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CMS Announces It has Issued more than 33,000 CPLs and CPNs Since October 1, 2015; More Are Coming!

By , February 12, 2016 10:45 am

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions, Helios

CMS Stack of PapersAs we have previously informed here, “in October 2015, the Centers for Medicare & Medicaid Services’ (CMS) Commercial Repayment Center (CRC) assumed responsibility for the recovery of conditional payments where CMS is pursuing recovery directly from a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation (WC) entity as the identified debtor.” On February 9, 2016, the CRC announced it has “issued more than 33,000 Conditional Payment Letters (CPLs) and Conditional Payment Notices (CPNs) since the transition.”  CMS further indicated that it “is aware that many insurers and WC entities are awaiting CPLs, CPNs, or demand letters.” As a result, CMS informed that it “is actively engaged with the CRC to improve responsiveness to requests for conditional payment information and the handling of correspondence.” https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Whats-New/Whats-New.html

Confused About When to Deal with the Benefits Coordination and Recovery Center Instead of the Commercial Repayment Center?

If you are still confused about when to deal with the Benefits Coordination and Recovery Center (BCRC) instead of the CRC, you are not alone. CMS indicates “you should contact the BCRC when Medicare is pursuing recovery from the beneficiary as the identified debtor. CMS pursues recovery from the beneficiary when the applicable plan has not reported ongoing responsibility for medicals (ORM) and has not otherwise notified CMS of primary payment responsibility. Typically this is when the beneficiary obtains a lump sum settlement, judgment, award, or other payment. This situation most frequently occurs with liability insurance, including self-insurance.”

Which means you should be dealing with the CRC if “you are an applicable plan or recovery agent for an applicable plan and you have questions about recovery cases initiated by the CRC.” As previously indicated by CMS, the CRC “pursues recovery directly from an applicable plan as the identified debtor when an applicable plan reports that it has ORM or otherwise notifies CMS of its primary payment responsibility, as the assumption is that the applicable plan’s responsibility is not in dispute. This situation most frequently occurs in no-fault insurance and workers’ compensation.”

Confused About What Prompts BCRC or CRC to Issue a Conditional Payment Notice Versus a Conditional Payment Letter?

If you are still confused about what prompts the BCRC or CRC to issue a CPN versus a CPL, you are definitely not alone. As CMS has previously explained, the CPN and CPL provide the same information regarding conditional payments and allow recipients an opportunity to dispute conditional payments before the demand is issued. However, there are some major differences.

A CPN will be issued by the CRC when “the applicable plan has notified CMS that it has primary payment responsibility for certain care and Medicare has made conditional payments. CMS may be notified of this through MMSEA Section 111 Mandatory Reporting or through a telephone call or written correspondence. In the absence of a dispute filed within the CPN response due date (30 days), the CRC will issue a demand letter automatically. The demand will include conditional payments included in the CPN as well as any additional conditional payments identified after the CPN was issued. It will provide instructions on making payment (within 60 days) or on formally appealing CMS’ determination (within 120 days).”

A CPL will be issued by the CRC when a “beneficiary (or their representative) reports a pending case where an applicable plan may have primary payment responsibility for certain care related to the injury and the MSP occurrence was not otherwise reported by the applicable plan itself (through MMSEA Section 111 reporting or by other means). The applicable plan may dispute conditional payments in the CPL, but unlike the CPN, there is no specific response due date. Therefore, the CPL is not automatically followed by the demand letter; the applicable plan or recovery agent must request it.”

Still Confused? Need Help Sorting all of this Out? Want an Agent to Handle it for You?

As CMS has previously indicated, applicable plans may appoint a recovery agent to work with the CRC and BCRC to resolve conditional payments. Helios Settlement Solutions serves as the recovery agent for several state, regional, and national self-insured, third party administrators, and insurers. We have a dedicated team of attorneys, nurses, pharmacists, claims specialists, and conditional payment specialists ready to assist you and your team. If we can be of any assistance to your organization in dealing with and ultimately resolving CRC or BCRC conditional payments, please contact us at 888.672.7674, or at contactus@helioscomp.com.

CMS Publishes Latest Version of Work Comp MSA Reference Guide

By , February 4, 2016 1:15 pm

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

Dated December 14, 2015, the Center for Medicare and Medicaid Services (CMS) recently published its updated Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, Version 2.4.

