July 01, 2011

CMS Policy for Set-Aside Submission

July 01, 2011

As covered in previous Wiedner & McAuliffe Newsletters, CMS issued a Memorandum on May 11, 2011.  This was intended by CMS to “reiterate guidance provided in [prior procedure] Memoranda regarding CMS’ Workers’ Compensation Medicare Set‑Aside Agreement (WCMSA) proposal review threshold …”

The Memorandum was a response, in part, to legislative efforts in some states to make mandatory the submission to CMS of a WCMSA when a CMS review threshold is met.

The May 11, Memorandum confirmed that:

There are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review.

Some ten years ago, in July 2001, CMS issued another in a series of Policy Memorandum. The July 2001 Memorandum formally introduced us to the Medicare Set‑Aside in workers’ compensation.  That same memo was also the roll-out of  certain review thresholds.  Those thresholds were described as situations when review and approval of a WCMSA by CMS would be deemed “appropriate”.

From a practical standpoint, the issue of a set-aside only arises, of course, when a settlement purports to foreclose a primary payer’s future medical responsibility to certain individuals.  CMS has made clear that parties may not unfairly shift the burden of medical expenses to Medicare.  What will happen if CMS determines that the parties have unfairly shifted to Medicare the responsibility for ongoing and future care?  CMShas made clear that CMS may invalidate State settlement terms and consider all settlement monies as for future medical care.  A beneficiary’s Medicare status may be placed in jeopardy and primary payers may have ongoing responsibility for future medical treatment and/or conditional payments.

While the ramifications of unfairly shifting medical care responsibility are clear, the protection mechanism for considering Medicare is not necessarily the subject of clarity.

CMS has instructed parties that in non-threshold cases, CMS will not review a set-aside proposal.  Cases with facts below the reviewed threshold simply fall below CMS operational workloads.  However, the future interests of Medicare must still be reasonably considered and protected in those cases.  Medicare has not developed its own practice protocols for what is necessary to properly address Medicare’s future interests in non‑threshold cases.

Accordingly, if a CMS-approved WCMSA is not required in review threshold cases and CMS will not review a set-aside proposal in a non-threshold case, do you need to develop set‑aside arrangements?

The answer is a qualified “yes”.

Direct and purposeful measures to protect Medicare’s future interests are necessary in cases that meet a review threshold.  A CMS-approved set-aside is CMS’ recommended compliance mechanism for ensuring that Medicare’s future interests are adequately considered.  CMS has also clearly told us that submission of a WCMSA to CMS is a voluntary process.  When a WCMSA is submitted for approval, CMS has set out policies and procedures for what information is necessary for CMS to make determinations that further the purposes of the Medicare Secondary Payer Law.

These same policies and procedures, and the series of official Memoranda from CMS, combined with known practices of CMS in evaluating and approving set-aside arrangements, allow parties the necessary tools to properly protect Medicare’s future interests in many cases that otherwise meet review thresholds.

In WC cases where a review threshold is met, and there are more obvious facts supporting ongoing and future care, settlement of future medical should contemplate a well crafted set‑aside proposal that is submitted to CMS.

A majority of cases meeting review thresholds do not involve clear future medical liability.  Or, that care which might be contemplated, is remote in time.  State law establishes status, and liability, as a primary payer.  If the state law creates limitations on liability, or sets parameters where there is no liability, the otherwise primary payer (workers’ compensation) is not legally accountable to Medicare under the Medicare secondary payer law.

Similar to the medical allocations we engineer in non-threshold cases where injuries are severe, and/or individuals are approaching a review threshold, we develop a workers’ compensation Medicare set-aside arrangement that adequately protects Medicare’s future interests in select cases, and without seeking CMS approval.

Medicare’s future interests are not necessarily implicated in every case (whether meeting a review threshold or otherwise).  Of course, taking direct Medicare-related measures in every non-threshold case is unnecessary and unrealistic.  Similarly, awaiting CMS approval of the set-aside in certain cases that do meet review thresholds may be unnecessary.

Many of the latter types of cases can be identified well before definitive settlement discussions begin.  In fact, protocols should be initiated to single out cases with, for instance, finite and completed medical care.

Specific steps can and should be taken during the workers’ compensation case to mitigate future medical (and Medicare) liability potential.  On a case-by-case basis, different tools can be used to adequately protect Medicare while not seeking CMS approval.