Synopsis: What Is A Medicare Set-Aside and How May the New U.S. Senate Bill Help?
Editor’s comment: I want to help all my readers on this complex claims topic. Lots of folks don’t understand the whole MSA or Medicare Set-Aside process. There is a new federal attempt to make it work better.
- First, What is a Medicare Set-Aside?
A Medicare Set-Aside is a trust-like arrangement set up to hold a portion of injury settlement proceeds for future medical expenses. A specialized company, like Sharpline Allocations, evaluates the injured worker’s future medical needs, recommends an amount to be set aside to cover future medical care and our federal government or their designated specialists approve the recommended amount. The funds are then either placed in the Medicare Set-Aside account in one lump-sum or the account is funded with a "structured settlement annuity" that will refill the account over time. In either case, the administrator of the Medicare Set-Aside trust may use the funds only to pay for medical care related to the injury, leaving Medicare or your private insurance free to provide coverage for medical expenses not related to the injury.
Medicare Set-Asides have been used for years in workers' compensation cases, and the federal government has an extensive set of reporting and monitoring rules. Recently, the federal government instituted a new set of reporting requirements for anyone who is responsible for compensating a personal injury victim, and many practitioners believe our government will soon require Medicare Set-Asides for all personal injury claims/settlements of any kind.
Currently, our federal government requires setting up a Medicare Set-Aside if the worker is a Medicare recipient settling a claim for more than $25,000 or if the settlement is for more than $250,000 and the worker can be expected to receive Medicare benefits within 30 months of settlement. This may happens when the worker receives Social Security Disability benefits, which has a 24-month waiting period before the worker can receive Medicare benefits.
- Second, U.S. Senate Bill Aims to Clarify/Simplify Frustrating Medicare Set-Aside Process
Observers feel a bill introduced in the U.S. Senate last week may clean up what has been a messy approach to Medicare set-asides. U.S. Senate Bill 3079, sponsored by Sen. Rob Portman, R-Ohio, and Sen. Bill Nelson, D-Florida, is a new and improved version of a bill introduced two years ago but which never emerged from committee.
The new bill would essentially force the Center for Medicare and Medicaid Services (CMS) to recognize provisions of states' workers' compensation laws, and would allow injured workers to pay Medicare's share upfront after a settlement instead of having to remember payments for the rest of their lives.
"This says, let's have a process that works for all parties involved," said Douglas Holmes, president of UWC Strategy in Washington, D.C., which lobbies and consults for businesses on unemployment and workers' compensation legislation. UWC led a coalition of insurance groups and claimants' attorneys that helped craft the bill. "We feel this reduces risks and reduces administrative costs."
While the process of handling Medicare's share in workers' compensation settlements has evolved over the past 50 years, it's never been formalized or codified, and remains inconsistent. "This will help injured workers finalize their claims and get money for settlements faster," said Ann Gray, assistant vice president of federal government relations for Property Casualty Insurers Association of America. The bill would also provide clear criteria for CMS to follow and would eliminate unnecessary reporting to the CMS, she asserts.
One problem with the current process is that in many cases, parties may have reached a potential settlement, only to have CMS reject the amount designated as a set-aside. This can completely change resolution and the settlement, particularly in major claims.
The new version of the Senate bill, known as the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2018, would address that by instituting a formal appeals process. CMS now has an informal review policy, but the reviews are limited and are done at the sole discretion of CMS. "A specific appeals provision is needed in statute," the analysis said. The suggested appeals process could "require more time and costs, so that could create another problem for carriers and employers," said Dan Anders, chief compliance officer at Tower MSA Partners.
Under the current process, Medicare has been inconsistent in its acceptance of state requirements, experts asserted. "If a workers’ compensation settlement agreement is accepted, reviewed, approved or otherwise finalized in accordance with the workers’ compensation law of the jurisdiction in which such agreement will be effective, such acceptance, review, approval or other finalization shall be deemed final and conclusive as to any and all matters within the jurisdiction of the workers’ compensation law," the new bill reads.
Rather than manage the MSA for a lifetime, the new bill would give the worker the option of making a direct, one-time payment to Medicare. "Such transfer shall be made only upon written consent of the other party or parties to the agreement," the text of the new bill reads.
