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On February 17, Centers for Medicare & Medicaid Services (CMS) held a webinar concerning Workers’ Compensation Medicare Set-Aside (WCMSA) and updates from Section 4.3 of the New WCMSA Reference Guide. John Jenkins, Health Insurance Specialist for CMS, and Contracting Officer’s Representative (COR) hosted the presentation and addressed a variety of questions on the topics.

Note: CMS opened the call with a disclaimer indicating that if there are any discrepancies between what is said on the call and what is written in the Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide (WCMSA Reference Guide or Reference Guide), what is written in the Reference Guide will control.

Treatments

When the Injured Worker (IW), due to comorbidities, is not medically cleared to have a recommended surgery CMS still wants the surgery to be included in the Medicare Set-Aside (MSA). It cannot assume the IW will not be able to meet the medical clearance requirement in the future.

 

No Treatment Necessary

  • According to Jenkins, if there is a reasonable expectation that there is or will be future treatment for an ongoing medical condition, the Workers’ Compensation Review Contractor  (WCRC) has a reasonable expectation that future care should be projected. If a specialist opines that care has concluded, the WCRC feels that it is extremely rare that an individual has only one provider, and there may be other providers including a primary treating physician that would recommend future care. If the individual truly does not need future care beyond a settlement and this is documented, the file should not rise to the level that requires submission. *
Medivest commentary: While not specifically mentioned on the call, Section 4.2 of the Reference Guide lists three requirements that should be met for this no future treatment necessary to take effect as an indication that Medicare’s future interests in a settlement are protected: 
“4.2     Indications That Medicare’s Interests are Protected
Submitting a WCMSA proposed amount for review is never required. But WC claimants must always protect Medicare’s interests. A WCMSA is not necessary under the following conditions because when all three are true, they indicate that Medicare’s interests are already protected:
        1. The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);
        2. There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and
        3. The individual’s treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury.”

 

Denial / State Specific / Hearings on the Merit

  • CMS recognizes there is such a thing as a legal denial. Jenkins emphasized that CMS standards say there must be some written response from a court of competent jurisdiction or associated board with authority under the law, pursuant to a disputed hearing on the merits. CMS will not decide whether a specific medical condition is or is not causally related to the compensated claim or whether it is or is not catastrophic if a statute limits WC benefits after a set time for catastrophic injuries. If you submit an unfunded “Zero MSA” for approval, CMS and its WCRC expects that such legal support will be included as documentation for the same. Any documentation must be signed by the legal authority.

 

Regarding a Medical Item, Service, or Expense Recommended by the Treating Physician but Denied by an Independent Medical Review (IMR)

  • It depends on whether an alternative treatment plan is provided. In California, the initial IMR denial is only good for a period of one year and does mean that the denial won’t be overturned on appeal. CMS’s position is if a submitter is going to send in a package and has an item, service, or a prescription drug that the IMR states does not meet the requirements of appropriate treatment, then the item, service, or expense will not be considered unwarranted by the WCRC unless an alternative treatment is provided. If there is no alternative item, service, or expense provided by the treating physician after any such denial, CMS will default to what the treating physician originally recommended.
Medivest commentary: This discussion addressed several areas discussed in the Reference Guide under Section 9.4.5 Medical Review Guidelines specifically listed in its subsection titled State-Specific Statutes, with the main points being listed below for additional clarification:
“A submitter requesting that CMS review the applicability of a state WC statute must include a copy of the statute with the submission and indicate to which section the topic in the submission the statute applies.
Submitters requesting alteration to pricing based upon state-legislated time limits must be able to show by finding from a court of competent jurisdiction, or appropriate state entity as assigned by law, that the specific WCMSA proposal does not meet the state’s list of exemptions to the legislative mandate. For those states where treatment is varied by some type of state-authorized utilization review board, the submitter shall include the alternative treatment plan showing what treatment has replaced the treatment in question from the beneficiary’s treating physician for those items deemed unnecessary by the utilization review board. Failure to include these items initially will result in pricing at the full life expectancy of the beneficiary or the original value of treatment without regard to the state utilization review board recommendation.
Note: Failure to include the required documentation at the time of original submission will not constitute a reason for the request of a re-review.”