First published in March 2013, and since revised on November 2013 (version 2.0), February 2014 (version 2.1), April 2014 (version 2.2), January 2015 (version 2.3), and now December 2015 (version 2.4), the guide was written to help stakeholders “understand the process used by CMS for approving proposed WCMSA amounts and to serve as a reference for those choosing to submit such amounts to CMS for approval.” Since its first publication, the WCMSA Reference Guide “reflects information compiled from all WCMSA Regional Office (RO) Memorandums issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules.”

Version 2.4 of the Guide now includes updates to accommodate Non-Group Health Plan (NGHP) Ongoing Responsibility for Medicals (ORM) recovery activities. This is based on the August 25, 2015, and September 17, 2015, CMS announcements that starting October 5, 2015, files would be transitioned to the Commercial Repayment Center (CRC), as CMS would start pursuing recovery from applicable plans, liability insurance (including self-insurance), no-fault insurance, and workers’ compensation law or plan, as the identified debtor. Those announcements stated, “CRC will identify and recover Medicare’s conditional payments for all new recovery cases where CMS pursues recovery directly from an applicable plan as the identified debtor. CMS will pursue recovery directly from an applicable plan as the identified debtor when an applicable plan reports that it has ongoing responsibility for ORM or otherwise notifies CMS of its primary payment responsibility.”

As a result, Version 2.2 of the WCMSA Reference Guide was amended to incorporate NGHP ORM recovery activities. Very specifically, Section 2.2 of the Guide (Reporting a WC Case) was amended by adding the following:

Note: If Medicare is pursuing recovery directly from the WC insurer, the beneficiary, attorney or other representative will receive a copy of recovery correspondence sent to the WC insurer. For more information on insurer recovery, see the Non-Group Health Plan Recovery page.

This latest version of the WCMSA Reference Guide incorporates what CMS has previously announced and is now taking place when Medicare is pursuing recovery directly from the self-insured employer or WC insurer, also providing notice to the beneficiary, attorney, or other representative of such recovery effort directly from the original primary payer or applicable plan. As always, Helios Settlement Solutions will continue to track and monitor any changes affecting Medicare Secondary Payer compliance and keep you updated as to its claims handling potential effects. Should you have any questions regarding these changes, or if we can be of any help regarding any issue pertaining to MSP compliance, please contact us at 888.672.7674, or at contactus@helioscomp.com.

Is this the Year? Is 2016 the Year CMS Will Start Mandatory Insurer Reporting Civil Money Penalties?

By , February 1, 2016 4:41 pm

Rafael Gonzalez, Esq.
Vice President, Strategic Solution, Helios Settlement Solutions

A. Introduction

122815_1601_2015HeliosS1.jpgApplicable plans that fail to comply with the Medicare Secondary Payer Act’s mandatory insurer reporting requirements “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” On December 11, 2013, the Center for Medicare and Medicaid Services (CMS) published CMS-6061-ANPRM, an Advanced Notice of Proposed Rulemaking on Civil Money Penalties Under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MIR ANPRM). Before embarking on actual rule making, this advance notice of proposed rulemaking solicited public comment on specific practices for which civil money penalties (CMPs) may or may not be imposed for failure to comply with Medicare Secondary Payer (MSP) reporting requirements for certain group health and non-group health plans arrangements. 34 comments were received by CMS by the deadline date of February 10, 2014. As we approach two years since such comments were filed, is this the year? Is 2016 the year CMS starts MSP mandatory insurer reporting civil money penalties? If so, are you prepared? Is your responsible reporting entity (RRE) ready? Does your self-insured employer or carrier, or corporate defendant or insurer have an MIR program that accurately reports to CMS ongoing responsibility for medical (ORM), reports the appropriate ICD-9 or ICD-10 codes to CMS, and timely and deliberately reports to CMS total payment obligation to claimant (TPOC) information?

