Situations where an individual has a "reasonable expectation" of Medicare enrollment for any reason include but are not limited to: a) the individual has applied for Social Security Disability Benefits; b) the individual has been denied Social Security Disability Benefits but anticipates appealing that decision; c) the individual is in the process of appealing and/or re-filing for Social Security Disability Benefits; d) the individual is 62 years and 6 month old (i.e., may be eligible for Medicare based upon his age within 30 months); or e) the individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

The same memos also indicate that if the claimant is not a current Medicare beneficiary, is not expected to become a Medicare beneficiary within 30 months following the settlement, and the total settlement amount is less than $250,000, Medicare's position is that they waive any interest in the settlement. In other words, it is unnecessary for the individual to establish a Medicare set aside if all of the following are true: a) the facts of the case demonstrate that the injured individual is only being compensated for past medical expenses; b) there is no evidence that the individual is attempting to maximize the other aspects of the settlement to Medicare's detriment; and c) the individual's treating physicians conclude that to a reasonable degree of medical certainty the individual will no longer require any Medicare covered treatments related to the workers' compensation injury.

Latest Changes on Life Expectancy Tables and Rated Ages

On May 20, 2008, CMS delivered its ninth memorandum on the Medicare Secondary Payer Act and workers' compensation. The memo indicated that effective with submissions received by CMS' Coordination of Benefits Contract on or after July 1, 2008, CMS will only accept life expectancies obtained from the CDC Table 1, "Life table for the total population."

On May 14, 2010, CMS published its fourteenth memorandum since 2001. The memo changed the rated age language to be included in Workers' Compensation Medicare Set-Asides (WCMSAs). The previous rated age statement from the submitter that all rated ages obtained on the claimant had been included is now rescinded. Instead, all WCMSA submitters must include the following certification statement in association with the rated age information: "Our organization certifies that all rated ages obtained on the claimant, at any time during that individual claimant's lifetime, have been included as part of this submission to the Centers for Medicare & Medicaid Services."

The CMS will not accept any variation or substitute wording. If a submitter is including rated age information in its WCMSA proposal, the new certification language must be included as written, with no exceptions. If this appropriate statement is not included as part of the WCMSA proposal, CMS will not accept the rated age provided. Instead, CMS will estimate the claimant's remaining life expectancy using actual age. All other requirements of acceptable proof of a rated age for a claimant are unchanged. Acceptable proof of rated ages is demonstrated through inclusion of independent rated ages on the letterhead of an insurance carrier or settlement broker.

Changes on Medication Pricing, Tapering, Off-label Use, and Generics

On April 3, 2009, CMS published its twelfth WCMSA memorandum since 2001. The purpose of the memorandum was to set forth CMS' procedures regarding the methodology of pricing future prescription drug treatment costs/expenses in WCMSA proposals. As a result of this memo, CMS began independently pricing future prescription drug treatment costs/expenses in WCMSA proposals beginning June 1, 2009. Where the related injury warrants the need of prescription drugs for the ongoing treatment of the related injury, CMS' independent pricing of the prescription drug amount will be calculated and priced using average wholesale price (AWP). The CMS will not use or recognize any other pricing, discounting, or calculation methods when determining the adequacy of the prescription drug amounts in WCMSA proposals.

Although not published in its usual memorandum format, on June 1, 2009, CMS published a guidance piece to supplement the April 3, 2009, CMS policy memorandum announcing prescription drug reviews effective June 1, 2009. The guidance indicates that the source for evaluation of sufficiency of WCMSA prescription drug component is the Red Book.

On May 14, 2010, CMS published its fourteenth memorandum since 2001. The purpose of this memorandum was to clarify guidance provided in CMS's April 3, 2009, and July 1, 2009, procedure memoranda regarding prescription drugs administered to Medicare beneficiaries for off-label and/or unlabeled outpatient uses and whether these drugs are considered covered by Medicare Part D and, therefore, appropriately included in a WCMSA proposal.

A covered Part D drug is "a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii)" of 42 U.S.C. section 1396r-8(k)(2). 42 U.S.C. Section 1395w-102(e)(1)(A). For a Part D drug to be covered by Medicare, and thus included properly in a WCMSA, the drug should be prescribed for an outpatient use that is approved under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. ? 301 et seq.], or supported by one or more citations included or approved for inclusion in any of the compendia described in subsection (g)(1)(B)(I) of 42 U.S.C. Section 1396r-8.

Effective June 1, 2010, for those workers' compensation settlements effectuated prior to June 1, 2010, and where the settlement included non-covered Part D drugs as part of the WCMSA, CMS will consider funds spent for those non-covered Part D drugs by beneficiaries and claimants as being an appropriate expenditure of funds as part of the WCMSA.

For those workers' compensation claims that were not settled prior to June 1, 2010, and where the settlement includes non-covered Part D drugs as part of the WCMSA, CMS will consider a re-pricing of those cases that included non-covered Part D drugs. Once CMS performs the re-pricing of the WCMSA, beneficiaries and claimants may not use funds from their WCMSA to pay for non-covered Part D drugs. Doing so constitutes an inappropriate expenditure of WCMSA funds.

For those workers' compensation settlements resolved on or after June 1, 2010, and where the settlement does not include non-covered Part D drugs as part of the WCMSA, beneficiaries and claimants may not use funds from their WCMSA to pay for those non-covered Part D drugs. Again, doing so constitutes an inappropriate expenditure of funds as part of the WCMSA.

Rafael Gonzalez is CEO of The Center for Medicare Set Aside Administration, LLC in Clearwater. He may be contacted at 877-433-8853; www.msacenter.com. Gonzalez will moderate a panel discussion entitled "The Bold New World of Taking Medicare's Interests Into Account" on Wednesday, Aug. 18, at the 65th Annual Workers' Compensation Educational Conference and 22nd Annual Safety and Health Conference in Orlando. Conference information is available at www.fwciweb.org.