The Medicare and Medicaid systems are fundamental sources for healthcare services for America’s seniors and disabled people. The Centers for Medicare and Medicaid Services (CMS) runs the healthcare networks that span the country and provide medical services for millions of people. When Medicare-eligible people suffer injuries at work, CMS can only provide healthcare funding when there is no other entity who is or should be held liable for those costs. It is this circumstance – the nexus of the CMS and Workers’ Compensation (WC) systems – where numerous issues and concerns arise in many, many injured worker cases.
History of Medicare and Medicaid
Most people recognize that maintaining good health becomes increasingly expensive as one ages. The number and severity of chronic conditions – diabetes, high blood pressure, arthritis, etc. – often increase as strength and agility decline. For these reasons, in 1965, the United States government developed the Medicare system – to ensure older Americans had access to appropriate health care services. The system assured a universal right to health care at the age of 65 years, which also reduced the cost to public hospitals of caring for otherwise uninsurable elderly patients.
However, establishing the system took time, and its implementation was fraught with delays, confusion, and arguments: what services should be offered? By Whom? Who will pay for those services, and how will those payments be made? Over time, various state and federal officials worked through many of those ‘kinks,’ and today’s system runs relatively smoothly, considering it retains thousands of healthcare professionals and provides services to more than 44 million Medicare recipients.
Back in 1965, during the development of the Medicare system, several decisions were made that have proved critical to the success of the public health care system:
- A compromise among three competing structural proposals resulted in a two-part senior healthcare plan, with a third prong covering low-income and disabled persons:
- Medicare Part A provides insurance coverage for hospital costs of seniors, and
- Medicare Part B covers outpatient physician services.
- The third prong established a right to healthcare for low-income families (regardless of age), the blind, and the disabled and eventually was titled, “Medicaid.”
- The money to pay for these services would come from every employed worker in the country, who would contribute a small portion of every paycheck into the national fund. The system would record their contributions and, when those funds were needed, the worker would be guaranteed access to healthcare services, regardless of actual cost.
These two decisions – the services to be available and who would pay for them – laid the foundation for today’s Medicare and Medicaid programs. These programs provide healthcare services for millions of seniors and disabled people who would otherwise have no access to relevant medical resources.
Generally, one’s age, legal status, and/or diminished capacity determines their eligibility for Medicare.
Medicare Part A – Hospital Insurance
Medicare Part A services are provided to every person 65 years or older who paid (or whose spouse paid) Medicare taxes for at least ten years. It is also available for younger people who have disabilities, and anyone with End-Stage Renal Disease. Recipients aren’t required to pay premiums for the services if they are eligible to receive or are receiving Railroad Retirement or Social Security benefits. Otherwise, recipients can purchase Part A coverage.
Medicare Part B – Medical Insurance (Outpatient)
Part B coverage is optional, and everyone who wants it must pay for it. To qualify, each recipient must be at least 65 years and a citizen or legal resident of the United States. These payments are deducted from Social Security or Railroad Retirement benefits, or the recipient is billed every three months.
Medicare Part C – Privately Provided Add-ons
Part C is offered through private healthcare companies that provide additional services as well as Medicare Parts A and B (usually vision, dental, and hearing services, among others). These companies received payment from Medicare for their Medicare-eligible recipients, and charge an additional premium for the additional coverages.
Medicare Part D – Prescription Drugs
Neither Part A nor Part B includes coverage for prescription drugs, which are covered by Medicare Part D.
People under 65 years can also receive Medicare benefits if they have qualified for Social Security Disability Insurance (SSDI) and have been receiving those benefits for at least 24 months. The Social Security Administration manages these benefits.
Medicaid is separate from Medicare in that it is administered by the States, according to federal rules. Both the state and federal governments pay into the funds providing Medicaid services. Medicaid recipients include low-income individuals and families, children, pregnant women, and people with disabilities.