B. Permissible Civil Money Penalties within the Social Security Act

As the MIR ANPRM indicated:

In 1981, Congress added section 1128A to the Social Security Act (the Act) to authorize the Secretary of Health and Human Services (Secretary) to impose CMPs and assessments on certain health care facilities, health care practitioners, and other suppliers for noncompliance with rules of the Medicare and Medicaid programs. CMPs and assessments provide an enforcement tool for agencies to ensure compliance with statutory and regulatory requirements and are in addition to potential criminal or civil penalties. Since 1981, Congress has significantly increased both the number and the types of circumstances under which the Secretary may impose CMPs.

C. The Medicare, Medicaid, and SCHIP Extension Act of 2007

As the MIR ANPRM also indicated:

Under Medicare law enacted in 1965, Medicare was the primary payer for certain designated health care services except those covered by workers’ compensation. In 1980, Congress added section 1862(b) of the Act which defined when Medicare is the secondary payer to certain primary plans. These provisions are known as the MSP provisions. Section 1862(b) of the Act prohibits Medicare from making payment if payment has been made or can reasonably be expected to be made by the following primary plans when certain conditions are satisfied: group health plans; workers’ compensation plans; liability insurance (including self-insurance); or no-fault insurance. For workers’ compensation, liability insurance (including self-insurance), or no-fault insurance for which payment has not been made or cannot be expected to be made promptly, Medicare may make a conditional payment subject to Medicare payment rules. Any conditional payments made by Medicare are subject to repayment once the primary plan makes payment.

After several failed experiments on getting primary payers to consistently and accurately report cases in which they were responsible for reimbursing Medicare, Congress passed the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). Section 111 of MMSEA added paragraphs (7) and (8) to section 1862(b) of the Act which established new mandatory reporting requirements for certain group health plan (GHP) arrangements and for liability insurance (including self-insurance), no-fault insurance, and workers’ compensation, collectively referred to as non-group health plan (NGHP) arrangements.

Section 1862(b)(7) of the Act (42 USC Section 1395y(b)(7)) added new reporting rules for GHP. Section 1862(b)(7) of the Act also included authority for Medicare to impose CMPs against GHPs responsible reporting entities which are determined to be noncompliant. An entity serving as an insurer or third party administrator for a GHP, or a GHP that is self-insured and self-administered, must report under these requirements. Section 1862(b)(8) of the Act (42 USC Section 1395y(b)(8)) added new reporting rules for NGHP arrangements. Section 1862(b)(8) of the Act also included authority for CMS to impose CMPs against NGHPs which are determined to be noncompliant.

As the MIR ANPRM provides:

Section 1862(b)(8) of the Act defines the term “applicable plan” to mean the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: (1) Liability insurance (including self-insurance); (2) no fault-insurance; and (3) workers’ compensation laws or plans. Section 1862(b)(8) of the Act also requires applicable plans to notify CMS when they pay liability insurance (including self-insurance), no-fault insurance, and/or workers’ compensation claims on behalf of Medicare beneficiaries. Information shall be submitted within a time specified by the Secretary after the claim is addressed or resolved (or partially addressed or resolved) through a settlement, judgment, award, or other payment, regardless of whether or not there is a determination or admission of liability.

D. The Medicare IVIG (Intravenous Immunoglobulin) Access and Strengthening Medicare and Repaying Taxpayers Act (SMART) of 2012

Perhaps because a mandatory $1,000 per day, per file penalty was seen as too harsh, or perhaps because there was a seemingly lack of due process in the manner in which such penalties were going to be levied, on January 10, 2013, the Medicare IVIG (Intravenous Immunoglobulin) Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) was enacted. The SMART Act, among several other provisions, amended section 1862(b)(8)(E) of the Act to state that applicable plans that fail to comply with the reporting requirements “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant,” revising the prior mandatory nature of this provision.

E. The Advanced Notice of Proposed Rulemaking on Civil Money Penalties

As a result of Congress’ amendment to the MSP, and before embarking on full rule making mode, CMS issued the MIR ANPRM to “solicit public comments and proposals for the specification of practices for which CMPs would or would not be imposed in accordance with sections 1862(b)(7)(B) and (b)(8)(E) of the Act (42 USC Section 1395y(b)(7)(B) and (8)(E)).” The MIR ANPRM made it clear that CMS was interested in comments and proposals “to specifically define “noncompliance” in the context of the phrase, “for each day of noncompliance with respect to each claimant” in sections 1862(b)(7) or (b)(8) of the Act.” Therefore, CMS was seeking public comment and proposals “on mechanisms and criteria that it could employ to evaluate whether and when the agency would impose CMPs.”

