The Centers for Medicare and Medicaid Services (CMS) may be allowing an exception to the federal rule that asserts no state law will supersede its jurisdiction under any circumstances. An updated Reference Guide for Worker's Compensation Medicare Set-Aside Arrangements (WCMSA) version 2.6, suggests that CMS may be more willing than before to let state law influence the results of WC cases that involve CMS beneficiaries. If that's the case, then the remedies and damages available to injured CMS-eligible workers may differ depending on their state of residence.
Traditionally, federal law supersedes state law, so federal rules that impose obligations on citizens preempt state rules that may cover the same duties. However, as we referenced in our March 2017, blog post, in 2013, the state of Georgia passed a law that limited to 400 weeks (seven years, eight months) an employer's obligation to provide long-term healthcare coverage for injured workers in certain WC cases. According to federal law, the rules promulgated by CMS govern in cases where injured workers are also Medicare beneficiaries or eligibles. In those cases, if a worker suffers injuries that will require lifetime care, then the liable employer must ensure that the resulting Medicare Set Aside (MSA) account provides those resources for that lifetime. The Federal goal is to shield CMS from having to assume future healthcare payments that, by law, should be covered by another entity. On their faces, the CMS "lifetime coverage" rule would supersede Georgia's 400-weeks rule for injured workers who are also Medicare beneficiaries or eligibles.
However, language entered into the newest edition of the Reference Guide suggests otherwise. Released in 2017, the new guide and its revised language indicate that, when submitted with the originating case documents, CMS will review documentation that supports a finding that a state statute that permits limitations on treatment for WC injuries is applicable and enforceable. In these cases, the MSA would be tailored to comply with both the federal and state law.
The new language does change WC claims cases in two significant respects, each of which could have a profound impact on all cases based on injured Medicare/Medicaid recipients/eligibles:
The guide shifts the timing of the argument (that state law is relevant and appropriate) from the review stage to the case initiation stage, giving insurers only one opportunity to present the concern. The timing change may indicate that CMS is adopting a more systematic approach to evaluating how states manage the damages aspect for their injured, CMS-related workers. However, even though the agency has previously accepted such documentation at the review stage, in practice, it has rarely determined that the state law would prevail. It remains to be seen if receiving the documentation at the beginning of the case will alter that traditional outcome.
The new guide also appears to open a door that would allow state rules to influence WC cases that previously have been decided solely by federal law. The specific language requires entities seeking to limit their long-term exposure for injured worker damages to provide "findings from [a competent state court] that the WCMSA proposal does not meet the state's list of exemptions to the legislative mandate."
In layman's terms: if the MSA proposal limits benefits AND the case itself does not fall under a state-based exception to a rule mandating those benefits, then the limited MSA value may be authorized. So, for example, if a state law limits long-term coverage except under certain circumstances, and the case with the relevant MSA proposal doesn't have those circumstances, then the insurer can limit the duration (and amount) of medical coverage for those WC injuries suffered by Medicare recipients.
The wording appears to be an accommodation for Georgia's 400-week rule. That rule permits the limiting of medical coverage for WC injuries to 400 weeks, unless - (here's the exception) - those injuries are deemed "catastrophic." When read in conjunction with the new Guide language, Georgia, insurers must obtain a court's determination that proves that the WC injuries at issue are NOT catastrophic before they are allowed to limit medical benefits associated with the injuries to 400 weeks. For those entities that are submitting MSA's to CMS for review, new filings will need to include a documented determination by a Georgia court that this claimant's injuries are not catastrophic before CMS would approve the reduced MSA proposal.
So, at least in Georgia, the new Guide adds an extra step to the creation of an MSA proposal that seeks to limit the duration of WC coverage - proving that the injuries are not catastrophic. By Georgia law, "catastrophic" injuries include the loss or paralyzation of limbs or appendages; severe brain injuries; 3rd- or 4th-degree burns over more than 25% of the body; blindness, or "other injury ... prevents the employee from performing their prior work ...." Note, also, that the Georgia law also offers the opportunity to rebut an assumption that an injury is catastrophic, which suggests there will be more litigation over this issue in that state in the future.
What this means for other states is unknown. States that have WC-claim-limiting language on their books may want to review it to determine how the new CMS language affects their WC activities moving forward. States that currently have no limiting legislation similar to Georgia's may now consider passing something to reduce in-state insurer exposure to potentially expensive WC claims.
The new Guide language and two new CMS contractors are already changing the always-fluid CMS/MSA landscape. For help understanding how CMS changes will affect your MSA activities, give us a call today.