Conditional Payment Recovery is not for Wimps

Workers’ compensation, auto personal injury protection (PIP) insurers, commercial premises med pay insurers and all liability insurers continue to struggle with the recovery compliance process concerning the repayment to Medicare conditional payments CMS believes are owed as demanded.

The dispute process and challenge to the indebtedness is complex and must include supporting documents such as medical evidence, judicial decisions, and state statutes controlling the underlying claim, so arguments and defense may be included in the rebuttals and appellate briefs submitted.

The risks and potential consequences of ignoring demands and not reimbursing Medicare and/or Medicare Advantage Plans (MAP) are generally unacceptable and costly to self-insureds, insurers, and third party administrators (TPAs). Unfortunately, there is still a lack of knowledge, experience, and expertise in managing conditional payments as the regulations change and become more comprehensive and as the Centers for Medicare and Medicaid Services (CMS) recovery contractors rely on what has already been reported to CMS via Section 111 mandatory insurer reporting (MIR).

It is not uncommon, and understandably so, for an adjuster to take the path of least resistance and merely reimburse Medicare the total amount of the conditional payment amount to simply close the file or to ignore the conditional payment demand altogether until the notice of intent to refer the debt to the Department of Treasury is received.

When one inexperienced in this process blows through the first and second levels of appeal—redetermination and reconsideration respectively—it takes over two years to bring the third level appeal before an administrative law judge. If all applicable arguments and defenses have not been raised at the second appeal level, they are waived and may not be heard or considered.

In this discussion, we will explore and dissect actual cases illustrating three misconceptions continuing to plague conditional payment recovery involving counterintuitive ideas we may not wish to confront:

  • What has already been reported to CMS via Section 111 MIR trumps all legitimate medical and legal arguments and defenses as well as what the parties have agreed upon unless and until corrected.
  • Conditional payments related to injuries/illness claimed and released must be reported and reimbursed even when liability/responsibility is unlikely or disputed.
  • Diagnosis codes bundled by the provider on a specific date of service may have to be repaid even if not treated and even if not the reason for the provider encounter.

Let’s begin by examining a case in which defenses and arguments were presented that should have resulted in a significant reduction in conditional payments.

Case 1

Mr. Bagley was a 64-year-old baggage handler for ACME Airlines. On July 8, 2010, Mr. Bagley complained of pain in his back and neck after handling over 350 bags in one day. He reported the pain to his supervisor and a workers’ compensation claim was filed. After the initial investigation, the following aforementioned injuries were deemed compensable: lumbar strain (847.2) and cervical strain (847.0).

However, he was not yet a Medicare beneficiary. Eventually, ongoing responsibility for medicals (ORM) was assumed on his Medicare eligibility date of October 10, 2010. The following ICD9 codes listed on the latest Health Insurance Claim 1500 form approved by the adjuster for payment to the provider was reported via Section 111 mandatory insurer reporting (MIR): lumbar strain (847.2), cervical strain (847.0), inguinal hernia without mention of obstruction or gangrene (550.9), elevated prostate specific antigen [PSA] (790.93).

He was treated conservatively with rest, rehab, and epidural steroid injections over a period of months, and was eventually released to return to work at full duty on November 17, 2010, with no permanent impairment assigned. He was paid indemnity benefits during the time his treating physician had him off work. Because there was no settlement and related medical expenses were left open, the file was administratively closed six months later. Mr. Bagley did not seek further medical treatment and retired from ACME Airlines on his 65th birthday, March 16, 2011.

On May 10, 2016, the responsible reporting entity (RRE) was mailed a conditional payment notice (CPN) showing that $11,446.55 was identified as related conditional payments. Most of the ICD diagnosis codes listed in the Commercial Repayment Center’s (CRC) Statement of Reimbursement were unrelated to the cervical and lumbar strain/sprain and instead were to treat his subsequent prostate cancer and inguinal hernia repair.