In addition, the MIR ANPRM established that CMS was soliciting comments and proposals “for methods to determine the dollar amount of a CMP that would be levied for each day that NGHP is a responsible reporting entity noncompliance under section 1862(b)(8) of the Act.” The MIR ANPRM also indicated CMS was soliciting comments on how it “might devise a method(s) and criteria to determine which actions would constitute “good faith effort(s)” taken by an entity to identify a Medicare beneficiary for the purposes of reporting under section 1862(b)(8) of the Act.” https://www.federalregister.gov/articles/2013/12/11/2013-29473/medicare-program-medicare-secondary-payer-and-certain-civil-money-penalties#page-75304

F. MIR ANPRM Comments Filed by Stakeholders

The MIR ANPRM specifically indicated CMS was “soliciting comments and proposals from insurers, third party administrators for GHPs, other applicable plans, and the public.” 34 comments were received by CMS. Some were from insurers, some from third party administrators, some from organizations representing insurers and healthcare providers, some from MSP vendors serving Medicare beneficiaries, some from vendors serving primary payers, and some from members of the public at large.

The American Insurance Association’s Medicare & Medicaid Task Force (AIA’s Task Force), which is made up of 34 domestic and foreign insurance groups, trade associations, and other stakeholders representing over 300 major insurance companies that provide all lines of property-casualty insurance and write more than $159 billion annually in premiums, submitted comments in response to the MIR ANPRM. The AIA Task Force suggested that “when a RRE is notified by CMS of an alleged failure to properly report, the RRE must be given an opportunity to respond to the allegation of a failure to properly report and access to a process to determine if a failure occurred.” If a failure to properly report has taken place, “the RRE must also be given a reasonable amount of time (negotiated between the parties taking into consideration the complexity of the failure) to correct the issue and file a corrected report or, if necessary, a plan to ensure that the issue will not reoccur.”

The AIA Task Force proposed that “under no circumstance should CMP be imposed if CMS cannot establish that the RRE has acted in bad faith in failing to properly report.” In other words, “for a RRE to be found to have acted in bad faith effort to report, CMS must establish (1) the RRE had actual knowledge of the failure to report properly, (2) acted in a deliberate manner not to report, and (3) acted with reckless disregard of the reporting requirements.”

In addition, the AIA Task Force proposed that “before assessing a CMP to a RRE, due process should provide an opportunity to request an administrative hearing. Upon the assessment of a CMP the RRE should be permitted to appeal within CMS or seek judicial review.” And if a CMP is assessed, that “CMS must also prove that the CMP is reasonable given the totality of the circumstances surrounding the failure to report including reason, size, duration and other mitigating factors.”

State Farm Mutual Automobile Insurance Company (State Farm) also responded. State Farm, the largest underwriter of private passenger automobile and homeowner insurance in the United States, with 81 million policies in the United States and Canada, recommended that “compliance would be established through documentation supporting attempts to obtain entitlement information from the claimant, written request to complete a CMS Model Language form, query of the BCRC database once the Secretary creates a process that does not require a social security number or HICN to query, or other evidence of reasonable attempts to determine the claimant’s entitlement.”

State Farm also indicated that “good faith efforts may be demonstrated through registration as an RRE, initial data exchange testing, regular file submissions, voluntary and timely correction of errors, notice to and cooperation with CMS in the reporting process.”

Gallagher Bassett Services, Inc. (GB) also responded. GB is a wholly-owned subsidiary of Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, headquartered in Itasca, Illinois. GB recommended that “no penalty should be assessed until an RRE has received sufficiently-detailed notice of a potential violation and has been given an appropriate 90-day opportunity to cure
the alleged deficiency. To the extent that the RRE has a good faith belief that it has met one of the safe harbors to be established, there must be sufficient time for the RRE to present its views as to why reporting is not needed or why it is otherwise exempt.”

