MSA addendum to C&R (California) (California)

[sittigdefense@gmail.com]

I'm a defense hearing rep not experienced with this, and the IW not represented, so ...
What needs to be included as comment or addendum to the C&R when a portion of the settlement goes to fund a Medicare Set-Aside? I haven't seen anywhere a boilerplate/template to use.
If you'll indulge me for a second question: If the Medicare and non-Medicare future medical are below the $25K CMS review threshold, but PD indemnity takes it over $25K, can/should it be submitted to CMS? I'm unclear if PD amount is included in "total settlement amount." Though it is of course a part of the C&R total, "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." Does that leave off PD? Or are we supposed to assume that the C&R settlement amount and "total settlement amount" are the same?
Thanks!

[stevepsca]

The threashold is triggered by all dollars included in the settlement, and the PD indemnity is part of that calculation.

There is a chart here http://www.wcc.ne.gov/legal/medicare_se ... elines.pdf that may help with defining the need for a WCMSA.
More here http://www.namsap.org/MSPWCSA%20bill.pdf

There are some great bulletins here THE SETTLEMENT PROCESS http://www.jjcelderlaw.com/SettlementProcessMSABull.htm

I believe you have a specific allocation to the WCMSA in the documents. If there is none, CMS can declare the entire amount of the settlement to be for future medical reimbursement, the IW would have to prove the entire amount was exhausted before Medicare will provide benefits.

IMHO... the IW should have a atty consultation at the least on this. And there may be need for a MSA vendor. The threasholds trigger the need to submit the MSA to CMS/Medicare, whether or not they actually review is based on their case loads.
Be sure this IW is fully aware of the responsibilities entailed if this is to be self administered. Not all IWs are, and think this is as simple as keeping the receipts. As we know... it's not.

If the Medicare and non-Medicare future medical are below the $25K CMS review threshold

No such threashold.

A WCMSA may be submitted to CMS for review in the following situations:

•The claimant is currently 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/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.
Computing the Total Settlement Amount
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. Payout totals for all annuities to fund the above expenses should be used rather than cost or present values of any annuities. Also, any previously settled portion of the WC claim must be included in computing the total settlement amount. (Ref: 4/25/06 Memo)
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. (Ref: 4/21/03 Q17)

More at http://www.cms.hhs.gov/WorkersCompAgenc ... #TopOfPage

[LoisLane]

The following quote is from Steve's post... And he is really up on his CMS info.

"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. Payout totals for all annuities to fund the above expenses should be used rather than cost or present values of any annuities. Also, any previously settled portion of the WC claim must be included in computing the total settlement amount. (Ref: 4/25/06 Memo) "

I HAVE always understood this to mean that the ENTIRE AMT OF THE ABOVE mentioned MUST be under the 25K. I read "previously settled" to mean TTD paid, not included in settlement, etc........
Does anyone have any opinion info to the contrary?


Lois

[sittigdefense@gmail.com]

Yes, thank you Steve. I think you are right about how to understand the $25K threshold; I found this regarding what I assume is the same concept in the description of the 30 mo./$250K threshold: "... anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement..." Lois, I'm not sure this would include prior TTD already paid, but perhaps previously unpaid included in the C&R. I interpreted the "previously settled portion" to mean PD previously Stipped. But I can see CMS including TD in this, even though that's not logical; their only relevant interest is in future medical.
If someone wants to give me a hand with one other question, it concerns a C&R when there has been no CMS review of the MSA, at least yet. In cases where the injured worker is represented, the defense may want a stipulation that applicant will supplement MSA out of settlement funds if additional is needed for CMS approval (or if CMS comes back later and voids the approval, which I understand they can). If I were a judge I certainly wouldn't approve that in the case of an unrepresented worker; if I were an AA I wouldn't agree to that unless CMS had already approved the MSA. I'm thinking defendant should go ahead and stipulate that we will supplement the MSA if needed for CMS approval. Thoughts?
Larry

[stevepsca]

Ok, and this is only IMHO... TTD and medical provided during a claim are ''benefits'', CMS is not concerned with anything that is paid during a claim, (other than conditional/advance payments) or while there are stipulations or F&A/O in place. PDA/PD indemnity are ''award'' money, CMS outlines the items they want included in calculating a threashold for review as they do because these 'rule' pertain to WC and PI claims, in PI there is the possibility for atty fees to be added on to a award/settlement, as well as pain and suffering, future lost wages, punitive damages, and future medical reimbursement... items we don't see in comp.

