6.6 Medicare Compensation Recovery

Where a worker receives compensation for their work related injury or illness, Medicare may require notification and repayment for any medical expenses it covered related to that injury. This process is referred to as Medicare Compensation Recovery and is administered by Services Australia (Medicare) under the Health and Other Services (Compensation) Act 1995 (Cth) (HOSCA).

Agents and must comply with the Medicare notification and recovery requirements under HOSCA. These requirements vary depending on the type of settlement A lump sum payment that replaces an injured worker's right to ongoing weekly compensation., agreement or decision, as detailed below.

The Medicare Compensation Recovery requirements outlined below are based on WorkSafe’s understanding of the HOSCA as it applies to Victorian workers’ compensation claims. Discussions are ongoing with Services Australia to confirm WorkSafe’s obligations under the HOSCA and streamline compliance, where possible

The Medicare Process below provides a quick reference guide of what is notifiable/recoverable.

See: Medicare Process

Agent obligations – judgments & settlements over $5,000

Agents are required to notify and repay Medicare for judgments or settlements of the following kind:

1. Common law settlement for pain and suffering damages only*

2. Impairment benefits payment

3. Voluntary settlement of weekly payments under Division 9 of Part 5 WIRC Act Workplace Injury Rehabilitation & Compensation Act 2013 Division 3A of Part IV of the ACA

4. Weekly payments settlement (e.g. via WIC Workplace Injury Commission, court judgment or settlement agreement)

5. Medical and like settlement (e.g. via WIC, court judgment or settlement agreement).

Where:

• the total amount of the judgment or settlement is fixed (rather than ongoing) at an amount above $5,000; or

• if the judgment or settlement does not specify an amount, it is fixed (rather than ongoing) and the total amount, being more than $5,000, can be ascertained (i.e. can be calculated).

*Note: Common Law both heads settlements excluded based on WorkSafe's interpretation of section 23(7) HOSCA, to be confirmed with Services Australia.

Examples

Under HOSCA, Agents are required to notify Medicare of the above settlements/judgments within 28 days of the settlement/judgment. The amount the Agent is required to pay to Medicare will depend on whether there is a current Notice of Past Benefits or Notice or Charge specifying the amount owed to Medicare.

Where there is a current Notice of Past Benefits or Notice or Charge

If there is a current (not expired) Medicare Notice of Past Benefits or Notice of Charge, the amount specified in this notice must be paid to Medicare within 28 days of the judgment or settlement. These notices are only valid for 6 months, and the expiry date will be listed on the notice.

To comply with HOSCA, Agents must do the following within 28 days of judgment or settlement:

1. Out of the settlement, pay the amount specified in the Medicare Notice of Past Benefits or Notice of Charge to Medicare. The balance of the settlement can then be paid to the worker, subject to any other required repayments as applicable (e.g. Centrelink recovery).

2. Notify Medicare of the settlement by emailing a completed Medicare Compensation Recovery Notice A Recovery Notice is issued by Centrelink to WorkSafe/Agent once Centrelink have determined the amount recoverable. The recovery notice specifies the amount that Centrelink is seeking to recover and the period that the recoverable amount relates to. A recovery notice legally prohibits WorkSafe/Agent from making any payments to the worker unless they have paid to the Commonwealth the amount specified in the notice. of Judgment or Settlement (MO022) form to Medicare along with supporting attachments as detailed in the form to compensation.recovery@servicesaustralia.gov.au
   Note: this form requires the Agent to include the worker’s Medicare card number and reference. The covering email should contain details of the payment to allow Medicare to reconcile the payment.
   For example: The X matter for worker X settled on X in the sum of X. A payment in the sum of X was made on X via EFT. Please find enclosed completed Medicare Notice of Judgment or Settlement dated X, and Notice of Past Benefits or Notice of Charge.

See: Medicare Compensation Recovery Notice of Judgment or Settlement form (MO022)

Once the settlement has been paid, a worker may be entitled to reimbursement under section 226 of the WIRC Act for all or part of the amount specified in the Medicare Notice of Past Benefits or Notice of Charge, given this amount should reflect medical and like services received for their work related injury or illness. In determining whether to reimburse the worker, the Agent must consider whether they would have been liable to pay for the individual services in accordance with Division 7 of Part 5 of the WIRC Act, had they not been covered by Medicare. A request for reimbursement should be supported by, at a minimum, the Medicare Notice with an itemised list of services.

