CMS Pub. 100-18, ch. 14, § 50.12.1

Medicare may not pay for any item or service when payment has been made, or can

reasonably be expected to be made, for such item or service under a WC law or plan of the

United States or any State. CMS recognizes that diagnostic information is not collected at

the point of sale, however, Part D sponsors are expected to make good faith efforts to

identify claims associated with WC.

It is imperative that Medicare’s interests be protected when parties enter into WC

settlements. One method of protecting Medicare’s interest in a WC situation is a Workers’

Compensation Medicare Set-aside Arrangement (WCMSA), which allocates a portion of the

WC settlement for future medicals and future prescription drug expenses. “Future medicals

and future prescription drugs” are those services and items provided after the final WC

settlement. CMS recommends Medicare beneficiaries (and individua ls who expect to

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become entitled to Medicare within 30 months of receiving a WC settlement) who are

parties to WC settlements, judgments or awards submit WCMSA proposals to CMS for

review prior to settlement to ensure Medicare’s interests are considered. CMS reviews

WCMSA proposals for Medicare beneficiaries with WC settlements greater than $25,000

and for individuals who are within 30 months of Medicare entitlement and possess a WC

settlement greater than $250,000. Based on this review, CMS will either concur with the

proposal or determine a different amount deemed adequate in order to protect Medicare’s

interest. Additiona l information regarding CMS’ WCMSA policies, procedures and

guidelines is available on the CMS Website; refer to Appendix B for the specific Web

address.

WCMSA funds are administered by the claimant or a professional administrator employed

by the workers’ compensation employer, carrier or the claimant. CMS keeps a record of the

WCMSA amount determined by CMS to be adequate to protect Medicare’s interests with

regard to the claimant’s future medical treatment and/or prescription drug expenses. The

claimant/professiona l administrator is responsible for submitting an annual attestation form

or professional accounting to the Medicare contractor. This document attests that the

claimant has appropriately expended the WCMSA funds for that year.

In order to assist the Part D sponsors in making proper payments to WCMSAs, at the end of

2009, CMS began including costs related to prescription drugs in its settlements and

reporting WCMSAs under a distinct non-GHP MSP cost on the COB file. The WCMSA

amount reported on the COB file is the combined amount for future medicals and future

prescription drug costs related to the WC injury. In addition, the file will include the

administrator’s name, address and telephone number, the WCMSA settlement date, the total

prescription drug settlement amount, and an indicator specifying whether prescription drug

costs are included in the WCMSA amount.

Beginning in 2010, if the COB file record received from CMS indicated prescription drugs

are included in the WCMSA, Part D sponsors continued to make conditiona l primary

payment under Part D and promptly contact the administrator to determine which claims

should not be paid for under Part D. Once the Part D sponsor established that a certain drug

was included in the set-aside, the sponsor set appropriate point-of-sale edits, denied payment

and rejected the claim for billing to the primary payer.

Exhaustion of the combined WCMSA amount includes both services (i.e., future

prescription drug treatment and future medicals). For example, if the total WCMSA amount

provided to the Part D sponsors is $10,000, this amount can include $7,000 for future

prescription drug treatment and $3,000 for future medical expenses. However, Part D

sponsors must understand that although the total WCMSA amount is $10,000, the final

actual expenditures could be $6,000 for future prescription drug treatment and

$4,000 for the future medical expenses, which will still appropriately exhaust the WCMSA.

The Part D sponsors do not have the ability, via ECRS, to report the exhaustion of a

WCMSA fund. The beneficiary is provided paperwork, in the WCMSA approval package,

to complete and mail to the MSPRC when WCMSA funds have been exhausted. Once the

documents are received, the MSPRC will then take the steps necessary to notify the BCRC

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of this development. The CMS Regional Offices also have the ability, via ECRS, to report

the exhaustion of WCMSA funds. Once the entire CMS-approved WCMSA has been

properly exhausted, the Medicare Part D plan sponsor resumes responsibility for paying

claims for covered Part D drugs.