So the considerations for MSA threashold to CMS review are PD/PDA, future medical, The AA fees are based on the full value of a C&R. The conditional payments must be reimbursed whether they are addressed at stipulations/F&A, or at C&R. Those would be 'prior settlement' items as would PDAs. As you mentioned, if there are TTD/TPD issues to resolve in the C&R, those would be included as well.

when there has been no CMS review of the MSA, at least yet. In cases where the injured worker is represented, the defense may want a stipulation that applicant will supplement MSA out of settlement funds if additional is needed for CMS approval (or if CMS comes back later and voids the approval, which I understand they can).

From an IW point of view, and I'm going through this now... I would not enter into any agreement, stipulation or C&R where a MSA is involved w/o prior submission and approval by CMS/Medicare to adequacy.

If I were a judge I certainly wouldn't approve that in the case of an unrepresented worker; if I were an AA I wouldn't agree to that unless CMS had already approved the MSA. I'm thinking defendant should go ahead and stipulate that we will supplement the MSA if needed for CMS approval. Thoughts?

Indemnity is money due based on the PD/WPI rating, future medical is due based on necessity, and agreement between the parties. IMHO...there is rarely sufficient benefit to the IW to close out the medical in a claim, and assume the liability, as well as take over the ''claims administration'' of the MSA. You haven't mentioned a seperate amount of non-medicare future medical. Once that MSA money is exhausted, whether annually with an annuity, or fully, there will be out of pocket costs for the IW. There is no reason in my mind for an IW to discount PD to 'todays dollars', and then agree to supplement a MSA where there may be shortfall after CMS approval.
When Lois comes back, I think she will tell you this too... WCAB judges are not keen in getting involved in WCMSA issues, and are not really addressing these issues at claim resolution. If the parties submit a C&R for review to adequacy, and it contains a MSA, so be it. Appearantly if the parties agree.. so do the ALJ's.
I don't believe this is adequate to the cause... IW's are looking to the judge to ensure their best interests are addressed. SSA/CMS-Medicare are doing the same. There could very well be a case come up where a judge has not taken the MSA issue seriously, the AA/DA/CA/TPA has not taken Medicare and the MSPA requirements to heart, and we'll see a $1000/DAY penalty levied against these parties.

(or if CMS comes back later and voids the approval, which I understand they can).

CMS/Medicare issues an approval letter, but there is no right to appeal. That approval is good for about 2 years, then it must begin anew, if the C&R is not finalized.
The threasholds are triggers for review.. that does not mean CMS will actually review the proposal. Actual review is based on the work load the COB is currently experiencing. So..there may or may not actually be a approval letter from CMS. With more and more applications and awards for SSDI/SSI, the COB/Coordination of Benefits offices are obviously saddled with a higher back log. I haven't seen any posts lately from the MSA vendors about any of these issues, or about requests for zero allocation issues.

Sorry for being so wordy...long posting day.

[jpod]

Steve I appreciate you are well versed in MSA requirements but I also see that you are confusing MSA requirements with the Schipp Act. While tangentially related to MSAs the Schipp Act really has nothing to do with MSAs. The Schipp Act, also known as Section 111 reporting, is separate and distinct. The 1,000 dollar a day fine comes from the Schipp Act and will be (not in force yet except for health insurers) levied when an insurer fails to report that they have either entered into what is called ORM (ongoing responsibility for medical care) or a one time settlement that resolves a claim (known as TOPAC) AND the employee is a Medicare beneficiary.

So if a 25 year old employee settles an ankle injury with minimal PD (say $5,000) with open medical, when that 25 year old becomes a Medicare beneficiary at age 65 the workers' comp insurer is required to report the prior stip settlement that was entered into 40 years earlier. In some cases the reporting is required regardless of whether the claim is open or closed at the time the employee turned 65, or whether the employee has had much treatment over the ensuing 40 years. (there are some exceptions but I will not go into them).