Caution should be taken where this reimbursement relates to a medical and like settlement (to avoid the worker being paid twice for the same medical and like expenses). Similarly, Agents should not reimburse the worker the total amount listed on a deemed Medicare Notice of Past Benefits or Notice of Charge (as this amount is for all Medicare expenses incurred from the date of injury – these are not limited to treatment for the compensable injury).

Where there is no current Notice of Past Benefits or Notice of Charge

If there is no current (not expired) Notice of Past Benefits or Notice of Charge, the Agent should, subject to the below process, make an advance payment of 10% of the settlement amount to Medicare. This allows the worker to access most of their settlement right away.

To comply with HOSCA, Agents must do the following:

1. Prior to settlement (usually at the offer stage), the Agent must notify the worker of the intention to make a 10% advance payment. This should be in writing, as evidence of this notification may be required to be submitted to Medicare with the Medicare Notice of Judgment or Settlement form. This notification must set out the following:

   • The intention to make the advance payment

   • The amount of the advance payment (i.e. 10% of settlement amount)

   • The circumstances in which Medicare can retain some or all of the advance payment

   • The circumstances in which the worker will be required to make an additional payment to Medicare
     If this notice is not provided to the worker, the Agent can be liable to pay the whole amount owing to Medicare.
     WorkSafe has updated some of its template letters to incorporate this notification.

     If a template doesn’t exist, this notification obligation can be met by sending a letter or email to the worker along the following lines:
     AGENT is required by law to notify Services Australia (Medicare) of your settlement and repay Medicare for any benefits which related to your work injury from your settlement. AGENT has not received a current Medicare Notice of Past Benefits or Notice of Charge detailing the amount owed to Medicare. As a result, AGENT intends to make an advance payment of 10% of your settlement to Medicare. This allows you to access most of your settlement right away.
     Once we process the advance payment, Medicare will send you a statement that details all the benefits Medicare have covered since your work injury. You will then need to mark the services that relate to your work injury and return the form to Medicare. Once they receive it, they will send you a notice outlining the amount owed to Medicare.
     Medicare will keep only the benefits related to your work injury. If the amount listed in the Medicare notice is less than the 10% advance payment, Medicare will refund you the difference. If the amount is more, you may need to pay the additional amount.

2. Out of the settlement, pay 10% of the settlement amount to Medicare within 28 days of settlement. The balance of the settlement can then be paid to the worker, subject to any other required repayments as applicable (e.g. Centrelink recovery).

3. Notify Medicare of the settlement by emailing a completed Medicare Compensation Recovery Notice of Judgment or Settlement (MO022) form to Medicare along with supporting attachments as detailed in the form to compensation.recovery@servicesaustralia.gov.au.
   Note: this form requires the Agent to include the worker’s Medicare card number and reference. The covering email should contain details of the payment to allow Medicare to reconcile the payment.
   For example: The X matter for worker X settled on X in the sum of X. A payment in the sum of X was made on X via payment method, representing a 10% advance payment. Please find enclosed completed Medicare Notice of Judgment or Settlement dated X.

See: Medicare Compensation Recovery Notice of Judgment or Settlement form (MO022)

Once the settlement has been paid and a worker receives a Notice outlining the amount owed to Medicare, a worker may be entitled to reimbursement under section 226 of the WIRC Act of all or part of the amount specified in the Medicare Notice, given this amount should reflect medical and like services received for their work related injury or illness. In determining whether to reimburse the worker, the Agent must consider whether they would have been liable to pay for the individual services in accordance with Division 7 of Part 5 of the WIRC Act, had they not been covered by Medicare. A request for reimbursement should be supported by, at a minimum, the Medicare Notice with an itemised list of services.

Caution should be taken where this reimbursement relates to a medical and like settlement (to avoid the worker being paid twice for the same medical and like expenses). Similarly, Agents should not reimburse the worker the total amount listed on a deemed Medicare Notice of Past Benefits or Notice of Charge (as this amount if for all Medicare expenses incurred from the date of injury – these are not limited to treatment for the compensable injury).