GB also indicated “CMS should permit RREs to assert affirmative defenses, such as allowing an RRE to establish that it did not have knowledge of the violation and by exercising reasonable diligence, would not have known that the violation occurred; or that the violation is due to circumstances that would make it unreasonable for the RRE, despite the exercise of ordinary business care and prudence, to comply with the reporting requirements violated and is not due to willful neglect, and was corrected within a reasonable period of time based on the nature and extent of the cause of the failure to comply. Likewise, the RRE should be permitted to present evidence that CMS was duly notified of the claim at issue through alternative means, as a way to mitigate any CMP.”

The State Compensation Insurance Fund (SCIF) also responded. SCIF is the largest provider of workers’ compensation insurance in California, and one of the largest state funds in the United States. SCIF suggested that “the assessment of the penalty be determined based on the following factors: recurrence of late reporting, failure to correct claim input file submissions and failure to produce regular file submissions. The Secretary may wish to impose penalties within a range of amounts less than $1,000 per day depending on the nature of the non-compliance. The NGHP should also be allowed to mitigate the imposition and amount of the CMP with evidence of attempts at compliance or remediation.”

SCIF also suggested that “a mechanism to appeal the imposition of the CMP be created that at a minimum includes the opportunity to present evidence and argument in defense of the imposition of the CMP to CMS, and an appeal to a hearing officer.”

As one of the oldest and largest vendors serving the MSP industry, and consistently the leading and most accurate provider of MIR information to CMS, Helios also responded. Helios indicated “that a differentiation should be made between RREs that have made a good faith attempt to comply with the spirit and congressional intent of Section 111 reporting and those who have not with regard to application of CMPs.” As such, it suggested a number of items that would define what activities would be included in a good faith attempt to be compliant. Helios therefore recommended that “RREs that consistently meet the criteria of the items it listed should be deemed to have made a good faith effort to report claims to CMS and therefore should not be subject to CMPs.”

Helios also recommended that “CMS postpone penalty enforcement when changes are being made to the overall NGHP process until at least six months beyond the completion of changes.” And for significant changes, such as the implementation of ICD-10, Helios suggested a “longer period of a year or more might be appropriate.” Helios also recommended that “CMS should consider providing the RREs with web-based capability to audit their own data within the CMS systems and that such access also include the ability to add new claims and amend previous submissions. Allowing an RRE to view the detail of a claim submission provides the RRE with the capability of internally auditing Section 111 data to ensure their processes are working correctly or those of their claim administrator or reporting agent.”

G. Conversion to ICD-10 and CMS’ Reliance on Same

Since receiving these 34 comments in 2014, in addition to having received MIR information on millions of claims, and beginning to use such data to identify conditional payments Medicare may be entitled to reimbursement on, the use of ICD-10s have become mandatory, as CMS will rely on them to make important decisions on each claim. On October 1, 2015, physicians, clinics, hospitals, diagnostic facilities, and all other providers started using ICD-10 codes for services provided on or after October 1, 2015. A major difference between ICD-9 and ICD-10 codes include the fact that ICD-9-CM diagnosis codes use 3 to 5 digits, while ICD-10-CM codes use 5 to 7 digits. This change alone will allow for greater detail and significantly more codes that were badly needed to truly explain today’s medical care and treatment. ICD-9-CM procedure codes used 3 to 4 numeric digits, while ICD-10-PCS codes use 7 alphanumeric digits. As a result, unlike ICD-9, which had essentially run out of room for new codes and no longer had the ability to provide necessary detail, ICD-10 significantly expands the number of codes and details of each code for all conditions.

It is also clear that ICD–10 will provide greater specificity of diagnosis-related groups, will improve quality measurement and reporting capabilities, will improve tracking of illnesses, and reflect greater accuracy of reimbursement for medical services. It is believed that ICD–10’s granularity will also improve data capture and analytics of public health surveillance and reporting, national quality reporting, research and data analysis, and provide detailed data to inform health care delivery and health policy decisions. It is universally accepted that the specificity of ICD-10 will improve the quality of healthcare we will all receive as ICD–10 includes significant improvements over ICD–9 in coding primary care encounters, external causes of injury, mental disorders, and preventive health, just to name a few.