ORM was not terminated for ICD diagnosis codes. Some of the ICD codes were unrelated and erroneously reported. As such, the initial decision from the CRC was unfavorable. A request for reconsideration was filed with the Qualified Independent Contractor (QIC) assigned once the corrections were made in the Section 111 data fields and re-reported to CMS. The inguinal hernia and elevated PSA level ICD codes were deleted since Mr. Bagley never claimed a hernia or elevated PSA level to be related to his work injury nor did his workers’ compensation (WC) treating physician ever treat either condition. A copy of the clinic notes was submitted as evidence to show no hernia was ever mentioned or treated. However, the elevated PSA level was listed in the past medical history showing he was under the care of a personal urologist.

While there were no medical records for the hernia surgery, a causation E code with a specific date of incident occurring after his retirement date was used to dispute a subsequent, unrelated cause for the inguinal hernia. The CRC statement of reimbursement showed that ICD9 code E919.2, accidents caused by lifting machines and appliances, was billed on June 18, 2012.

Case 2

The second case we will examine is one in which the ICD codes assigned when ORM was assumed for compensable injuries treated necessitated reporting of additional ICD codes when the case settled and TPOC was reported for all claims released.

On November 5, 2015, 66-year-old, 235-pound, Mr. Green stepped into a hole while working, twisted his knee, and sustained a left meniscus tear confirmed by MRI. ICD code S83.201 was deemed compensable and reported to CMS via Section 111 MIR when ORM was assumed shortly afterward.

After a lengthy period of physical therapy with limited success, a decision to perform a left knee arthroscopy was made. The procedure was followed by additional rehabilitation with an eventual release to return to regular duty some eight months after the initial date of injury.

Almost 18 months post return to work, Mr. Green complained of low back pain, but could not identify a specific activity triggering the pain, so his workers’ compensation claim to add his low back pain was denied. While his orthopedic surgeon who performed the arthroscopy attributed his low back pain to a change in gait resulting from the meniscus tear, an IME spine surgeon did not agree. No medical or indemnity benefits were paid as a result of his lower back complaints. He continued to treat for his back pain but never returned to work and instead retired. His disputed workers’ compensation claim for both injuries was compromised and settled on July 17, 2017, for $50,000.

The total payment obligation to the claimant (TPOC) amount and date was reported to CMS via Section 111 MIR which included both the ICD diagnosis codes S83.201 and M54.41. An ORM termination date was reported since all medical benefits were included in the settlement.

MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation USER GUIDE, Version 5.2, Chapters 3 & 6, state when a claim settles, all injuries claimed and released must be reported to CMS. As such, both of the following ICD codes were reported upon settlement: left meniscus tear (S83.201) and lumbago with sciatica, right side (M54.41).

Case 3

The final case to review involves ICD diagnosis codes bundled by the medical provider into a specific date of service even though the reason for the provider encounter did not include treatment involving the ICD diagnosis code.

On December 13, 1984, while working, Mr. Coleman injured his lower back. Over the course of several years, he has periodically continued to be treated by his authorized treating physician for chronic low back pain as a result of his degenerative lumbosacral disc. His employer continues to pay for Mr. Coleman’s pain management services. Unfortunately, when he became Medicare-eligible a few years ago, CMS demanded conditional payments for items and services billed by his private and personal family physician who treats him for an occasional upper respiratory infection, chronic diabetes, and esophageal reflux disease. The example below shows one of many similar dates of service. In this instance, $76.34 was demanded as a conditional payment CMS made related to the claim for one date of service:


ORM is open for a lifetime for his low back pain. The WC statute permits the employer the choice of treating physician and states medical services provided by an unauthorized physician are not covered and will not be reimbursed by the employer. Both the employee and the unauthorized physician were notified the unauthorized provider would not be reimbursed pursuant to state WC statute. Unfortunately, his family physician continues to include one ICD code for each semiannual office visit.