Obtaining a Medicare Notice of Past Benefits

A worker (or their representative) can request a Medicare Notice of Past Benefits prior to settlement, which, if current (not expired) at the time of settlement, will become the Medicare Notice of Charge. This can be done by completing a Medicare Compensation Recovery Notice of past benefits request form (MO026). Services Australia’s website indicates that it is preferred that such requests are made only if the claim is expected to settle within the following 6 months.

When this form is submitted, a Medicare history statement and declaration will be issued to the worker. This history statement will list all Medicare benefits received by the worker since the date of injury, and require the worker to declare which benefits relate to their work injury. The Medicare history statement and declaration must be completed before a Medicare Notice of Past Benefits can be issued.

See: Medicare Compensation Recovery Notice of past benefits request form (MO026)

Section 23A Statement

If at the time of settlement, there is no current Medicare Notice of Past Benefits or Notice or Charge, and either of the following circumstances apply, the worker may submit a Medicare Recovery Section 23A statement form MO023:

• Where no Medicare benefits have been received in relation to the injury or illness, or;

• Where a Medicare Notice of Benefits or Notice of Charge has recently expired and the worker hasn’t received any Medicare benefits since the expired notice.

This can be submitted to Medicare with the Medicare Compensation Recovery Notice of Judgment or Settlement form. Upon receipt, Medicare will issue a Medicare Notice of Charge. According to the Services Australia website, this process can take up to 3 months.

This form can only be completed by the worker, as it involves a declaration that no Medicare benefits have been received by them. If a worker is intending to submit a section 23A statement, and requires assistance, they should be directed to their legal representative or Services Australia.

See: Medicare Compensation Recovery Section 23A statement form (MO023)

Agent obligations - Acceptance & reinstatement of claim - Reimbursement Arrangements

Under HOSCA, Agents are also required to notify Medicare of the following claims decisions:

• Acceptance of a claim for compensation more than 6 months after the claim was lodged

• Reinstatement of a claim for compensation more than 6 months after the claim was terminated.

These decisions are referred to as reimbursement arrangements under the HOSCA.

Examples

To comply with HOSCA, within 28 days of the decision to accept liability for the worker’s medical and like entitlements (i.e. acceptance or reinstatement decision), the Agent must:

• Email a completed Medicare Compensation Recovery Notice of reimbursement arrangement form to Medicare along with supporting attachments as detailed in the form: compensation.recovery@servicesaustralia.gov.au

See: Medicare Compensation Recovery Notice of reimbursement arrangement form (MO027)

Following receipt of this form, Medicare will commence the process to issue a Notice of Charge, including obtaining a Medicare history statement and declaration from the worker.

If Medicare issue a Notice of Charge on the Agent following notice of a reimbursement arrangement, this amount must be paid within the time period specified in the Notice. Please contact WorkSafe in the event the Agent or receives a request for the Agent to pay a deemed Medicare Notice of Charge (where Medicare is requesting payment for all services paid since the date of injury, not just those that relate to the compensable injury).

Further Information

Further information can be obtained from the Medicare Compensation Recovery Website.

The Medicare Compensation Recovery Team can be contacted via phone 1800 777 653 Monday to Friday 8:30 – 5pm.

Notices should be sent via email Compensation.Recovery@servicesaustralia.gov.au

See: Medicare Compensation Recovery information for insurers and other payers

Process

For Agent obligations under the HOSCA for Medicare - Follow the below steps:

Note: the below table is based on WorkSafe’s understanding of the requirements under the HOSCA as they apply to Victorian workers’ compensation claims. Discussions are ongoing with Services Australia to confirm WorkSafe’s obligations under the HOSCA and streamline compliance, where possible.