 

Regarding RX Drugs

  • CMS is open to input from the MSP compliance community regarding improvements that might be made in the future regarding dispensing fees and the lowest-priced accepted national drug code at below average market rate.

 

Amended Review Process

  • CMS did not answer the question posed regarding approved cases that are over 72 months old and did not settle and whether the original MSA approval should be funded for approved cases.

 

Regarding Annual Attestation

  • Jenkins says CMS places a flag in their system related to body parts and treatment as a result of the CMS submission. That flag will not be removed from the system until the individual provides the attestation as per CMS guidelines.

 

Regarding Data Sharing with Part D Prescription Drug Plans (PDPs)

  • CMS is not currently sharing all data with Part D plans because those part D plans have not specifically requested it.

 

Regarding Non-CMS Approved MSAs

  • CMS indicated it had received a lot of questions regarding non-submit MSAs, so that was the driving force behind the inclusion of Section 4.3 in the recently updated WCMSA Reference Guide.
  • Jenkins indicated that CMS’s position with under-threshold WC settlements is that they never would have seen them. He indicated that CMS will issue additional clarification on how to handle those cases in the future.
Medivest commentary: Presumably to add clarification to Section 8.1 entitled Review Thresholds that already provides the two specific examples listed below to illustrate CMS expectations when a WC settlement does not meet Workload Review Threshold: 
“Example 1: A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim is offered settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00).
Example 2: A 47-year-old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the Settlement.”
  • With respect to non-approved products, CMS is still putting a marker in their system indicating there is a MSA. The marker allows CMS to avoid making payment.
Medivest commentary:  What was not discussed was how WC settlements compensating for future medicals but not submitted for approval to CMS (such as Evidence-Based Medicine MSAs or other non-submit WCMSAs) that are reported by Responsible Reporting Entities (RREs) for self-insured employers or WC carriers under Section 111 Mandatory Insurance Reporting will also be flagged for medical denials. RREs report the ICD diagnosis codes being compensated in a settlement at the time of their electronic Section 111 submission of data including the total settlement amount. Because an approved WCMSA amount is not listed for non-submitted WCMSAs, the default in the Common Working File (CWF) for the WCMSA amount is the settlement amount. Therefore, it seems highly likely that CMS will become more and more efficient in setting the system flags to deny future payments of medicals that correspond to compensated ICD codes deemed by RREs to be associated with a WC settlement. While the remedy of a denied medical is an appeal, if the goal is to not have an injured worker experience a future Medicare medical denial, CMS seems to suggest that the best way to address this issue would be to submit those WC settlements that meet workload review thresholds.
  • The non-CMS approved products do not allow CMS to put a marker in the system and block payment. Until recently, no one provided CMS with that documentation.
Medivest commentary:  This statement seemed to contradict the prior statement. The theory initially described was that only submitted WCMSAs are flagged for medical denials to help ensure that CMS complies with the MSP by not paying for medicals when the items, services, or expenses for those specific ICD codes were compensated by the WC settlement.  There was no discussion during this webinar on the interplay between Section 111 data and the data obtained via the WCMSA submission process.  We hope that CMS will clarify this issue moving forward.
  • There is the possibility the beneficiary will have to expend some of their funds outside of the MSA in a non-approved product situation – it was stated CMS was allowed to deny medicals up to the entire net settlement (allowing for a deduction for procurement costs to be consistent with existing MSP regulations).
  • CMS does not recognize the use of structured settlements for non-submitted MSA products. The individual must demonstrate they have exhausted the full value. CMS will only consider them as a lump sum settlement. CMS will not make payment until the full MSA amount has been exhausted even if they are notified the funding of the MSA was via structure.
  • The WCMSA does not demonstrate post-settlement compliance. The WCMSA is strictly an agreement between CMS and the CMS beneficiary about what dollar value/time, CMS will return as a primary payor if they can show the funds were used correctly. This is an agreement between CMS and the beneficiary only.
  • CMS will stick to the release date of Jan 11th, 2022, regarding how it handles the use of non-CMS approved products.
  • “If a non-approved product is priced correctly, Medicare is never going to see a bill.”
Medivest commentary: This was possibly the most important statement made by Jenkins.  He is admitting the reality that there certainly can be reasonably priced non-submit MSAs that do exactly what they were intended to do.  If the non-submit MSA accurately reflects the Medicare beneficiary’s injury related Medicare covered medicals and is exhausted exclusively for those purposes, then clearly Medicare’s interests have been protected because Medicare will not be prematurely (or ever) billed for those medicals.