It continues to be the practice of CMS to seek full reimbursement for a conditional payment as long as one diagnosis code is related. Although only applicable in California and not precedent case law, CIGA v. Burwell, 2017 WL 58821, (C.D. California, January 5, 2017) held that the state law that controls the underlying claim determines whether a workers’ compensation payer has a "responsibility to make payment" for an "item or service" rather than the Medicare Secondary Payer Act. In addition, when the case was appealed, CIGA v. Price, 2017 WL 1737717 (C.D. California, May 3, 2017) issued a limited prospective order declaring CMS’ interpretation of the term "item or service" in relation to its billing practice unlawful. The case is set for trial in September 2017. We continue to raise these issues since the insurer/TPA is not entitled to obtain unrelated, private medical records that can be used to show that the reason for the provider encounter and the diagnoses being treated are all unrelated to the worker’ compensation claim.

Adverse Consequences That May Not be Readily Apparent:

Patterns of practice to take into consideration and revisit at various times during the life of the claim:

  1. Did I input ICD diagnosis codes into my claims database or Section 111 MIR system before the claimant was Medicare eligible?
  2. Do I know whether ICD diagnosis codes, ORM, or TPOC automatically transmit to CMS when
  • a claimant is not Medicare eligible,
  • after a claim is administratively closed, or
  • the claim has been denied?
  1. Does my claims database require I assume ORM in order to pay an expense on the claim file regardless of whether the claim is compensable or denied?
  2. Did I assume ORM on a case in which there may have been no-fault coverage but NO no-fault claim was ever presented for payment?
  3. Did I inadvertently report ORM on a claim that had been denied? Is that the reason why I received this conditional payment notice (CPN)?
  4. Have I inadvertently forgotten to terminate ORM when
  • medical benefits were settled,
  • when a WC claim was denied, or
  • when a causation judicial decision was made?
  1. Were ICD codes obtained from provider bills that had been approved for payment used as a means of selecting which ICD codes to report via Section 111 MIR? If so, re-review and correct if needed.
  2. For Section 111 MIR purposes, did I select ICD codes for diagnoses
  • deemed to be compensable?
  • consistent with the injuries claimed and are being treated?
  • identifying injuries being released when settled?

CMS’ newly updated WCMSA Reference Guide has arrived!

imageThe Centers for Medicare and Medicaid Services (CMS) released the latest update on July 31, 2017, of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide dated July 10, 2017. To view the reference guide click here. It contains some long-awaited good news for those jurisdictions with State-Specific Statutes, some clarification on several items and further information related to the new Amended Review process.

CMS provides information regarding what is required for approval when preparing a WCMSA according to State-Specific Statutes in Section 9.4.5 (page 24). They also throw out a warning to include this information in the initial submission and 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.”

Submitters requesting an alteration to pricing based upon state-legislated time limits must be able to show by a finding from a court of competent jurisdiction, or appropriate state entity as assigned by law, the specific WCMSA proposal does not meet the state’s list of exemptions to the legislative mandate. For example, this would apply to Georgia statute limiting future medical to 400 weeks for non-catastrophic cases here the date of injury is after July 1, 2013. While it appears CMS will now honor state statutes with time limits for treatment, a court order or finding confirming the claim does not meet the exemptions under the state law will be required.

CMS also indicates for those states where treatment is varied by some type of state-authorized utilization review board, the submitter shall include the alternative treatment plan from the treating physician confirming what treatment has replaced what was deemed unnecessary by the utilization review board. In California, carriers and Third Party Administrators (TPAs) will no longer be able to rely on the Independent Medical Reviews (IMRs) alone. Going forward, carriers and TPAs will need to seek an alternative treatment plan from the treating physician prior to submission of a WCMSA when treatment has been deemed unnecessary. It also brings up scenarios where no alternative treatment is necessary. If a claimant is receiving duplicate therapy, (such as two skeletal muscle relaxants) and utilization review deems the use of one of them as unnecessary there may be no alternative treatment or replacement for that treatment. In those instances, an argument may need to be made that no replacement is needed. CMS may require a statement from the treating physician to that effect as well.

