Dealing with health insurance issues in a workers’ compensation claim has never been anyone’s idea of a “good time” from an employer and insurer perspective. . From the challenges Medicare creates with the settlement, to the uncertainty encountered in submitting Medicare Set-Asides (MSA) to the Centers for Medicare and Medicaid Services (CMS), it’s fair to say that most people on the side of Defense workers’ compensation claims don’t do a happy dance when they realize their claim has a Medicare component. Unfortunately, while we already have enough to deal with the usual Medicare issues, private third-party actors are about to further disrupt the claims process by seeking to enforce Medicare Secondary Payer (MSP) law even more than the federal government. .
Medicare Secondary Payer in Workers’ Compensation Claims Act
The MSP Act provides, in part, that employers and insurers in workers’ compensation claims cannot pass claim-related medical expenses to Medicare. Typically, employers and insurers achieve this goal by funding MSAs where appropriate and addressing any contingent payment issues through settlement. A contingent payment is a payment made by Medicare for a condition related to a claim, for which Medicare requests reimbursement. Typically, conditional payment information is requested directly from the CMS, usually during the process of obtaining an MSA and getting it approved. However, CMS only provides data and seeks to recover Medicare portions A (hospitalization or inpatient treatment) and B (such as outpatient services, physician visits, and durable medical equipment). CMS does not have information or data about payments made by private health insurance plans, such as Medicare Advantage plans. These plans provide an insurance-like alternative to traditional Medicare plans and are known as Medicare Part C. Medicare Part D plans provide prescription coverage.
MSP provides a private cause of action when a primary payor, such as an employer or workers’ compensation insurer, fails to reimburse Medicare for contingent payments, and if successful, recovery is the double the amount due.
Private entities are funding lawsuits to recover double damages
In a series of cases in federal court between 2012 and 2016, the private cause of action established by MSP was extended to private health insurance plans, Parts C and D. Previously, the administrators of these plans sued recovery through traditional theories of subrogation and contracts. As a result of this series of rulings, private entities began to sue insurance companies on behalf of Part C and D plans in an attempt to recover double damages on unreimbursed contingent payments. These private entities are backed by deep equity and have deep pockets to fund these lawsuits, with the obvious goal of a substantial recovery. After all, as a reminder, the potential damages in these causes of action are double the contingent payments.
At the time of this article’s publication, the vast majority of these private causes of action are being sued against general liability or automobile insurance policies. Speculation is that, given their success in lawsuits already filed, these private third parties are about to set their sights on the workers’ compensation industry.
Emerging Risk Area for Workers’ Compensation Claims
The reason these private actors would pursue these claims against workers’ compensation companies is obvious: money. According to CMS, as of October 2021, there were nearly 28 million enrollees in Part C and D plans, or about 8% of the total US population. The US Bureau of Labor Statistics has estimated that there are nearly 3,000,000 non-fatal work-related accidents and injuries each year. Although this is by no means a scientific estimate, if we take the above numbers together, it is reasonable to assume that there are 210,000 Medicare Parts C and D beneficiaries each year who are injured in work accidents. If we further assume that in each of these cases there is a minimum contingent payment of $50.00, this problem could potentially represent a $21 million problem for employers and insurers. (In reality, it could be considerably higher because, in practice, health insurers in general, which includes any health insurance plan, but specifically Parts C and D, quite often pay for treatment and/or orders inadvertently without knowing that there is a primary payor.)
While there is no evidence at this point that the lawsuits that have threatened the commercial and auto insurance industry, it seems fairly obvious that, given the potentially large collection pool that these third parties plan to pursue these claims against employers and insurers of workers’ compensation claims.
How Employers and Insurers Can Protect Against These Costly Claims
So how do employers and insurers prevent and deal with these issues? They should seek to determine if the injured worker is a Part C or D beneficiary and, if so, ensure that conditional payment information is requested from those carriers. (Again, since this data is not kept by CMS, it’s not something the workers’ compensation body would know about unless they make a proactive request from the insurer of Part C or D.) If there are contingent payments from Part C or D, they must be paid as part of any settlement or otherwise dealt with as part of the settlement of the claim. The risk of not doing so could be substantial and result in the reopening of a claim that was long thought to be closed or resolved. Employers and insurers want certainty in the settlement of their claims, and without investigating whether there are Part C or D contingent payments (in addition to the traditional Part A and B searches), no certainty can be obtained.
Bill to curb MSP litigation
While the above steps can ensure that employers and workers’ compensation insurers are protected from these private causes of action, Congress is considering legislation that could eventually address this issue. The Repair Abuse in MSP Payments (RAMP) Act was introduced as bipartisan legislation earlier this year. If passed, it would eliminate MSP’s private cause of action clause and apply to all primary payors, including employers and workers’ compensation insurers.
There has long been a saying in the claims industry that “a good claim is a closed claim”. Claims handlers want to know what when they close a claim is that it’s closed for good. The increase in these third-party causes of action in commercial and auto claims, and the threat of them interfering with the workers’ compensation system, is a barrier to certainty that when a claim is closed, it’s closed for good. By taking the above steps, we can make sure they are.
Hopefully Congress will act in the near future to permanently fix this issue, but in the meantime, by taking the appropriate steps, employers and insurers can avoid having to reopen their claims and potentially pay double damages for payments. conditionals of parts C and D. .
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