Arkansas Act 1058: What About a Carrier’s Obligations Under the Medicare Secondary Payer Act?

Medicare Set-Aside Blog, MSP News, State Regulations on April 19, 2017 | Posted by Jean S. Goldstein, JD

Senate Bill 760, or Act 1058 (“the Act”) was signed into law on April 7, 2017.  The initial purpose of the Act was to clarify the Workers’ Compensation Death and Permanent Total Disability Trust Fund.  However, the bill was revised to expand the Arkansas Workers’ Compensation Commission’s ability to consider and finalize specific settlements.  Act 1058 now affords the Commission with the ability to consider both the employer’s and injured employee’s best interests when determining whether to order a final settlement.  Previously under the statute, the Commission was instructed to only consider the claimant’s best interests.  The Act also enables the parties to petition the Commission for a partial settlement, if the claimant is eligible for Medicare, on all issues other than future medical treatment.   The Act is further written to provide the Commission with the ability to determine that a final settlement is in the best interests of the parties, even when partial settlement has only been requested.

How Act 1058 Could Affect a Claim Within the Jurisdiction

Act 1058 requires that the Commission approve all final settlements, but also extends authority to the Commission to approve a partial settlement addressing everything but future medicals, if the employee is Medicare eligible.  Essentially in finalizing a case, the Commission could order that future medicals remain open in a case, if such an action would benefit either the employer or the injured employee.

The Act can also be construed to provide the Commission with the authority to finalize a settlement, when just a partial settlement has been requested.  In this scenario, there is one alarming question that needs clarification: what happens if there are future medicals?  Will the Commission finalize a case because it is simply in the best interests of a party?  Without more directives, the answer appears to be yes; this is within their discretion based upon how Act 1058 reads on its face.

Why It’s Important to Note Act 1058

Act 1058 does not specifically address considering Medicare’s interests, but rather bases finalizing a case in terms of what is in the best interests of a party.  The Medicare Secondary Payer Act requires that Medicare’s interests be considered when a primary payer exists, such as a workers’ compensation carrier.  Moreover, in any case in which a person is eligible for Medicare at the time of settlement of a claim, there are issues that may affect the settlement that must be taken into account.  Act 1058 does not specifically address these issues, nor does it address primary payer’s obligations.  In addition, with a partial settlement as guided under Act 1058, conditional payments for medical treatment that may have been paid by Medicare will still be subject to reimbursement.  Even with a settlement under Act 1058, a carrier’s obligations to Medicare are not terminated; conditional payment notices and letters will still be forthcoming and must be addressed.  Thus, opening another can of worms and possibly subjecting a carrier to additional costs and litigation down the road.  Therefore, it stands to reason that Act 1058 will affect a carrier’s or employer’s Medicare Secondary Payer obligations.  The Act further serves a reminder that:

1) various jurisdictions finalize settlements differently;

2) understanding and considering a claimant’s future medical needs at the time of settlement is paramount; and

3) it important to know a claimant’s Medicare status, at the time of settlement.

Recommendations Across All Jurisdictions

While ACT 1058 is specific to Arkansas, we have several recommendations that span across all jurisdictions:

  • Be proactive with respect to any potential Medicare Secondary Payer (MSP) issues.  It is the parties’ responsibilities to recognize potential exposure, and it is in the parties’ best interests to outline and consider Medicare’s interests within a settlement agreement;
  • Understand jurisdictional limitations and processes; and how these can affect your specific claim; and
  • Determine a claimant’s Medicare status prior to settlement.

Conclusion

As it stands, Act 1058 does not reasonably and adequately consider Medicare’s interests, but it remains to be seen whether additional clarification will be forthcoming.  The Act further serves as a reminder that there are still many unfamiliar with a primary payer’s obligations under the Medicare Secondary Payer Act.  For these reasons, having a thorough legal and medical understanding and analysis of your claim is the key to ensuring compliance under the Medicare Secondary Payer Act.

Contact us at info@medval.com with any questions or to further discuss our recommendations in your specific jurisdiction.