Recent Medicare Compliance Alerts Affecting Workers’ Compensation Claims

Shawn Deane
General Counsel & Vice President of Claims Solutions | J29
Shawn.Deane@j29inc.com  

Last week, on February 14, 2024, the Centers for Medicare & Medicaid Services (“CMS”) released two (2) alerts related to Medicare Secondary Payer (“MSP”) affecting Non-Group Health Plan (NGHP) insurance types, including workers’ compensation. The first alert is associated with CMS’s annual low-dollar recovery threshold and the second relates to calculating life expectancy in a workers’ compensation Medicare Set Aside. Each will be addressed in turn.

Alert #1 - $750 Threshold Maintained

The first alert from CMS is titled 2024 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments and can be found here.

Prior legislation amending the MSP statute, known as the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the “SMART Act”), required, among other things, that CMS, on an annual basis, calculate and publish a threshold amount for settlements in relation to conditional payment recovery. As CMS indicates in their 2024 SMART Act NGHP Threshold Report to Congress, “[t]he single threshold amount for a year is to be set so that the average cost of collecting conditional payments is at least equal to the amount credited to the Medicare Trust Fund. This requirement ensures that CMS is not spending more to recover funds than it is collecting.”

Effective January 1, 2024, the threshold for physical trauma-based liability insurance, no-fault insurance, and workers’ compensation settlements will be $750. Settlements of $750 or less do not need to be reported to Medicare, and Medicare’s conditional payments do not need to be repaid, as long as such settlements are under the threshold amount and the relevant primary payer does not have ongoing responsibility for medical expenses. (emphasis added).

See 2024 SMART Act NGHP Threshold Report to Congress.

By way of background, conditional payments are those payments made by Medicare, during the pendency of a bodily injury claim, which were the responsibility of the primary payer (i.e., workers’ compensation, liability or no-fault insurer, including self-insurance). In workers’ compensation and no-fault claims, responsibility is typically demonstrated by the assumption of Ongoing Responsibility for Medicals (ORM). Responsibility can often be demonstrated by way of a settlement. It is important to note, there is no applicable dollar threshold in relation to ORM recovery. In the context of the alert, recovery is precluded if the settlement amount is $750 or less and there is no ORM.

To arrive at the 2024 $750 threshold figure, CMS determined the cost of conditional payment recovery in 2023. The Benefits Coordination & Recovery Center (BCRC) is the CMS contractor that performs recovery in liability, no-fault and workers’ compensation claims following a settlement (the Commercial Repayment Center (“CRC”) performs this recovery in ORM claims pre-settlement). The BCRC spent $52,488,253.66 on Coordination of Benefits & Recovery (“COB&R”) activities in liability, no-fault and workers’ compensation claims. CMS divided this total amount by the total amount of applicable conditional payment demand letters (166,660), which resulted in an average cost of collection per case of $315. CMS then compared the estimated collection per case ($315) to the average demand amounts per settlement range for liability, no-fault and workers’ compensation insurance types.

Based upon the above, CMS concluded:

…it will maintain a $750 threshold for 2024 so that physical trauma-based settlements of $750 or less do not need to be reported and Medicare’s conditional payment amount for these settlements does not need to be repaid… For no-fault and workers’ compensation insurance settlements, CMS will maintain the current threshold of $750, where the no-fault insurer and workers’ compensation carrier does not otherwise have ongoing responsibility for medical expenses.

Alert #2 – Use of CDC Life 2021 Life Table

The second alert announced that starting on February 24, 2024, CMS will utilize the Centers for Disease Control and Prevention’s (CDC) 2021 Life Table for Workers’ Compensation Medicare Set Aside (“WCMSA”) life expectancy calculation. A link to the Life Table can be found here: https://www.cdc.gov/nchs/data/nvsr/nvsr72/nvsr72-12.pdf

Life Tables are utilized to calculate the life expectancy of an injured individual for purposes of allocating Medicare-covered / claim-related healthcare expenses over their lifetime. Of note, a rated age is also typically used in calculating / adjusting this life expectancy.

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Author Bio

Shawn Deane
General Counsel & Vice President of Claims Solutions | J29
Shawn.Deane@j29inc.com  

(866) 529-6771

www.j29inc.com

As General Counsel & Vice President of Claims Solutions, Shawn Deane leads J29’s legal and Medicare Secondary Payer (MSP) services team. Shawn is a practicing attorney and has over 16 years of experience in Medicare compliance, workers’ compensation, and insurance claims. He was previously General Counsel & Senior Vice President of Risk Management & Compliance at the nation’s largest professional administrator of Medicare Set Asides. Prior to that he was Vice President of Medicare Compliance & Policy at one of the country’s largest Medicare Set Aside vendors. He’s an industry expert and thought leader in workers’ compensation, Medicare Set Asides (MSAs) and Medicare compliance. 

About J29

J29 is a women-owned business that offers Medicare Secondary Payer (MSP) compliance services providing Medicare Set Asides (MSAs), conditional payment / lien services and related solutions to all workers’ compensation stakeholders – including carriers, self-insureds, third-party administrators, and attorneys.

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