Medicare Rules Impact Workers’ Comp Claims

More employers are opting to leave workers’ compensation claims open (and incurring additional costs for doing so) rather than satisfy Medicare set-aside funding requirements for closing cases with prescription drug expenses.  “The practice contradicts the orthodox strategy of cutting workers comp expenses by closing claims as quickly as possible and is among several forces driving an overall slowing of claims closures for older cases.”

This shift is driven by the large monetary value of prescription drugs for future medical expenses calculated by the Centers for Medicare and Medicaid Services (CMS).  When a claim with a medical component involves Medicare-eligible beneficiaries, employers or their insurers are required to notify CMS.  They then determine the amount claims payers must set aside for future medical expenses so Medicare will not be stuck with the costs.

CMS’ figures have been criticized for failing to take important factors into effect.  For example, their figures are based on the full price of brand-name drugs over the long term, rather than take into account that a lower-cost generic form will be available at some point.  In addition, they “fail to recognize that a claimant may need a prescription drug only for a finite period, rather than for his or her expected lifetime.”

As a result some employers are electing to pay the claims expenses over time rather than settle and fund the full amount calculated by CMS.  Other employers opt to wait until claimants are off certain drugs before settling a claim.

From Business Insurance, June 27, 2011 issue, pp. 1 and 21.