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Medicare set aside in Ohio Workers Compensation Claims

On Behalf of | Jul 1, 2011 | Workers' Compensation

Core issue: The Centers for Medicare and Medicaid Services (CMS), a part of Health and Human Services, is implementing policy relating to the Medicare secondary payor act resulting in substantial present and future challenges for the Ohio’s workers compensation system. Under the Medicare secondary payor act any primary insurance payor is supposed to assume a central responsibility for paying medical bills – not transferring responsibility for those present or future claims and related billing to Medicare. So far so good. In Ohio, our present worker’s compensation system is doing an excellent job of paying the primary medical bills and for the most part we’ve kept Medicare’s interests clearly in mind and defended the spirit and letter of the set aside regulations. I believe Ohio has been a model partner to Medicare in this process.

The settlement of a worker’s compensation claim has become a national risk to Medicare. States with a fully or partially privatized worker’s compensation system often try to settle claims quickly for large amounts of money to absolve themselves from the future financial responsibility for the injury. If the worker requires additional medical treatment (after the initial settlement is reached) they are placing an increasing burden on Medicare to cover these future costs. This is the (in my opinion appropriate) reason for the Medicare secondary payor policy.

If you are settling a claim and you know that the worker will need $20,000 in future care you need to set aside a certain amount of money to meet those future medical needs (if that is what the evidence shows).

Ohio takes a more “protectionist” look at an injured worker. Ohio wants to approve appropriate claims and allows them to develop and pay them along the way. These cases are usually resolved/settled toward the end of the case when medical facts are clearer and future liability has been reduced or virtually eliminated. Ohio wants to help understand and clearly identify the genuine medical issues and compensate for them appropriately.

In 2001 I went to Baltimore, MD to sit down with Medicare to demonstrate the financial responsibility of Ohio (in relation to Medicare’s interests) and how Ohio was uniquely structured and operating to meet the spirit and intent of Medicare’s guidelines. At that time we were seeking an exemption an equivalent release from Medicare to relieve them of responsibility for Ohio. We modified our settlement agreement here in Ohio which provided for specific information regarding any potential medical needs and future cost set asides, and created a special notice to Medicare beneficiaries that Medicare was not going to pay for these services until the allocation in the set aside was exhausted. Ohio was following the law and protecting Medicare’s interests.

As the issue of Medicare set aside heated up, cottage industries sprang up to serve these issues and Medicare contracted out some of its responsibilities to ensure that proper set asides were in place to private entities. The statute does provide penalties for people who are violating the law.

These outside contractors in many cases don’t understand what Ohio DOES pay for and what we DON’T pay for and this has caused delays in resolution of cases and added substantial additional costs to the worker’s compensation system.

In the last few years congress has required all insurance companies and state run funds to begin reporting on every workers comp claim, cases that get settled, etc. to CMS. This adds a tremendous burden and cost to Ohio’s state run monopolistic system.

Our statute in Ohio is very clear that a case cannot be settled without the BWC approval, and then secondary review and authorization from the Ohio Industrial Commission that the settlement does not represent any unfair or gross miscarriage of justice. This dual

PRINTZ – Written by Justice Scalia (based upon the Brady Bill)

Congress was attempting to get States to enforce the federal regulatory program. Justice Scalia wrote that “congress cannot compel the states to enact or enforce a federal regulatory program, nor can they circumvent that prohibition by conscripting the States officers directly.” We believe that since Ohio is a state run monopoly operated solely by state officers that Medicare has no legitimate legal right to either interfere with or approve our settlements. We believe Medicare’s present policies and actions are in direct contradiction to this clear mandate.

CMS is accomplishing this through “informal policies” – avoiding legislative directive. “no federal statutory or regulatory requiring that a workers comp medicare proposal be submitted to CMS for review, and, CMS does not require a state or any other entity to obtain CMS’s approval of a set aside amount prior to a settlement. CMS is influencing this through informal policies creating havoc in our system throughout Ohio. Because we are a monopoly, pure state’s rights….CMS needs to stay out of Ohio.

We are supporting CMS in spirit and in letter. I believe we are a shining example of how state and programs can work together and should work together. Our proposal is for Ohio to send them a sampling of our cases so that CMS can see:

1. Ohio is in fact doing things appropriately and with Medicare’s interests clearly in mind, and

2. CMS needs to take administrative notice of our settlements, and waive any requirement of submitting MSA for approval by any Ohio employers or injured workers needing to seek CMS’ approval (and any associated liability). Any liability for the development of MSA.

We are a shining beacon where business can work effectively with a cost efficient and effective workers comp systems. We are purely a state run system, and CMS does not need to be concerned with small or private entities attempting to wrongfully transfer responsibility for the payment of treatment for a work related injury that their state workers compensation should be taking care of instead of medicare. Ohio is in support of CMS, and for that reason CMS should recognize Ohio for our model, and relieve us of the cost, delay and bureaucracy of compliance with settlement reporting relating to the secondary payor act.