See: Medicare Compensation Recovery Notice of Judgment or Settlement form (MO022) | Medicare Compensation Recovery Notice of reimbursement arrangement form (MO027)

Payment/Decision Type	Notification Requirement	Recovery Requirement
Impairment benefit (IB) payment over $5,000	Notifiable as a settlement under section 23 of the HOSCA Must send: Medicare Compensation Recovery Notice of Judgment or Settlement (M0022) form - within 28 days of settlement	From the IB entitlement, must pay either: amount specified in current Medicare Notice of Past Benefits or Notice or Charge; or If no current Medicare Notice of Past Benefits or Notice of Charge has been issued at the time of settlement, pay 10% advance payment - within 28 days of settlement
Common law damages settlement over $5,000 – pain & suffering only	Notifiable as a settlement under section 23 of the HOSCA Must send: Medicare Compensation Recovery Notice of Judgment or Settlement (M0022) form - within 28 days of settlement	From the common law settlement, must pay either: amount specified in current Medicare Notice of Past Benefits or Notice or Charge; or If no current Medicare Notice of Past Benefits or Notice of Charge has been issued at the time of settlement, pay 10% advance payment - within 28 days of settlement
Common law damages settlement over $5,000 – pain & suffering and pecuniary loss (both heads)	Not notifiable. Note: Common Law both heads settlements excluded on interpretation of section 23(7), to be confirmed with Services Australia	Not recoverable.
Voluntary settlement of weekly payments over $5,000 (Division 9, Part 5 WIRCA/ Division 3A of Part IV of ACA))	Notifiable as a settlement under section 23 of the HOSCA Must send: Medicare Compensation Recovery Notice of Judgment or Settlement (M0022) form – within 28 days of settlement	From the voluntary settlement, must pay either: amount specified in current Medicare Notice of Past Benefits or Notice or Charge; or If no current Medicare Notice of Past Benefits or Notice of Charge has been issued at the time of settlement, pay 10% advance payment - within 28 days of settlement
Weekly payments settlement for a fixed amount over $5,000	Notifiable as a settlement under section 23 of the HOSCA Must send: Medicare Compensation Recovery Notice of Judgment or Settlement (M0022) form - within 28 days of settlement	From the weekly payments settlement, must pay either: amount specified in current Medicare Notice of Past Benefits or Notice or Charge; or If no current Medicare Notice of Past Benefits or Notice of Charge has been issued at the time of settlement, pay 10% advance payment - within 28 days of settlement
Weekly payments – ongoing receipt	Not notifiable	Not recoverable
Death benefits of any kinds (lump sum, pensions, funeral expenses, grief and loss)	Not notifiable	Not recoverable
Medical and like settlement for a fixed amount over $5,000	Notifiable as a settlement under section 23 of the HOSCA Must send: Medicare Compensation Recovery Notice of Judgment or Settlement (M0022) form - within 28 days of settlement	From the medical and like settlement, must pay either: amount specified in current Medicare Notice of Past Benefits or Notice or Charge; or If no current Medicare Notice of Past Benefits or Notice of Charge has been issued at the time of settlement, pay 10% advance payment - within 28 days of settlement
Acceptance of a compensation claim (including acceptance for medical and like expenses) within 6 months of lodgment of claim	Not notifiable	Not recoverable
Acceptance of a compensation claim (including acceptance of liability for medical and like expenses) more than 6 months after lodgment (e.g. rejection of claim overturned as a result of dispute more than 6 months after claim lodged)	Notifiable as a reimbursement arrangement under section 13 of the HOSCA. Must send: Medicare Compensation Recovery Notice of reimbursement arrangement form within 28 days of claim acceptance decision	Medicare may recover any amount owed. If Medicare Notice of Charge issued, must pay amount specified in notice by due date.
Acceptance of liability for medical and like expenses more than 6 months after terminating the entitlement (e.g. MLER termination overturned as a result of dispute more than 6 months after termination)	Notifiable as a reimbursement arrangement under section 13 of the HOSCA. Must send: Medicare Compensation Recovery Notice of reimbursement arrangement form within 28 days of acceptance (reinstatement) decision	Medicare may recover any amount owed. If Medicare Notice of Charge issued, must pay amount specified in notice by due date.
Acceptance of particular medical and like service or expense (as opposed to general acceptance of an entitlement to medical and like expenses broadly)	Not notifiable	Not recoverable
Acceptance of liability for a particular injury (as opposed to general acceptance of an entitlement to medical and like expenses broadly)	Not notifiable	Not recoverable
Medical and like expenses – ongoing receipt	Not notifiable	Not recoverable
Provisional payments	Not notifiable	Not recoverable

 

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