New Jersey No Longer Mandates WCMSA in WC Settlements
Roy Franco
July 27, 2012

Katie A. Fox, MSCC
VP Medicare Compliance – WC

Alvena Ferreira, Senior Nurse Allocator

Medicare Compliance is at the forefront of all parties in the resolution of a workers’ compensation claim. In 2005, Peter J. Calderone, Director/Chief Judge of Workers’ Compensation, issued the first Memorandum on Medicare Compliance. Chief Calderone has recommended periodic judicial review of the status of the case, Medicare filings, and Medicare inquiries. On July 11, 2012, Peter J. Calderone, Director/ Chief Judge of Workers’ Compensation, issued a follow up memorandum regarding “Medicare Conditional Payment and Set-Aside Issues.”

The 2012 memorandum brings to light the evolving position of Medicare Compliance. The memorandum outlines CMS position as well as the position of the United States Justice Department which has evolved in recent litigation in the New Jersey Federal District Court. The position of the NJ Division of Worker’s Compensation is amended with respect to the following two principal areas: requirement of the parties to obtain CMS approval of a WCMSA; and requirement of the state specific Medicare Attachment to settlement documents.

Looking at the first position shift by the NJ Division of WC, it is evident that the comments of CMS clarifying that the MSA process as a recommended and optional process are being heard by the industry. In an effort to drive compliance, many states have implemented mandatory steps regarding Medicare Secondary Payer compliance to be taken during the settlement process. NJ is now adjusting their position consistent with the May 11, 2011, CMS Memorandum which clarified that the submission of a WCMSA is a recommended process for settlement that meets the workload review threshold – not a regulated process born by statute. Other states either have published similar positions or are currently investigating the same issue.

Of note, the July 11, 2012 memorandum does not wash away the recommended WCMSA process. Chief Calderone states, “Please note that the advantage of a CMS approved WCMSA is finality and assurance from CMS that the set-aside meets CMS standards and will not be challenged later. A non-approved set-aside could create uncertainty and the possibility of a later denial of Medicare benefits to a petitioner.” Clearly one can see that the need for finality and the lack of regulation have created confusion around the process of obtaining CMS approval of a WCMSA.

Franco Signor would like to point out that the pending legislation entitled “The Smart Act”, would open the door to regulation around an appeal process which would facilitate clarity in disputing the CMS approved number. As a result of this regulation, the industry would experience great delays. Both of these concerns point back to consideration of when to utilize the optional CMS WCMSA review process.

Consistent with the issue of requiring a state form be attached to the WC settlement documents has been adjusted. Chief Calderone points out that “[t]he parties may reach an agreement that is suitable for their particular situation such as naming one of the parties responsible for finalizing the CMS conditional payment process and/or allocating responsibility for any payments to CMS. While it is important that settlements or judgments reference the status of the CMS process, it is best left to the parties on how they want to resolve remaining issues with CMS.” Again the state is making an adjustment in response to follow the lack of clarity of the Federal process. While Franco Signor feels the position shift is appropriate, it is of concern overall that without guidance, confusion will grow in the area of Medicare Compliance. Chief Calderone acknowledges this possible confusion by stating, “Clearly to avoid later misunderstandings and potential client claims against counsel or others, it is recommended that the parties fully inform their clients of CMS requirements and their CMS compliance options.” Chief Calderon concludes this point by recommending clear written communication.

Overall the parties are left trying to navigate the various components of Medicare Compliance without state mandated guidance. A variety of options exist, which involve confusing and time intensive processes, that make clear the Medicare Trust is to be repaid for related conditional payments made during the life of the workers’ compensation claim. The parties have a duty to prevent an intentional shift of financial obligation for the ongoing medical needs from falling on Medicare subsequent to a worker’s compensation settlement of future medical benefits. Franco Signor’s goal is to keep our clients ahead of the curve of Medicare Compliance, while focusing on cost effective solutions.