ICD-10 also affects MSP. For mandatory insurer reporting submissions prior to October 1, 2015, use of ICD-9-CM diagnosis codes is mandatory. For submissions beginning October 1, 2015, ICD-10-CM diagnosis codes will be required on all production Claim Input Files (CIP) and Direct Data Entry (DDE) add and update records with a CMS DOI on or after October 1, 2015. For submissions beginning October 1, 2015, either ICD-9-CM or ICD-10-CM diagnosis codes will be accepted on all add and update records with a CMS DOI prior to October 1, 2015. However, each record can only contain either all ICD-9-CM or all ICD-10-CM codes. RREs may not submit a combination of ICD-9-CM and ICD-10-CM diagnosis codes on one single record. RREs will not be required to convert or crosswalk ICD-9-CM codes submitted on previously accepted records to ICD-10-CM codes when submitting subsequent updates to those records.

The effects of these changes don’t stop at MIR. Effective January 1, 2016, CMS has added an additional limitation to Medicare claims payments where insurers or workers’ compensation entities have reported to CMS that they have Ongoing Responsibility for Medicals (ORM). In situations where an insurer or workers’ compensation entity has reported to CMS that it has ongoing responsibility for medicals for specific care (using ICD-9 or ICD-10), CMS’ claims processing contractors will use the information provided by the insurer or workers’ compensation entity to determine whether Medicare should or should not make payment for those claims. CMS has made it clear that insurers and workers’ compensation entities that notify Medicare that they have ORM are strongly encouraged to report accurate ICD-9 or ICD-10 codes as Medicare’s claims processing contractors will use this information to pay or deny claims accordingly. In other words, reported ICD-10 codes will be key as CMS decides to pay or deny each bill it receives, will be paramount to challenging any conditional payment Medicare may be requesting reimbursement on, and will be central to the determination of what items should or should not be included in a Medicare set aside.

H. Conclusion

As we approach two years since comments were filed to the MIR ANPRM, is this the year? Is 2016 the year CMS sets MSP mandatory insurer reporting civil money penalties? Based on the 34 comments received in response to CMS’ request for comments and proposals for the specification of practices for which CMPs would or would not be imposed, all stakeholders responsible for reporting, including self-insureds, insurance carriers, third party administrators, and agents reporting on their behalf agree that rules guiding this process must specifically define noncompliance, and must provide for an appeals process before CMS would be authorized to impose CMPs. If CMS were to finalize such rules in 2016, are you prepared? Is your responsible reporting entity (RRE) ready? Does your self-insured employer or carrier, or corporate defendant or insurer have an MIR program that accurately reports to CMS ongoing responsibility for medical (ORM), reports the appropriate ICD-9 or ICD-10 codes to CMS, and timely and deliberately reports to CMS total payment obligation to claimant (TPOC) information?

2015 Helios Settlement Solutions MSP Compliance Webinar Series: An Update on Medicare Set Asides

By , December 28, 2015 12:01 pm

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions, Helios Settlement Solutions

At the top of our goals every year is to make sure we continue to serve our clients by providing several educational opportunities on all components of Medicare Secondary Payer compliance. This year, in addition to the blogs we have posted, presentations we have delivered, opinions we have written, and research articles we have published, we also presented three webinars on the latest MSP compliance issues. Over the last couple of weeks, we have reviewed our first two presentations on Mandatory Insurer Reporting and Conditional Payments Resolution. Today we review our third presentation, An Update on Medicare Set Asides.

On November 4, 2015, from 1 to 2 pm, Helios hosted its third 2015 MSP Compliance Webinar, “An Update on Medicare Set Asides”. The webinar was presented by Mendi Benbrahim, MSA Production Supervisor at Helios, Melanie Carrozza, Vice President of MSA Operations at Helios, and Rafael Gonzalez, Esq., Vice President of Strategic Solutions at Helios.

Mendi, Melanie, and Rafael introduced Medicare Set Asides (MSA) by first discussing the statutory framework of the MSP Act at 42 USC Section 1395y(b)(2) and its applicable regulatory provisions at 42 CFR Section 411.46. Very specifically, Mendi, Melanie, and Rafael spoke about lump-sum commutation of future benefits and lump-sum compromise settlements. In either situation, they made it clear that parties’ agreements will not be recognized if a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition; hence, Medicare will not pay for treatment of that condition.