 

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467. For any specific questions regarding MSAs of any type, click here.


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Protecting Medicare’s interests in a settlement is a legal requirement. In 1980 Congress enacted the Medicare Secondary Payer Statute (42 U.S.C. 1395y(b) or MSP), giving Medicare rights as a “Secondary Payer”. While the MSP does not specifically state how a party should protect Medicare’s future interests, the MSP law prohibits Medicare from making a payment where there is a primary payer involved but provides one exception for what is known as conditional payments. Medicare may make a payment under certain circumstances when a primary payer is involved such as a liability carrier or self-insured, and the primary payer has not yet demonstrated its payment obligation by settling a case or paying a judgment. These payments are called conditional payments because the Medicare payment is conditioned upon being reimbursed by the primary payer. The right to reimbursement is a direct statutory right of the U.S. for recovery of conditional payments, that carries steep interest assessments over 10% for demands not paid within 60 days and when left unpaid, can lead to recovery of double damages in litigation. The MSP also provides a right of subrogation where the U.S. is subrogated to the rights that Medicare beneficiaries have. It is important to know that along with the rights of the U.S. under traditional Medicare, which encompasses Medicare Part A and Part B, Medicare Advantage Plans also known as Medicare Advantage Organizations (Medicare Part C), and Medicare Part D Prescription Drug Plans, may assert a private cause of action under the MSP against primary payers and in some cases, those who receive payment from primary payers.

The MSP outlines what plans are deemed primary to Medicare. These plans or types of insurance are auto insurance, liability insurance including self-insured plans, workers’ compensation and no-fault insurance. Collectively, these are referred to as Non-Group Health Plans or NGHP. Medicare’s interests in a settlement applies not only to past payments (think Medicare liens) but to future medicals as well. When describing conditional payments and the right of the government to reimbursement, the MSP does not distinguish between pre-settlement conditional payments and post-settlement conditional payments. Therefore, Medicare’s rights to recovery may apply to post-settlement conditional payments anytime Medicare is prematurely billed for injury related medicals after settlement. In the Workers’ Compensation context, the policy of the Centers for Medicare & Medicaid Services (CMS), as the agency that runs Medicare, traditionally has looked to the employer or insurance carrier for the employer as the debtor for reimbursement of conditional payments arising prior to settlement. In the liability context, the Medicare beneficiary is considered the debtor for conditional payments. Because the MSP allows recovery from both the primary payer and any person or entity that receives payment from a primary payer such as the contingency fee of an attorney being paid from settlement proceeds, attorneys need to be aware of how to protect not only their clients but themselves from collection actions under the MSP.

Completing a Medicare lien investigation and reimbursing Medicare for past payments related to a claim is what most parties will do to consider Medicare’s past interests in a case. However, the most frequently overlooked piece when settling a liability claim is determining how much of the settlement money is being paid to compensate for future medicals and of that amount, how much of that would ordinarily be covered by Medicare. In other words, some trial attorneys may look at all the available damages when proceeding with a case but may not realize that they should also demonstrate a consideration of Medicare’s future interests regarding the future medicals. The repercussions of not addressing Medicare’s future interests in a case could result in Medicare denying payments for case related medical items, services, and/or expenses. This is Medicare’s primary enforcement mechanism post settlement. If done properly, actions taken during the representation of the injured plaintiff (whether enrolled in Medicare at the time of the representation or not) will help ensure that the injured Medicare beneficiary will have funds available to get the treatment they need and future Medicare entitlement for case-related body parts. Protecting Medicare, and the Medicare beneficiary, is a long-term play.

