Earlier this year, we about CMS updating its WCMSA Reference Guide. Specifically, we pointed out that CMS for the first time included explicit examples in which the settlements would not meet CMS’ Review Threshold for review of a proposed WCMSA, but which would still require consideration of Medicare’s interests.
The first example involved an under-threshold Medicare beneficiary settlement, and the second example involved an under-threshold “Reasonable Expectation” settlement (the settlement was below the $25,000 review threshold for Medicare beneficiaries). The second example involved a Social Security Disability (SSDI) entitled injured worker that would become Medicare eligible within 30 months of the settlement due to SSDI entitlement (the settlement was below the $250,000 review threshold for reasonable expectation claimants). In both under-threshold examples, CMS asserted that it had the right to recover the entire settlement if no future medical plan was included in the settlement to protect Medicare’s interests despite the lack of availability of CMS review on these WCMSAs.
This recent WCMSA Reference Guide update is a reminder that workers’ compensation payers need to not only remember to protect Medicare’s interests in settlements with Medicare beneficiaries, but also settlements with “Reasonable Expectation” claimants. A refresh on the Medicare Secondary Payer (MSP) compliance requirements with Reasonable Expectation claimants and how CMS defines Reasonable Expectation may be helpful.
Clearly, if at the time of settlement, the claimant is not Medicare-entitled, there are no conditional payment reimbursement or Section 111 reporting obligations. However, whether a WCMSA is necessary is not always entirely clear for settlements with claimants that would be defined to have “Reasonable Expectation” of Medicare entitlement as defined by CMS.
CMS’ WCMSA Reference Guide Version 2.9, Section 8.1 states the following regarding Reasonable Expectation:
A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:
• The claimant has applied for Social Security Disability Benefits
• The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision
• The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits • The claimant is 62 years and 6 months old • The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD If a threshold is met, a WCMSA can be submitted to CMS for approval.
These thresholds are created based on CMS’ workload, and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases.
Franco Signor’s legal department receives numerous questions on whether a WCMSA is warranted for a claimant that has applied for SSDI benefits and was denied. In a strict sense, according to CMS’ definition of Reasonable Expectation as referenced above, simply one application for SSDI puts a claimant in the Reasonable Expectation category. We will hear often that a claimant applied for SSDI as long as ten (10) years ago and have not re-applied for benefits, and the workers’ compensation payer will want to know if this takes the claimant out of the Reasonable Expectation category. CMS, unfortunately for workers’ compensation payers, has not put a time limit on when an SSDI application is so old that it no longer makes the claimant “Reasonable Expectation.”
Because MSAs are just one methodology (the preferred methodology by CMS) to protect Medicare’s interests, the decision to utilize an MSA in a settlement where the claimant has applied for SSDI may not always be clear, particularly if the claimant was denied benefits. It is up to the parties to decide whether they will elect to do an MSA in these scenarios according to their “appetite for risk.”
However, it is important to keep in mind that once a claimant begins receiving SSDI benefits, Medicare enrollment will typically automatically occur after twenty-four (24) months. Even still, this doesn’t mean that every person approved for SSDI must wait two years to get their Medicare coverage. The two-year Medicare waiting period generally gets calculated from the date of the claimant’s SSDI entitlement. Normally, this is the date the claimant’s disability began plus the five-month SSDI waiting period. Depending on how far back the disability is, the claimant may have met a substantial portion of the waiting period by the time the claimant is approved for benefits. But, because Social Security only allows a maximum of 12 months of retroactive benefits, plus the 5-month waiting period for benefits, the earliest that a claimant can become eligible for Medicare is one year after the claimant applies for Social Security disability.
As mentioned by CMS in its most recent Reference Guide and according to , if the claimant becomes a Medicare beneficiary within thirty months of the settlement and an MSA was not included, the claimant may have to expend the entire settlement on Medicare covered expenses related to the injury before Medicare will provide coverage.
Arguably, the best practice for settlements involving a claimant who has applied for SSDI is to consider an MSA in order to protect all parties and avoid loss or interruption of the claimant’s future Medicare benefits. However, the decision regarding whether to include an MSA in the settlement of the case rests with the parties to the settlement. If the parties wish to utilize the voluntary CMS submission process to receive CMS approval of the MSA, the total settlement must be over the current $250,000 review threshold. In addition to a claimant’s right to appeal a denial of SSDI benefits, they can also request a re-opening of their case, or file a new case. This should also be considered when the parties are making the determination to include an MSA in the settlement.
For questions on Reasonable Expectation and WCMSAs, please contact firstname.lastname@example.org.