Information regarding the previously released Amended Review process has been added under Section 16.0; please refer to our prior blog from July 13, 2017, with further details regarding the items needed for this type of review. This section points out several warnings

  • Only cases not yet settled as of the date of the request for re-review qualify for this re-review process;
  • “The approval of a new generic version of a medication by the Food and Drug Administration does not constitute a reason to request a new case review for supposed changes in projected price.” This cannot be the only reason/change for the re-review request;
  • CMS will deny the request for re-review if submitters fail to provide the required information and justifications referenced with the request for re-review. Submitters will not be permitted to supplement the request for re-review. CMS is confirming all required information must be supplied with the Amended Review request or the request will be denied.

Further clarification regarding hearing on the merits of a case in the context of whether the WCMSA should be submitted to CMS is found in Section 4.1.4. Because the CMS prices are based upon what is claimed, released or in effect released, CMS must have documentation as to why disputed cases are compromised and settled with future medical costs allocated for less than the recommended pricing. As a result, when a state WC judge or other binding party approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. This shall include all denied liability cases, whether in part or in full. For example, CMS is asking to see supporting evidence that the burden of proof was not met by the claimant, no causation medical evidence was proffered by the claimant within the statute of limitations period, a judicial decision ruled the employer/defendant was not responsible based upon findings of fact and law. If Medicare’s interests are not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the entire dollar amount of the entire WC settlement. Medicare may also assert a recovery claim, if appropriate.

Spinal Cord Stimulator (SCS) pricing with CPT codes has been added to section 9.4.5. The reference guide goes into great detail on how to price a SCS appearing to suggest pricing for SCS will be different per jurisdiction going forward, instead of the same price for all states across the board, which has been the current allocation methodology utilized by the Workers’ Compensation Review Center (WCRC) up to this point. We will be monitoring this closely for any changes. CMS also differentiates the allocation differences between the non-rechargeable (every seven years) and rechargeable SCS devices (every nine years).

CMS has added a new section addressing changes in the submitter of record, found in Section 19.4, stating “CMS requires a written release from services by the original submitter and a new signed Consent to Release form authorizing the new submitter. Both must be provided in order to continue the WCMSA review process. Submitter changes will not be accepted after settlement.” This has been the process for quite some time but was not previously documented. It is our hope this will also apply to files having been previously approved by CMS but never settled, which in the past CMS has not always been honored.

Other minor changes/additions are found in the following sections:

  • Section 9.4.4 Medical Review: Step 5: Verifies jurisdiction and calculation method
  • Section 16.1 Required Resubmission: If a file is closed by CMS for a year or longer the initial submission will have to be re-done completely (start over)
  • Section 17.1 Administrators: CMS has added a sentence to this section recommending professional administration
  • Section 9.4.6.2 Pharmacy Guidelines and Conditions – Medically Accepted Indications and Off-Label Use: (clarification)
  • Section 10.4 Section 20 – Life Care / Future Treatment Plan: CMS has added the following sentence and made this section in the CMS portal a mandatory addition: “For the purpose of evaluating plan proposals, either a Life Care Plan or Future Treatment Summary is required for submission.”
  • Section 10.5.3 Total Settlement Amount: This section has been expanded with more detail of what the computation of the total settlement amount includes.

We recommend our clients review the updated reference guide to determine if any updates/changes apply to their specific cases. Please continue to watch this site for additional updates, news or trends from CMS as the above updates start to unfold.

