FEDERAL INSURANCE PROGRAMS - MEDICARE

Question 1

SECT B: FEDERAL INSURANCE PROGRAMS – MEDICARE

PROBLEMS FOR MEDICARE

Answer 1

1. Medicare benefits overlap with other insurance coverages, with Medicare deemed as the secondary payer to worker’s compensation and liability insurance (ie auto liability)
   a. Overlap with WC if employee > 65 has work-related injuries that would be covered under Medicare as well
   b. Overlap with WC if employee injured before retirement age but WC claim closed via settlement with compensation for future medical payments
   c. Overlap with primary medical insurance when medical costs are incurred before they are approved to be covered
   • Medicare makes these “conditional payments” to medical providers, subject to later reimbursement by insurer
2. Medicare unable to track when Medicare-eligible parties were collecting WC or liability payments
3. Medicare costs rose due to medical cost inflation, longer life expectancy

Question 2

SECT B: FEDERAL INSURANCE PROGRAMS – MEDICARE

MEDICARE SET-ASIDE ALLOCATION (MSA)

Answer 2

• All parties to a settlement agree to “set aside” a portion of the WC or liability settlement to be used for future medical costs related to the WC or liability injury
• MSA funds are primary over Medicare
• (-) No aggressive collection process, so no incentive to “set aside”

Question 3

SECT B: FEDERAL INSURANCE PROGRAMS – MEDICARE

CENTRE FOR MEDICARE & MEDICAID SERVICES

Answer 3

1. Review for approval WC MSAs where claimant is *
   i. Medicare beneficiary and settlement > 25K
   ii. Medicare eligible within 30 months of settlement, with settlement > 250K
2. (*) CMS can review MSAs with lower thresholds
3. Reject/revise MSA proposals, increasing estimated lifetime medical need
4. Refuse payment for future care if MSAs were not submitted or approved
5. Aggressively seek reimbursement for past “conditional payments”
6. Upon MSA approval, injured worker must comply with reporting requirements before Medicare makes any payments
   i. Pay WC-related medical bills using an interest-bearing account
   ii. Complete reporting of their payments

Question 4

SECT B: FEDERAL INSURANCE PROGRAMS – MEDICARE

CONCERNS WITH MSA PROPOSALS

Answer 4

1. Pharmacy costs
   • 2009 MSA pharmacy guidelines for Medicare Part D (drugs) priced drugs at retail costs without consideration to any negotiated price insurer may have
   • 2010 Medicare clarified that drugs not included in Medicare Part D did not need to be considered in MSAs, reducing prescription costs in MSAs
2. Life expectancy: actual age vs rated age
   • Rated age = impaired life expectancy < life expectancy of actual age
   • If CMS protocols for rated age are not followed, CMS recalculates MSA using claimant’s actual age
3. Insurers use specialists to review MSA proposals, increasing administrative costs of settling such claims

Question 5

SECT B: FEDERAL INSURANCE PROGRAMS – MEDICARE

MEDICARE, MEDICAID & SCHIP REQUIREMENTS

Answer 5

• Law requires Responsible Reporting Entities (RREs) (claim payers) to determine the Medicare enrollment status of all claimants & report certain information about those claims through the CMS
• “Double damages plus interest” penalty
o Fine to primary payers if Medicare’s right to reimbursement is ignored
• Additional fine of $1,000/day/beneficiary for each day the insurer is out of compliance with law