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States COVID Statutes and their impact on Medicare Set-Asides

April 27, 2022 · Medicare Insights Team

Since the start of the COVID-19 pandemic, 28 states have taken some level of action to extend workers’ compensation coverage to include COVID-19 as a work-related illness. Eleven states have statutes creating a presumption of coverage for COVID-19.¹ Depending on the state, the presumption of COVID-19 as an occupational disease could cover most workers or it could cover a specific class of workers.  For example, the Illinois statute covers all essential workers, while the Missouri statute covers only first responders.

Optum has noted at least one instance where a state’s presumption of COVID-19 being an occupational disease has impacted the outcome of a Medicare Set-Aside (MSA). In this case, the claimant in the state of Virginia made a claim for COVID-19 as a work-related occupational disease. The insurer denied the claim entirely, and the parties sought to settle the matter. The parties sought a zero-dollar MSA, which was rejected by the Centers for Medicare and Medicaid Services (CMS). CMS rejected the zero-dollar MSA on the basis that the state of Virginia enacted a presumption where COVID-19 is occupationally-related for this class of individual. With the presumption, COVID-19 is compensable under the workers’ compensation laws. As such, the MSA did not meet the requirements of a zero-dollar MSA. CMS required an allocation for COVID-19 that included pulmonology visits, chest x-rays and CT scans.

When dealing with MSAs that involve a COVID-19 claim, it is important to be aware of any state workers’ compensation laws that could impact the MSA allocation or potentially disqualify a zero-dollar MSA. It is likely CMS would require a court order to overcome a presumption of an occupational disease statute. It should also be noted in the Virginia example, that while there was no statute in place when the insurer denied the COVID-19 claim, the Virginia statute retroactively applied to claims dating back to 2020. There are still several states that are pending legislation on similar laws regarding presumption of occupational disease for COVID-19, which could impact future MSAs.

As a leader in MSP compliance, Optum is able to help navigate complex MSA issues and assist with your Medicare Secondary Payer related needs. 

If you have additional question regarding this topic or Medicare Secondary Payer compliance, please contact Optum MSP Compliance Counsel, Michael Flower, at michael.flower@optum.com or (813) 627-2406. 

1See https://www.ncsl.org/research/labor-and-employment/covid-19-workers-compensation.aspx for list of states that have enacted COVID-19 statutes related to workers’ compensation. 

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