Section 111 reporting applies to many forms of insurance: health, auto, tort liability, workers' comp, etc. Even people who own property that is leased or rented to tenants can be considered insurers under the Schipp Act if they pay for any type of injury claim that arises from an injury on their property. A lot of commercial buildings have multiple owners and those owners may have a deductible pool for liability insurance. If they pay the deductible to the claimant they are considered self-insured under the Schipp Act and they are subject to the reporting requirements just like any insurer.

Section 111 reporting only occurs when, and if, the employee becomes a Medicare beneficiary and has almost nothing to do with settlement values (if total claim value is less than $750 I think no reporting is required). If the plaintiff/applicant/insured is not a beneficiary at the time of settlement there is no reporting required under the Schipp Act regardless of the value of the settlement or whether or not an MSA is required.

However, the insurer must track that claimant and when they become a Medicare beneficiary; at that point in time the insurer is to report the settlement to Medicare under Section 111, not before. The 1,000 dollar a day fine is for any violation, which could include reporting a claim before CMS wants it reported. They want data, but they want accurate data and not a data dump (CMS has not yet decided how it will impose the fines). For workers' comp this reporting requirement goes back to the time when Medicare was created in the early 1960s. So claims settled in the 1960s, 70s, 80s, 90s, etc. have to be inspected to see if the claimant is now a beneficiary and that old claim must be reported to CMS beginning next year if the employer isliable for futre medical treatment AND the employee is a Medicare beneficiary (there are situations where older claims need not be reported but I will not go into that here). For other forms of insurance the retro date is 1984 although I am not certain of this point since I have only focused on the workers' comp requirements.

As the Section 111 folks say over and over again on the monthly conference calls Section 111 reporting does not relieve parties from their duties regarding MSAs. Insurers still need to determine if an MSA is required.

Switching to MSAs Thresholds and whether one is required:
Issues relating to whether past payments (payments made before settlement – TD, medical etc) are to be considered when determining if thresholds have been met that require an MSA (if FM is to be settled of course) is not clear. Medicare has been vague on this point. In my opinion their vagueness is intentional.

What Medicare has made clear is, if an MSA was not done and the parties can not demonstrate they adequately protected Medicare’s interests at the time of settlement, Medicare can and will, decide on its own whether the thresholds were met and whether the case required an MSA. Medicare says it has the right to take the position that all monies paid on the claim count towards the threshold, whether those payments were past indemnity payments or past medical payments. Remember stipulations contain agreements on what TTD was due, and paid, so in essence the parties are settling the TD portion of a case when entering into a stipulation. I would advise against ignoring the entire settlement when calculating whether an MSA threshold has been breached.

[stewshe]

jpod,

Damn, I'm glad I'm retiring in December! I didn't like MSAs before...now I really don't!

[medlink]

Great recaps Steve & Jpod!

However, it should be clarified that with regard to the MSA Thresholds (not the MMSEA 111 that includes Mandatory Insurance Reporting), Medicare is not asking that the settlement with MSA consider past medical treatment payments or prior TTD payments.

From Medicare's perspective when considering the CMS thresholds, the following costs should be included in 'total settlement': 1) Prior PD Award indemnity payments, 2) Any advance PD payments, 3) Current settlement PD payments, 4) A/A fee, 5) Future medical care/prescription drugs, 6) Structured Annuity fees -if any, 7) Custodian fees for MSA Annuity - if any, 8) Medicare conditional payments - if any.

Janice Skiljo Haris, RN MS MSCC CNLCP
* MEDLink Medicare Set-Asides (MSA)
* MEDLink Life Care Plans (LCP)
1613 Montgomery Street
San Francisco, CA 94111
tel: (415) 399-9769
fax: (415) 399-9439
email: jharis@camedlink.com

[medlink]

OOPS - I meant to add that if current total settlement included TTD payments (not past TTD), then it would be considered by CMS as inclusive for threshold purposes.

To recap, 'total settlement': 1) Prior PD Award payments, 2) Any advance PD payments, 3) Current settlement PD & TTD payments, 4) A/A fee, 5) Future medical care/prescription drugs, 6) Structured Annuity fees -if any, 7) Custodian fees for MSA Annuity - if any, 8) Medicare conditional payments - if any.

Best, Janice Skiljo Haris, MEDLink