How the Government Shutdown Will Impact Workers’ Comp

By: | January 7, 2019

Jean is Senior Legal Counsel at MEDVAL and has over 15 years of diverse legal experience in Medicare Secondary Payer (MSP) compliance, litigation, and elder law. At MEDVAL, her focus is on MSP compliance and the resolution of claims involving liability, no-fault, and workers’ comp insurance. Jean is a nationally recognized blogger and author on MSP compliance and claims management.

The partial government shutdown has now entered its third week and has officially survived two differently controlled Congressional Houses. The entire nation has been affected by the shutdown in some manner. In fact, the shutdown and current political impasse may have a cascading effect through various industries, including the workers’ compensation industry.

In the immediate forefront of the shutdown, much of the workers’ compensation industry will not be disrupted. While Social Security benefits will continue to be paid, all nonessential services will be discontinued, which includes Social Security benefit verifications.

Social Security benefit verifications are often obtained in workers’ comp cases to confirm the benefits received by an injured worker. The temporary discontinuation of this service will only mildly affect the workers’ comp industry, in that parties will not be able to obtain a direct verification of individuals’ benefits to determine Medicare beneficiary status or Social Security Disability Benefit status.

This partial government shutdown is certainly different than the last time we experienced a full government shutdown in 2013.

At that time, many employees of the Centers for Medicare & Medicaid’s (CMS) offices were furloughed. As a result, the CMS Regional Offices were unable to perform all agency functions. For those who deal with workers’ comp claims in the Medicare Secondary Payer[1] arena, many will recall that the 2013 shutdown affected the processing of Workers’ Compensation Medicare Set-Asides[2] submitted through the voluntary review program, as established by CMS. However, the agencies and contractors that work with CMS are fully-funded through fiscal year 2019, and CMS and its programs will be largely unaffected by the partial government shutdown[3].

Even though CMS continues to be operational, there are other facets of this government shutdown, which may have a lasting impact on the workers’ comp industry.

Read More: How to Keep Health Care Coverage Going During the Government Shutdown

The true impact of the shutdown is very much dependent upon how long the shutdown and stalemate between both political parties continues. Although, we can knowledgeably speculate the unforeseen chain of events that will occur if the shutdown does not end soon.

Various sources have cited that 800,000 federal workers are furloughed or are working without pay. The federal workers’ comp system will certainly be impacted by this shutdown, but overall 800,000 unpaid employees will also have a direct impact on the economy and therefore the workers’ comp system.

Historically, workers have received backpay after a shutdown, but it remains to be seen as to whether that will happen with this shutdown.

Amongst the cited figure of 800,000 workers, some are employees of the Internal Revenue System (IRS). The IRS’s lapsed appropriations contingency plan indicates that only 12 percent of the IRS workforce is designated as “excepted/exempt” and able to work during the shutdown. Therefore, it is extremely likely that there will be delays in taxpayer refunds.  The delay of taxpayer refunds and workers remaining unpaid equates to less spending by consumers, and less spending has a direct and lasting impact on the economy.

When consumers are optimistic, there is more economic growth, including job growth across all industries. Therefore, less spending corresponds to less workers and less job growth, which will directly impact the workers’ compensation industry. Most importantly, less workers ultimately means less workers’ comp claims.

Additionally, the workers’ comp industry may be impacted by anticipated delays in the federal court system. If federal courts lose funding, which is expected to occur this week, and many civil cases are subsequently placed on hold, resolution of some federal claims may be attempted through means of arbitration through state court systems. This in turn, may cause bottleneck delays in state courts, which may also impact the timely resolution of workers’ comp claims.

If this government shutdown does not end soon, it will have a lasting impact on the economy. Ultimately, it is the strength of the economy which directly influences growth and stability in the workers’ comp space.

While it is true that the effects of this shutdown will not be immediately felt by much of the workers’ compensation industry, the cascading effects of the shutdown will disrupt the industry if an end is nowhere in sight. &

[1] Medicare Secondary Payer provisions ensure that Medicare does not pay for medical items or services when there is other insurance coverage that is primary to Medicare.

[2] A Workers’ Compensation Medicare Set-Aside Arrangement allocates a portion of a workers’ compensation settlement to pay for future medical services and treatment related to a workers’ compensation injury, illness or disease.

[3] This includes the Workers’ Compensation Review Contractor, the Benefits Coordination & Recovery Center and the Commercial Repayment Center, which are operational and continuing services.

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