As Mendi, Melanie, and Rafael indicated, bottom line is that all parties in a workers’ compensation case have significant responsibilities under the MSP laws to protect Medicare’s interests when resolving cases that include future medical expenses.  As a result, as CMS has indicated in writing, the recommended method to protect Medicare’s interests is a Workers Compensation Medicare Set-Aside Arrangement (WCMSA). 

Mendi, Melanie, and Rafael spoke about WCMSA amounts and funding. They indicated that the WCMSA amount is determined on a case-by-case basis and is based on the claimant’s life expectancy (rated aging permitted), future medical needs and recommendations related to the workers’ compensation injury, illness, or disease, and appropriate pricing for such medical services (state fee schedule or actual charges and prescription medications (average wholesale price per Red Book). All three agreed that MSAs may be funded as a lump sum or through a structured annuity. If annuitized, CMS requires that the WCMSA is seeded with two years of medical and prescription expenses, along with any recommended major medical procedures, with the remainder of the WCMSA spread out over claimant’s life expectancy.

Next, Mendi, Melanie, and Rafael addressed how CMS treats differing medical opinions. They explained that based on CMS policy, treating physician, independent medical review (IMR) or agreed medical examiner (AME) opinions are more heavily weighted than other medical opinions such as independent medical examiner/qualified medical examiner (IME/QME). Generally an IME/QME opinion will only be considered if there is a court order on the merits of the case or a state workers’ compensation statute confirming the IME/QME opinion is the prevailing medical opinion.

Mendi, Melanie, and Rafael also spoke about situations where the claimant agrees not to seek treatment as a method of controlling future MSA costs. However, all three were in agreement that settlements cannot be approved when there is a promise not to bill Medicare for services in lieu of including those services in an MSA. This applies even if the claimant offers to execute an affidavit or other legal document agreeing to this fact. Irrespective of such an agreement or indication, if the medical evidence indicates a need and recommendation for such medical care, CMS will include such care in MSA.

Mendi, Melanie, and Rafael also mentioned CMS mandated MSA pricing. Very specifically, they indicated the use of Red Book Average Wholesale Price (AWP) for prescription medications, via CMS Portal, and State Workers’ Compensation (WC) Fee schedule or actual charges (carrier payment history) for states in which there is no WC Fee Schedule for medical care and treatment.

Mendi, Melanie, and Rafael also shared their thoughts on the issue of annual medical costs vs. future allocations. They shared with those in attendance that CMS will review the last two years of medical records, payouts, and prescription invoices to determine the future Medicare covered treatment needs and costs. As a result, cases with low annual medical spent for the last year or last two years could still generate a significant future allocation if the medical opinions indicated in the medical records show the possibility for long term high medical expenditures.

Of course, no MSA presentation would be complete without a discussion of the impact of Medicare Part D on MSAs. As Mendi, Melanie, and Rafael indicated, all workers’ compensation settlements must include allocate for future prescription medication treatment to protect Medicare’s interest. MSA prescription medication allocations are calculated based on current treatment regimen. As a result, on average, 60% of the total MSA allocation amount is related to Part D medications. Consequently, parties should be looking for ways to minimize the impact of Part D on MSAs. Mendi, Melanie, and Rafael suggested coming up with profiles to identify claims that may make an MSA unreasonably high for settlement, assessing the current MSA Part D exposure on claims that are not yet at settlement stage but have potential for settlement, and providing detector type tools to identify and mitigate MSA exposure. As all three mentioned, implementing these controls is key to assuring program success.

One of the continuing challenging areas for all MSP stakeholders are $0 MSAs, especially those with denied claims and/or denied body parts. As Mendi, Melanie, and Rafael informed, CMS will accept a zero allocation on totally denied claims/body parts if no medical or indemnity payments have been made (medical-legal expenses or payments made within a statutory pay and investigate period are acceptable). CMS will require the carrier/TPA/defense counsel to provide a notice of denial, controvert, or confirmation on letterhead that no medical or indemnity payments have been made for the denied conditions/claim. If an erroneous payment was made, especially outside the pay and investigate statutory time period, CMS will require the following information to confirm the carrier did not accept liability: applicable statutory citation, initial letter sent to the injured worker advising that benefits would be paid during the investigative period (or any other statutory notice required), notice of denial (or any other statutory notice required) sent to the injured worker advising that compensability was not accepted for the alleged injury and/or body parts, and proof that any and all payments were made within the “payment without prejudice” period.