Medicare’s Connection to WC cases
As we noted in our post of September 3, 2019, Workers’ Compensation insurance gives both injured workers and their employers a ‘litigation-free’ venue for resolution of issues arising from on-the-job injuries. The process eliminates the need to determine liability (via expensive lawsuits) while ensuring that injured workers receive the medical and injury care they need to recover. In these cases, most often, the proceeds from the WC insurance are the sole funds used to cover the injured person’s medical costs during recovery and rehabilitation.
Recently though, as the American population ages, more people are working well into their 60’s and beyond. They may be eligible for both Medicare coverage in addition to WC coverage if they are hurt at work. A fundamental challenge arises from this scenario based on the original purpose of the funds that are used:
- The employer pays a premium that provides WC funding for the specific purpose of ensuring its workers have access to medical resources in the event of an on-site injury. Several factors influence WC premium values, such as relative levels of on-site risk, available safety mechanisms, and worker safety training, among many other variables. Each of these worksite factors is designed to reduce the likelihood of an injury. The employer and its WC insurance company must use those calculated WC funds specifically to assist the injured worker while concurrently holding the employer safe from liability claims.
- Medicare funds, on the other hand, are available only due to the worker’s age or capacity and are earmarked to cover costs when there are no additional insurance or other funds available. Most importantly, these funds are intended to be used only when the person has no other healthcare resources available, and Medicare funds are their sole means of obtaining healthcare services.
In the case of an injured worker who is also over 65 years of age, these two funding sources are available for those medical costs because they qualify in both systems. Further, either or both sources are often tapped for use early on, in the immediate aftermath of the injury, when urgent care is necessary. It’s usually only after that immediate care is provided and the patient is stabilized that the financial professionals look into the cause of the injury, and that’s where Medicare funding can muddy up the WC case.
Causation and Medicare in a WC Case
In a straight-up WC case, the actual cause of the accident may not be significant to the case’s final resolution (that’s what the insurance is for). In the WC/Medicare cases, however, causal factors may matter a lot.
Under the Medicare Secondary Payor Act (MSP), Medicare funds are deemed ‘secondary’ (to be used after primary funds are exhausted) to those of other, non-employer entities if they contributed to the cause of the injury. However, that ‘secondary’ classification can’t be made until those contributing factors are established, and that determination may not be made for days or even months after the incident. The MSP Act asserts that when another entity is deemed to have caused the injury, then it is improper to use Medicare funds to cover the cost of the recovery. Further, when that determination is made, but Medicare funds are already dispensed, then the CMS has a legal duty to go after that other entity to retrieve those funds back.
Investigations are Critical for Protecting Medicare Funds
Ergo, the investigation of both the cause of and the responsible parties for a workplace injury often drags out the WC case, and creates the need for CMS oversight and also, in many cases, litigation. As we noted in our October 1st blog post, there can be many contributors to the cause of a workplace injury. Many companies use third-party contractors in their business, whose on-site activities may have caused a dangerous situation. Other participants in the work at hand may also be contributors, such as the manufacturer of tools or machinery in use at the time. Consequently, in any case when a non-employer entity may be responsible for the conditions that caused the injury, then CMS will pursue the case to ensure that no Medicare funds are spent inappropriately for medical services related to that injury.
The Medicare Set-Aside Account
After making those determinations and identifying the entity(ies) responsible for causing the injury, then an account is often created to maintain the funding needed for those healthcare services until they are no longer necessary. For injured workers who are also Medicare-eligible or recipients, that account is (in most cases) a Medicare Set-Aside account, which holds injury-specific healthcare funds to prevent the use of Medicare funds for that purpose. Additionally, CMS tracks the use of those funds over time; entities responsible for managing those funds must report on how they are used and can be fined if they fail to report or misuse the money.
See our post next month to learn how Medicare Set-Asides are established and managed to protect the interests of both the Medicare recipient and the Medicare system in general.