Endo Pharmaceuticals to voluntarily withdraw Opana® ER

opana-er-85341864The FDA and the Endo International plc reached an agreement on July 6, 2017 to voluntarily withdraw its reformulated Opana® ER (oxymorphone HCL extended release tablets) from the market after determining the benefits of its use in patients no longer outweighs the misuse and abuse risks. Endo plans an orderly transition for patients to minimize treatment disruption and to ensure patients have time to work with their prescribers. Optum expects prescribers will review their patients’ current therapy, evaluate the continued need for ongoing opioid therapy and then choose their course of action. This new treatment plan may include either implementation of an opiate weaning schedule as a plan to discontinue opioid therapy for or to continue opioid therapy and begin the process of migration to a new medication. Should a claimant require continued opioid therapy, alternatives exist including a generic non-abuse deterrent formulation of oxymorphone extended-release tablets.

At this time, Optum highly recommends awaiting change of therapy to an alternative medication prior to submission of any Medicare Set Aside (MSA) to The Centers for Medicare and Medicaid Service (CMS) to avoid the possibility of inclusion of Opana® ER in the approved MSA. We are proactively reviewing previously completed (MSA) reports and current referrals and will notify clients whose MSA contains Opana® ER. This voluntary withdrawl provides an opportunity to help the prescriber in weaning or transitioning the claimant to another opioid regimen.

We offer a variety of clinical products and have a staff of pharmacists and nurses to assist claimants with a plan to render the most cost-effective treatment for the claimant while allowing for the best therapeutic outcome.

Note, at this point other formulations of Opana® will remain on the market; the only formulation slated for removal is the Opana® ER. Click here to view the Endo news release in reference to this matter.

CMS Expands Re-review Process

The long awaited update to the Workers’ Compensation Medicare Set-Aside (WCMSA) Re-Review process, as promised by The Centers for Medicare and Medicaid Services (CMS) in late December 2016, has arrived.

We reported in January through our blog entry, MSA Optimism for the New Year, CMS expected to update their Re-Review process sometime in 2017 to “address situations where CMS has provided an approved amount, but settlement has not occurred and the medical care that supported the approved amount has changed substantially”.  CMS released an update to their Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Portal User Guide on July 11, 2017 (click here to access the updated guide) which includes the much-awaited information, starting in section 12.4 (page 12-12) titled “Submit a Re-Review Request for an Approved Case”.

Previously there were two Re-Review options (1 and 2 noted below). Now, CMS adds a third option referred to as the “Amended Review”.

  • Option 1:  You believe CMS’ determination contains obvious mistakes
  • Option 2:  You believe you have additional evidence, not previously considered by CMS, which was available prior to the submission date of the original proposal which warrants a change in the CMS’ determination.
  • Amended Review:  You believe projected care has changed so much the new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

CMS specifies only one Amended Review is permitted per case and another re-review cannot be requested if a request for an Amended Review is denied. The following criteria have to be met for a case to be eligible for an Amended Review:

  • The case must have been originally submitted between one and four years from the current date and cannot have a previous request for an Amended Review
  • Must result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount

CMS has also noted as part of the re-review request, you may change from brand-named medications to generic medications and drug types. However, this change cannot be the sole reason for your re-review request. You must include additional changes (such as changes in dosage and/or frequency, additional medications, or medications no longer taken) to qualify for a re-review request.

The Amended Review process is a welcome change and we feel it will be a great benefit to the industry. This new process allows cases that have a CMS approved MSA, but did not settle to be re-evaluated for a more appropriate allocation based on current medical status. Although the Amended Review is limited to files with CMS submissions between one and four years from the current date, it is still great news for the MSA industry and a step in the right direction. One further change we would like to see is a formal appeals system put into place.

We recommend carriers and Third Party Administrators (TPAs) evaluate open cases to verify if any would fit the criteria for an Amended Review if medical circumstances have changed since CMS submission. The new criteria may provide a chance to settle the case where previously it was held up.

We anticipate there will be the potential for many cases which have not settled to take advantage of the Amended Review process. This could result in a CMS backlog for a short time while the industry is evaluating their caseload for opportunities. We anticipate the outcomes and potential reductions will allow files, where settlement was precluded due to a large CMS approved MSA’s, to be resolved. Please continue to watch this site for additional updates, news or trends as this new process unfolds.