New Guidance from Medicare: Best Practices for Set Aside Proposals

On September 26, 2009 Medicare issued guidance as to how Set-Aside proposals “could” be submitted to Medicare. We expect that these recommendations will now be ‘best practices’ for dealing with Set-Aside arrangements.
History.
In July 2001 CMS issued a memo to its regional offices. It suggests that under certain circumstances parties to workers’ compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses. The memo discusses the circumstances under which the regional offices will “pre-approve” such an allocation. It discusses pre-approval in two categories of cases:
Cases in which the workers’ compensation claimant is currently entitled to Medicare benefits.
Cases in which the injured individual has a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is over $250,000 (Patel 2001, Question 1).
This enforcement of a previously-quiescent right to reimbursement (or set-aside) was new, and it has considerably impacted the handling of workers’ compensation claims since. As the Social Security system (and Medicare) approach the “funding gap” currently projected to be reached in 2018, we can expect that CMS will get more creative in their demands for set-aside and conditional payment reimbursement and increasingly draconian in enforcing their rights.
Medicare announced that the ‘threshold’ for reviewing cases was to be set at $25,000. Medicare refuses to provide a pre-approval of set-aside unless the lump-sum payment to the claimant exceeds $25,000.

Set-Asides.
After a case is settled, CMS wants the parties to create some form of “set-aside” arrangement in which the funds for future medical expenses that would be covered under Medicare are placed in a trust or deposited in a separate account. Medicare will begin paying medical bills for the work-related condition only when set-aside is depleted and the funds are accounted for.
The New Forms.
Medicare has issued a 38-page ‘checklist’ including sample forms that it ‘recommends’ submitters utilize. According to CMS, “cases using this or similar format can generally be processed more quickly with fewer errors – resulting in faster determinations at less cost to submitters and the government.” The ‘recommended’ submission form is divided into numbered sections to correspond to the electronic folders in which CMS scans and files documents for review. For submissions by CD-ROM, grouping and naming documents by the CMS conventions is the preferred method of delivery.

CMS recommends the following numbered sections:

Section 05 – Cover Letter;
Section 10 – Consent Form;
Section 15 – Rated Ages;
Section 20 – Life Care/Treatment Plan;
Section 25 – Court/WC Board Documents;
Section 30 – WCMSA Administration Agreement;
Section 35 – Medical Records;
Section 40 – Payment Information;
Section 50 – Supplemental – Additional Information.

We are constantly providing guidance to clients regarding Medicare obligations and liabilities. By publishing these new ‘recommendations’ we expect that service providers drafting set-aside agreements and claimant’s attorneys will be better prepared to obtain CMS approval of set-asides.
The CMS ‘sample submission’ and ‘checklist’ can be downloaded here (waring: external link to CMS, link is to a PDF).

Greg Lois is the managing partner of LOIS LLC and dedicates his practice to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 & 2017 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@loisllc.com