Zero allocations, in cases where no future treatment is recommended or anticipated, continue to be a challenge. As Mendi, Melanie, and Rafael indicated, CMS will accept a $0 MSA if there is no future medical treatment recommended or anticipated which is related to the injury. However, they will approve such $0 allocation only if the medical documentation from the treating physician (not an IME/QME) confirming to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the workers’ compensation injury. The settlement documents should demonstrate that the injured individual is only being compensated for past medical expenses and no other aspects of the settlement (i.e., lost wages/disability) are being maximized to Medicare’s detriment.

WCMSA submission to CMS is always one of the most popular topics of any MSA presentation and it was again here. As Mendi, Melanie, and Rafael reiterated, while there are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process in order to assure compliance and walk away with a measure of protection for all parties involved. As Mendi, Melanie, and Rafael indicated, if parties choose to submit a WCMSA for review, CMS requests that parties comply with its established policies and procedures. CMS will only review WCMSA proposals if the claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or if the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

As Mendi, Melanie, and Rafael explained, once a WCMSA is submitted, it is forwarded to the WCRC. The WCRC performs an independent review of the proposed medical and prescription medication costs to determine if the proposed WCMSA amount is adequate to protect Medicare’s interests. If the state does not have a fee schedule (Indiana, Iowa, Missouri, New Hampshire, New Jersey, Virginia, Wisconsin), the reviewer will price per actual charges, even if the submitter proposed fee schedule pricing. Average Wholesale Pricing per Red Book Drug Reference is used for prescriptions. When the WCRC completes its review and renders their recommendation, the WCMSA is sent to the Regional Office (RO) assigned to the case. The RO makes a determination as to the final WCMSA amount and notifies the submitter of their decision.

Mendi, Melanie, and Rafael reminded listeners that although there is no formal appeals process regarding the RO’s WCMSA determination, submitters may file a re-review request when CMS’ determination contains obvious mistakes (e.g., a mathematical error or failure to recognize medical records already submitted showing a surgery, priced by CMS, that has already occurred) or there exists additional evidence, not previously considered by CMS, which was dated prior to the submission date of the original proposal and which warrants a change in CMS’ determination. All three were hopeful that CMS would act on their February 11, 2014, proposed expansion of the WCMSA Re-Review process. Such a process would allow review when submitters disagree with how the medical records were interpreted, when items or services priced in the approved set-aside amount are no longer needed or there is a change in the beneficiary’s treatment plan, in situations when a recommended medication should not be used because it may be harmful to the beneficiary, or because items included and priced in the MSA are for unrelated body parts.

Last, Mendi, Melanie, and Rafael also discussed WCMSA administration and accounting. They indicated that per CMS policy, the total WCMSA amount (future medical treatment and future prescription medication treatment) must be deposited in an interest-bearing account, separate from any other account such as personal savings or checking. WCMSA funds may only be used to pay for those expenses that would normally be paid by Medicare and that are related to the settled claim. They reminded listeners that funds in a WCMSA account may not be used to purchase a Medicare supplemental insurance policy or a Medigap policy, or to pay for ACA coverage premiums. WCMSA funds (lump sum or annuitized payments) must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease. Such funds may be administered by the claimant, or may be professionally administered by a custodian. Whether self administered or professionally administered, CMS must be provided with an annual accounting of all expenditures from the WCMSA account.

We are so very appreciative for your trust and confidence in us. We are so very grateful for your reliance on us and for allowing us to continue to serve your MSP compliance needs. Be on the lookout for details on our 2016 Helios Settlement Solutions MSP Compliance Webinar Series. We will soon announce dates and times for CEU accredited quarterly presentations that will concentrate on legislative, regulatory, and legal updates to mandatory insurer reporting, conditional payment resolution, and set aside allocations, approval, and administration, as well as non-CEU quarterly offerings that will focus on outside the box, creative problem solving solutions to the MSP compliance issues you have asked us to address and assist you with. As always, we welcome your thoughts and ideas on how to better to serve you, including possible topics for discussion and presentation during our 2016 webinar series. Please contact us at 888.672.7674, or at contactus@helioscomp.com.

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