There are several options regarding how to consider Medicare in a settlement. The options will largely depend on the details of the case and there is not a single method that can be applied across the board. The Medicare Set-Aside (MSA) allocation is used frequently on workers’ compensation claims as a method to estimate Medicare’s future interests in a case. Medicare has offered guidance and put in place a voluntary submission process by which they will review MSA allocations that meet certain workload review threshold categories and will issue an approval (or counter approval) on the proposed amount. CMS, as the sub agency under DHHS that runs the Medicare program, publishes a WCMSA Reference Guide that outlines the format for MSA allocation reports and what information should be provided to have the MSA reviewed. Even though there is a well-established process for review of WCMSAs, there is no law requiring the completion of a MSA allocation on a WC case or any case.

As of July 2019, Medicare has avoided setting up a formalized process for review of liability MSAs and has not issued formal guidance or regulations regarding liability MSAs. It is this lack of guidance or a formalized process (like there is in WC) that has led many to believe they do not need to be concerned with Medicare’s future interests in a case. The general approach is to determine whether Medicare made conditional payments pre-settlement and if so, pay the pre-settlement Medicare lien (or negotiate it to satisfactory resolution), and close out the case. This approach is only the first step in adequately addressing and protecting Medicare’s interests. If you only consider Medicare’s past interests, you are placing you and your clients at risk.

Medicare will actually be aware of the case and the associated injuries. They are tracking this information via the MSP’s Mandatory Insurer Reporting (MIR) provision that comes out of Public Law Section 111 and is most commonly known as Section 111 reporting. Section 111 reporting is codified in the MSP under 42 U.S.C. §1395y(b)(8) and establishes MIR for either ongoing payment obligations or total payment obligations demonstrated by payments made by auto insurance, liability insurance including self-insureds, workers’ compensation plans or insurance, or no-fault insurance. If payment of over $750 is made regarding a claim of an individual who is a Medicare beneficiary, the primary payer (source of funds) is required to electronically report the amount of the payment, the date of the payment, the name of the Medicare beneficiary, date of the incident, and all the medical codes associated with the claimed injury (sometimes referred to as the Big 5), and a huge number of other data fields to Medicare. The information becomes integrated into what is known as the common working file for that Medicare claimant. Medicare places electronic markers for the claimant and for the medical codes (ICDs and CPTs) associated with the claimed injury. This information is ultimately used to “track the case” to ensure that Medicare is reimbursed for past payments (liens) and to help Medicare avoid making payments for future medical care related to the case for which it is not the primary payer. Medicare uses this information to monitor the file, check for unpaid liens, and notify parties of discrepancies. The MSP initially described penalties of $1000 per day per claim but was later amended in 2012 with the SMART Act and now describes financial penalties of “up to $1,000 per day per claimant” for noncompliance of any primary payer. CMS has not yet promulgated regulations regarding exactly how civil money penalties will be assessed and whether there will be safe-harbors for bona fide errors associated with the reporting process.

The Office of Management and Budget (OMB) provided indications in December of last year that CMS will be providing two Notices of Proposed Rulemakings (NPRMs) related to the enforcement of the MSP. Each are scheduled to be issued no later than September 2019. While the first could relate to any NGHP cases, because WC already has both regulations in the Code of Federal Regulations addressing Workers’ Compensation cases as well as a Reference Guide concerning WCMSAs, and no-fault claims don’t typically have future obligations, many in the industry have surmised that this first rulemaking will address protecting Medicare’s future interests in liability cases and putting back on the table the adoption of regulations or at least guidance (like a LMSA Reference Guide) on a possible review and approval process with workload review thresholds for CMS review of Liability Medicare Set-Asides (LMSAs). The second NPRM that is scheduled for the same time period will relate to the civil monetary penalties associated with non-compliance with Section 111 reporting. Once these two NPRMs are released, the best practice compliance behaviors for parties on both sides of liability cases should become even more clear.

