Medicare is secondary payer to group health plan insurance in specific circumstances. It is also secondary to liability insurance (including self-insurance), no-fault insurance, and Workers’ Compensation (WC). An insurer or WC plan cannot supersede federal law by alleging its coverage is “supplemental” to Medicare.
Medicare may not pay for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” If responsibility for the WC claim is in dispute and WC will not pay promptly, the provider, physician, or other supplier may bill Medicare as primary payer. If the item or service is reimbursable under Medicare rules, Medicare may pay conditionally. This is subject to later recovery if there is a subsequent settlement, judgment, award, or other payment.
WC is a primary payer to the Medicare program for Medicare beneficiaries’ work-related illnesses or injuries. Medicare beneficiaries are required to apply for all applicable WC benefits. If a Medicare beneficiary has WC coverage, providers, physicians, and other suppliers must bill WC first.
Reporting a WC Case
All WC occurrences that involve a Medicare beneficiary should be reported to the Benefits Coordination & Recovery Center (BCRC). Medicare is required by statute to seek reimbursement for conditional payments related to the settlement. Further, Medicare is prohibited from making payment when the beneficiary obtains a settlement, judgment, award, or other payment. Medicare remains the secondary payer until the settlement proceeds are appropriately exhausted.
The parties to a WC settlement sometimes choose to pursue a CMS-approved WCMSA (Workers’ Compensation Medicare Set-Aside Arrangement) amount. This is to establish certainty with respect to the amount that must be appropriately exhausted before Medicare begins to pay for care related to the WC settlement, judgment, award, or other payment.
What Are Workers’ Compensation Medicare Set-Aside Arrangements?
The WCMSA goal is to estimate the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-injury-related conditions during the claimant’s life. This is also to set aside sufficient funds from the settlement, judgment, or award to cover that cost.
WCMSAs may be funded by a lump sum or may be structured, with a fixed amount of funds paid each year for a fixed number of years, often using an annuity. A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare. When a proposed WCMSA amount is submitted to CMS for review and the claimant (who may or may not be a beneficiary) obtains CMS’ approval, the CMS-approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment.
Past and Outstanding Claims
Generally, the term “past medical services” refers to Medicare-covered and otherwise-reimbursable items and services that the beneficiary receives before he or she obtains a WC settlement, judgment, award, or other payment. In situations in which Medicare has paid for WC-claim-related care before the beneficiary has obtained a settlement, judgment, award, or other payment, those Medicare payments are referred to as “conditional payments.” They are considered conditional payments because Medicare pays under the condition that it is reimbursed when the beneficiary gets a WC settlement, judgment, award, or other payment.
If a Medicare beneficiary has outstanding WC-related claims that were not paid by either Medicare or the WC carrier prior to the settlement, the beneficiary is required to pay for related unpaid medicals bills out of his or her WC settlement. Medicare cannot pay because it is secondary to the WC settlement.
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