go to her local Social Security office and obtain a statement on Social Security letterhead confirming her Medicare status. Alternatively, a Medicare release signed by the claimant will allow the insurer to independently verify the claimant’s Medicare status.

A claimant, who is not currently on Medicare, has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

• The claimant has applied for Social Security Disability Benefits.

• The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision.

• The claimant is in the process of appealing and/or refiling for Social Security Disability Benefits.

• The claimant is 62 years and six months old.

Once the claimant’s Medicare status is established, the CMS review thresholds should be taken into consideration. At this time, CMS will review a proposed WCMSA amount when the claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000 or the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

In analyzing the two sentences under the workload review threshold, one would infer that total settlement amount means the settlement amount for future medical expenses and disability or wage loss. Section 6.4 of the Reference Guide indicates that the computation of the TPOC amount includes, but is not limited to, all Medicare covered and non-covered medical expenses related to the claim(s), indemnity (lost wages, property damages, etc.), attorney fees, set-aside amount (if applicable), payout totals for all annuities rather than cost or present values, settlement advances, lien payments (including repayment of Medicare conditional payments), and amounts forgiven by the carrier/insurer. While not specified, the litigation costs payable directly to claimant’s attorney will also count toward the dollar amount for CMS’ review threshold.

It must be noted that if a claimant’s workers’ compensation settlement does not meet the workload review thresholds in place at the time of the settlement, CMS will not issue a verification letter indicating that the review criteria have not been met or indicating that a WCMSA is unnecessary.

There is the option of submitting a zero-dollar request to CMS. This request must include the carrier’s complete payment ledger (showing no indemnity or medical payments), verification of denial, medical records (if requested), and a Consent to Release form completed by the claimant. This submission has the risk of CMS generating a counter WCMSA demand and has the potential to render a settlement no longer reasonable.

In conjunction with determining whether to submit a WCMSA to CMS for approval, verification with CMS as to conditional payments should be made. A conditional payment notification (CPN) will also be issued when the BCRC is notified of settlement, judgement, award, or other payment through an insurer/workers’ compensation entity’s MMSEA Section 111 report. A response to the CPN must be made within 30 days. Interest accrues from the date of the demand letter and, if the debt is not repaid or otherwise resolved within the time period specified in the recovery demand letter, is assessed for each 30-day period the debt remains unresolved.

When a workers’ compensation judge or other binding party approves a workers’ compensation settlement after a hearing on the merits, Medicare will accept the terms of the settlement unless the settlement does not adequately address Medicare’s interests. In many instances, evidence-based or non-submit Medicare Set-Aside allocations are prepared to allocate an amount to cover the claimant’s future medical needs. Section 4.3 of the Reference Guide advises that CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement. Failure to adequately address Medicare’s interests will result in the denial of payment for medical services related to the workers’ compensation injury until the claimant’s settlement proceeds are exhausted.

The only clear takeaway from CMS’ Guidelines is that the parties must consider Medicare’s interests in all workers’ compensation cases and only approval of a submitted MSA is guaranteed to protect Medicare’s interests. There is currently no plan to establish a set of standards for specific conditions. Accordingly, whether the proposed amount allocated for future medical treatment in non-submitted WCMSA settlements adequately considers Medicare’s interests is up to CMS’ subjective interpretation. As such, it is imperative to have the documentation to support the amount attributed for future medical payments from the settlement amount.

About The Authors
Stacy A. Tees

Stacy A. Tees is a partner at Goldberg Segalla in the Philadelphia office.

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