Medicare’s primary enforcement mechanism regarding protection of Medicare’s future interests and the Medicare Trust Funds is denial of payments for medicals related to compensated third party injuries. However, what happens when Medicare’s computer system doesn’t catch a body part or claim previously compensated in a third-party settlement? Anytime and every time Medicare pays for those injury related medicals when it should not have, those conditional payments accrue as a growing collection action on behalf of Medicare. Our company has seen demands for payment that have included requests for reimbursement of post settlement medicals. We have also seen an uptick in recovery actions by the Department of Justice concerning collection of conditional payments. In March of 2019, a law firm in Maryland agreed to pay $250,000 to resolve a Medicare conditional payment demand on a case where the firm had already disbursed net settlement proceeds to its client. Last June, it was a law firm in Philadelphia that reached settlement with the Department of Justice to reimburse Medicare for conditional payments that were not paid out of trust and had already been disbursed to the client. Just because a plaintiff’s medicals might have been paid for by Medicare after a settlement in the past, does not mean that Medicare won’t deny those items or services in the future, or that it won’t demand repayment when it determines it made conditional payments. Imagine what could happen if Medicare began searching every single payment it makes and brushing that payment up against every settlement over $750 reported by insurance carriers. This is the future and could lead to some eye-popping dollar figures related to parties and legal representatives that failed to pay past Medicare liens and regularly fail to prevent future Medicare liens.

We should also not lose sight of the fact that if an injured individual does not set aside funds for injury related Medicare covered medicals and settlement funds are no longer available, that individual may not be able to get the treatment they need. Sadly, we often see that the MSA funds are the only funds remaining after about five years following a settlement. On a positive note, if MSA funds are exhausted and exhausted properly with the attestations and accounting that CMS likes to see, Medicare will typically step in and become the primary payer for those case related items going forward. Even though there is no law requiring the preparation of a MSA allocation, it is the safest and most conservative approach that can be taken. The injured party will obtain a detailed report outlining anticipated future medical care costs that are normally covered by Medicare. Along with a non-qualified report that typically comes along with a MSA allocation, you will have a better economic picture of all items, services and expenses reasonably expected in the injured plaintiff’s future. Obviously there will often be cases with such significant injuries and accommodations to living and transportation that could also benefit from an evaluation by an economist to take inflation into consideration and Life Care Plans that examines case management costs and some other costs that may not be evaluated in a MSA to help round out the best evidence to build your client’s case.

With a healthy respect for the extraordinary reach of the MSP, if the MSA funds administered are the total amount of funds projected in a LMSA and CMS is notified of the settlement and the amount of the MSA (different from asking CMS to review a LMSA), chances are less likely that there will either be a denial of the payment of post settlement injury related Medicare covered medicals after proper exhaustion or that post-settlement conditional payments would ever arise. Of course, when LMSAs are apportioned, questions abound whether Medicare may ever demand exhaustion of a full projected MSA versus an apportioned dollar amount that takes various factors into consideration of why a liability case may settle for less than full value. We could receive some indication of answers once regulations are promulgated regarding liability futures. However, in the meantime, a MSA allocation offers valuable protections regardless of whether an apportionment is calculated, because the MSA helps limit the extent of Medicare’s reach into a settlement. Without it, the default position taken by CMS for liability cases is that without a plan for future care, the entire settlement will be treated as the amount compensated for as future Medicals. Therefore, CMS would look for the entire value of the settlement to be exhausted in payment of future Medicals before Medicare would pick up coverage for that injury. Contemplating the MSA allocation in the settlement and making sure MSA funds are spent according to Medicare guidelines via professional administration is the safest and most conservative approach that can be taken to not only protect Medicare’s interests in a case, but to protect an attorney and their client from collection actions by CMS, helping to provide peace of mind for your injured clients.

 


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