We were asked to consult on an interesting Medicare Secondary Payer case the other day.  A “working aged” employee (Medicare’s name for an employed beneficiary) covered by a workers’ compensation claim in a lifetime medicals state was injured on a loading dock by falling cargo.  The workers’ compensation carrier paid lost wages and medical bills arising from the incident and the claimant filed a tort suit against the trucking firm.

The problem is that the beneficiary claims that he must have shoulder surgery.  He plans to file a claim for the surgery with the workers’ compensation carrier.  The carrier states that the proposed shoulder surgery is unrelated to the incident.  They are going to deny the claim.  The trucking firm’s insurer plans to settle the claim.  As part of that settlement, the insurer is going to pay a lien filed by the workers’ compensation carrier.   What are the reporting and MSP obligations of the trucking firm’s insurance company arising from the liability payment?

Workers Compensation Carrier's Obligation

Let’s start by describing the WC carrier’s obligations.  Under Centers for Medicare and Medicaid Services, Section 111, Mandatory Insurer Reporting or MMSEA the carrier must report their “Ongoing Responsibility for Medicals” or ORM beginning from the “CMS Date Of Incident” or DOI.  Since this is a state with lifetime medicals, they are going to be responsible for all related medical payments until they can procure a letter from a physician that the claimant requires no further treatment or they settle the case.  Any medical bills paid by Medicare that the Medicare Secondary Payer Recovery Contract (MSPRC) determines to be associated with the injury are going to be sent to the WC carrier for reimbursement, which could include the shoulder surgery.  The WC carrier is on the hook for past and future medical payments.

Liability Insurer's Obligation

So, where does that leave the trucking firm and their insurance company?  Their first concern was the payment for past medical costs to the WC carrier.  According to CMS reporting rules, they do not have to report the payment of the lien as a TPOC and the logic here is pretty straightforward: the WC carrier is responsible for all medical costs arising from the injury and CMS is not interested in whether or not the WC carrier is recompensed for those costs by a liability settlement.  Their second concern was about the claimant’s WC claim for the shoulder surgery.  If the WC carrier denies the claim, will Medicare demand reimbursement from the liability settlement?  Is a Medicare liability set-aside required?

Having established that the WC carrier is responsible for payments related to the injury why would the liability insurer assume the claim?  Further, in this situation, the insurer has testimony from three physicians, two of which reject the hypothesis that the claim is related to the injury.  If the insurer has settled for past medical costs and has no obligation to compensate the claimant for any future medical costs, then the insurer can settle the case for pain and suffering without medicals.  If medicals are not included (aside from those funds used to pay the WC lien) in the settlement, the settlement should not be reported under Section 111 and there is no reason to consider a set-aside.

Engage Medicare Consul Service as your Section 111 Mandatory Insurer Reporting Agent and receive the benefit of expert advice at no additional cost.