Updated CMS Guide Lays Out Risk of Skipping CMS Review of Worker’s Compensation Settlements

Insurers who are inclined to ignore a government review of proposed workers’ compensation regulations may think twice about this strategy due to an updated policy guidance released by the Centers for Medicare and Medicaid Services on January 11.

For the first time, CMS’s reference guide to workers’ compensation health insurance benefits says the agency will assume that insurers and employers who do not submit proposed workers’ compensation settlements for consideration attempt to shift the costs to taxpayers by setting aside insufficient funds for the plaintiff’s future medical care.

Additionally, section 4.3 of the updated guide states that CMS may refuse to pay for any medical treatment for a worker’s compensation claimant whose settlement has not been reviewed by the agency’s contractor until that the plaintiff spends the full amount of the settlement on medical care. This includes money that has been paid to cover compensation benefits in addition to the amount allocated for future medical care.

In a blog post published on Friday, law firm Goldberg Segalla said plaintiffs’ attorneys will likely start pushing for CMS-approved settlements because of the CMS threat that will force plaintiffs to spend their entire regulation.

“This will likely be a deterrent to many settlements, as CMS approval adds both time and expense to the process, while often overstating future medical expenses.”

The Medicare Secondary Payer Act requires employers and insurers who settle workers’ compensation claims to set aside sufficient funds to cover the cost of all care the claimant will need to treat the worker’s injury for the remainder of his life. Parties who do not face a future lawsuit by CMS who will seek to recover double the amount of damages if Medicare is required to pay for treatment that should have been covered by the insurer or the employer of accidents at work.

Employers and insurers can submit settlement proposals to a CMS contractor to ensure that the amount set aside for future medical care is sufficient. The process is voluntary, but provides protection against future lawsuits or, for the claimant, against CMS refusing to pay for medical care.

Many regulations never go through a CMS review. A number of consulting firms and law firms set aside by Medicare provide “evidence-based” estimates designed to ensure reserves are adequate, without setting aside the exorbitant collected amounts that CMS would demand in its review. .

S. Phillip Unwin, a partner at Goldberg Segalla’s office in Rochester, New York, said in a telephone interview that due to CMS’s latest guidelines, plaintiffs’ attorneys will be very reluctant to settle any claim that does not has not been reviewed by the CMS contractor. . He said this could discourage settlements, as CMS will likely require payers to set aside significantly more money than “evidence-based” private estimates.

Unwin says he already advises his clients not to submit proposed future medical settlements to the CMS contractor for review until the claimant’s condition has stabilized and the frequency of treatment slows. He said that because of the updated referral guide, more of his clients may be seeking “compensated only” settlements or avoiding settling claims requiring future medical attention.

Unwin said “there is a very high likelihood” that plaintiffs’ attorneys are advising clients not to accept settlements without CMS review due to updated language in the reference guide.

“Their clients are looking at a situation where if they move in without CMS approval, they may have to spend the entire settlement” on medical care, he said. “In most cases, it’s much more than the fallowing itself.”

Shawn Deane, general counsel for Ametros, said that over the past few years he has seen more and more settlement agreements that circumvent the CMS review process. Ametros administers the medical benefits that have been established for workers’ compensation claimants, ensuring that the money is spent on proper care.

Deane said so-called “unsubmitted” settlements are becoming more common because CMS assumes that the amount of medical treatment the plaintiff is currently receiving will continue at the same rate throughout the plaintiff’s lifetime. MSA consulting firms that provide “evidence-based” estimates of future medical care factor into more usual patterns. For example, they may assume that the applicant will eventually be weaned from painkillers.

This is not the case when CMS considers a proposal for future medical regulations, he said.

“It’s almost the worst case scenario,” Deane said. “They worry that some people will never improve, but most people do improve somewhat.”

Deane said in a blog post that some Mediare-only consulting firms offer to compensate their clients and the plaintiff if CMS sues to recover their treatment costs because the medical allowance is insufficient.

Deane said CMS has always strongly encouraged workers’ compensation payers to submit proposed settlements to its contractor for review and to use professional administrators, such as its own company, to ensure the money is properly spent. The review process remains voluntary, but now CMS has publicly stated that it is skeptical of “not submitted” settlements and clarified the severe penalties that can be imposed if the layoff is found to be insufficient.

“Now it’s clear,” Deane said. “Now it’s in writing.”