New Nebraska Legislation Allows Parties to Determine How Medicare’s Interests Should be Considered in Certain Settlements

Medicare Set-Aside Blog, Medicare Set-Asides, MSP News on April 26, 2018
Posted by Jean S. Goldstein, JD, CMSP

The Centers for Medicare & Medicaid Services (CMS) through various Memorandums and guides, has clearly stated that “[w]hile there are no statutory or regulatory provisions requiring that a (Workers’ Compensation Medicare Set Aside) WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process.”  Of significant note, the word is recommended; not required.  However, there are jurisdictions which have implemented a condition for approval of a workers’ compensation settlement: that if one of CMS’ established work review thresholds are met, the WCMSA must be submitted to CMS [1].  Nebraska has been such a jurisdiction, for which the Nebraska Workers’ Compensation Court formally released “Guidelines for Medicare Set-Aside Arrangements in Lump Sum Settlements [2]” which explicitly required that if one of the thresholds were met, CMS submission of a WCMSA was required. 

Last week, the Nebraska legislature approved Legislative Bill 953 (LB 953), which intends to alleviate the requirement of CMS submission for WCMSAs which meet CMS’ workload review thresholds.  The revised statute specifically requires that applications for an order approving a lump sum settlement be submitted to the Nebraska Workers’ Compensation Court for approval.  However, as a result of the amended statute, if the agreement contains the following it can now be considered sufficient for approval:

  • A concise statement of the terms of the settlement or agreement;
  • A brief statement of the facts concerning the injury;
  • The wages received by the injured employee;
  • A description of the medical, surgical, or hospital expenses incurred for treatment that will remain unpaid as part of the settlement which are disputed and have been denied; and
  • A statement that the parties have considered the interests of Medicare and have taken reasonable steps to protect any interests of Medicare.

Most significantly, the statute further indicates that the Compensation Court will “conclusively presume that the parties’ agreement relating to consideration of Medicare’s interests set forth in such lump settlement is in conformity with the compensation schedule and for the best interests of the employee or his or her dependents under all circumstances.”[3]  Thus, the statute is essentially stating that whether the parties choose to submit to CMS or not, if the agreement contains the above statement regarding consideration of Medicare’s interests, and the employee’s attorney affirms that the agreement is in the best interests of the employee; the agreement should be deemed sufficient for approval. 

Interestingly, the standard of best interests is peppered throughout the new statute; and while the previous version of the statute also addressed this standard, it is the revised version that truly seems to take into consideration that which will benefit all parties. The regulation is now stating that CMS submission is not required, even if one of the workload review thresholds for CMS submission are met.  What remains to be seen is when the Workers’ Compensation Court issued “Guidelines for Medicare Set-Aside Arrangements in Lump Sum Settlements” will be revised to reflect the amended law.  Nonetheless, LB 953 is a significant change and we hope the Nebraska Workers’ Compensation Court will soon revise their guidelines and expectations for settlements of cases involving such settlements.

The decision to submit a WCMSA to CMS is one that must be based upon risk management decisions, as well as various circumstances, including unique medical and legal factors, and the inherent costs which are associated with the CMS review and submission process.  Submitting a WCMSA can be quite expensive, not only in actual costs, but also due to unanticipated development delays.

Over the past eight years, MEDVAL’s clients have enjoyed the benefits of fully compliant MSA programs that avoid the significant overfunding costs associated with common settlement processes. We have many clients whose cost avoidance programs reduce excess spending by several millions of dollars per year.  Contact us today to start a dialogue on how we can impact your goals for 2018.

[1] The CMS work review thresholds are when one the following apply:

  • The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
  • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

[2] Last revised 10/31/17.

[3] Of note, the Court on its own motion may hold a hearing on the application for approval.