The measure also would require Medicare to set up a mechanism to accept the upfront payment, something the agency is not equipped for under current law.
Current statistics on set-asides nationwide were not available Wednesday, and Anders and Holmes said that a lack of data from CMS has been part of the problem. In 2013, The National Council on Compensation Insurance estimated workers’ compensation carriers throughout the country paid about $1.8 billion in Medicare set-asides that year. That number continues to rise with inflation and may be $3B annually at present.
Senate Bill 3079 has been assigned to the U.S. Senate Finance Committee.
Synopsis: Thoughts from Dr. David Fletcher on Sweeping New Legislation That Will Impact All IL WC Claims. This Will Be a Seminal Change That is a Must-Read for All Claims/Risk and Other System Participants.
Editor’s comment: Here is His Guest Commentary Published Without Editing | Doc Feels a Crisis Looms in the IL Workers' Comp System
Please Note Amendment 2 of IL Senate Bill 90 has passed by both IL legislative houses and has been sent to Governor Rauner for signature and enactment.
This unprecedented bill replaces everything after the enacting clause. It amends the IL Workers' Compensation Act in relation to fees and electronic claims. The new bill, if it becomes law, requires a medical provider to bill an employer or its designee directly. This bill provides the employer or the insurer must send to the provider an explanation of benefits or EOB. The bill requires employers and insurers to pay interest to providers at the rate of 1% per month for services rendered on and after the effective date of this amendatory Act if the bill is not paid promptly. The bill authorizes providers to bring an action in circuit court to enforce the payment procedures with regard to services rendered on and after the effective date of this amendatory Act. The bill also requires the IL Director of Insurance to adopt rules to ensure that providers have the opportunity to comply with requests for records by employers and insurers. Finally, the bill imposes penalties upon employers and insurers that fail to comply with the electronic claims process. If Governor Rauner signs the bill, it will become law effective immediately.
By DR. DAVID FLETCHER
There's a crisis looming in our state's workers' compensation system. If allowed to fester, it will keep workers from receiving timely medical treatment for workplace injuries. It will delay workers' recoveries and their return to their jobs. And it will end up costing more for the very businesses and insurers seeking efficiencies in the system.
This crisis is not one you've heard about from the business and insurance communities. It's a crisis created by their failure to implement laws that have been on the books in Illinois for more than a decade.
As doctors who care for workers compensation patients, here are our concerns: Illinois law spells out the right for medical professionals to receive prompt payment for the care we give to patients with workplace injuries.
Just like any other business or profession, we need to be paid for that care we give, so that we can compensate our employees and keep open the doors of our medical practices.
Yet, many Illinois workers' compensation insurers completely ignore the prompt payment law. To date, there has been no remedy for doctors and other caregivers who remain unpaid for months and months at a time.
Furthermore, state law mandates that insurers accept electronic billing and documentation for workers' compensation claims. This expedites the process.
Yet, many insist on an obsolete paper-based medical billing system, which delays medical care to injured workers and wastes resources.
Add to this bleak reality a recent, alarming increase in delayed payments for already-approved workers' compensation medical care claims. The result is more and more physicians unable or unwilling to treat injured workers.
Since 2005, the Workers' Compensation Act has allowed medical professionals a late interest penalty for approved workers' compensation medical care.
Yet there is no way for doctors and others to enforce or collect this interest.
Even if the workers' compensation insurer approves care for an injured worker, it can and often delays payment for the medical treatment rendered. These delays can last for years.
A recent court ruling found that medical professionals can't even go to court to collect this interest.
Since the court decision, these payment delays have worsened to the point of doctors dropping out of the system.
What's lost in the current debate on workers' compensation policy is that medical professionals — the physicians, surgeons, hospitals and specialists — actually provide the care that supports our entire system.
Medical professionals are the ones who get injured employees back to work, reduce employer costs for time off and long-term injuries and work with employers to prevent work-related accidents from even happening in the first place.
We are often blamed for the system's ills, even though we are in a unique position to make that system function.
When workers are hurt on the job, they need timely access to dedicated physicians, surgeons and specialists to treat their injuries. We in the medical community stand ready with solutions to the problems that are threatening the health of our workers' compensation system.
It's time to pass legislation that forces workers' compensation insurers to start following the law. The alternative is having doctors and care centers rush to the exits.
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