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By Settlement Solutions, March 19, 2012 12:50 pm

In the case of In Re Washkowiak¹, an Illinois appellate court awarded a portion of a workers’ compensation claimant’s MSAMedicare Set-Aside to the claimant’s now ex-wife in a divorce settlement. Christopher Washkowiak (Christopher) and Rosana Washkowiak (Rosana) were married in 2004. Christopher suffered a work-related injury while working for Northern Pipeline Construction (Pipeline) in 2008 and subsequently filed a workers’ compensation claim. In 2009, Christopher filed a petition for dissolution of his marriage to Rosana. After the parties came to a settlement agreement, the trial court entered a judgment of dissolution of marriage on August 31, 2010 which provided that Rosana would be awarded 17.5% of the net proceeds from Christopher’s workers’ compensation settlement.

About three months after the divorce settlement, Christopher settled his workers’ compensation case. As part of the settlement, an MSAMedicare Set-Aside was included to be “. . . used solely to pay for future Medicare-covered medical and/or prescription drug expenses.” The MSAMedicare Set-Aside amount was $70,000 and his total amount of settlement, excluding the MSAMedicare Set-Aside, was $365,000, and with deductions for attorneys’ fees, medical reports and x-rays, totaled $296,330.

It was clear to the parties that Rosana was entitled to 17.5% of the $296, 330 that Christopher received from his settlement; however this dispute concerned whether Rosana would also be entitled to 17.5% of Christopher’s $70,000 MSAMedicare Set-Aside fund. The trial court found that the MSAMedicare Set-Aside funds should be included in the net proceeds for purposes of calculating Rosana’s share, and therefore, Rosana received a distribution of $12,250 from Christopher’s MSAMedicare Set-Aside (she had already received the undisputed portions of the workers’ compensation settlement).

Christopher appealed the trial court’s decision based upon the argument that the nature and intent behind an MSAMedicare Set-Aside precludes the funds from being included as part of the “net proceeds” of the settlement. In essence, he felt that because the funds were intended to be only used to pay for his future medical costs which would otherwise be covered by Medicare, that it would not be logical to include the MSAMedicare Set-Aside as part of the “net proceeds.”

The appellate court did a thorough evaluation of the various CMSCenters for Medicare and Medicaid Services Memoranda, the MSPMedicare Secondary Payer Act, as well as the corresponding Code of Federal Regulations (CFRCode of Federal Regulations) for guidance surrounding MSAMedicare Set-Aside allocations. While this investigation revealed the intent and purpose behind an MSAMedicare Set-Aside–which is specifically to protect Medicare’s interests and pay for items related to the injury that would otherwise be reimbursable by Medicare–the appellate court could not ignore the fact that the dissolution of marriage decree defined “net proceeds” to include reimbursement for medical payments actually paid by Christopher. Because the $70,000 MSAMedicare Set-Aside was intended for the sole purpose of paying Christopher’s future medical bills, the settlement was thereby reimbursing him for his future medical costs. Because of this logic, the funds in the MSAMedicare Set-Aside were found to squarely fall under the definition of “net proceeds” contained in the dissolution agreement.

For the trial court to have attempted to subdivide the MSAMedicare Set-Aside funds from the rest of the net settlement proceeds and assess them individually would not have been supported by the marriage dissolution decree. Additionally, the court found that Christopher could still provide that 17.5% from his settlement funds and make his $70,000 MSAMedicare Set-Aside whole again by using his other settlement proceeds.

Interestingly, the dissenting opinion stated that the majority’s decision was incorrect and against public policy. Justice McDade wrote: “Both parties acknowledge that all funds held within an MSAMedicare Set-Aside can only be used for future medical expenses. I therefore believe it would violate public policy to allow respondent (Rosana) to take 17.5% from the funds allocated to Medicare for her own personal use. Such a diversion of funds not only harasses logic, but it also cuts against the grain of the plethora of legislative authority that has been enacted since 1980 in an effort to curb skyrocketing health costs and preserve the fiscal integrity of the Medicare system.”

There is a lot to be learned from In Re Washkowiak. Clearly, it was not the court’s place to re-write the terms of the parties’ dissolution decree in this case. However, the dissenting judge’s public policy argument clearly does have merit in that the intent of the MSAMedicare Set-Aside was to protect Medicare’s interests by paying for items which would otherwise be reimbursable by Medicare. This case demonstrates that care should be taken when drafting settlement agreements in dissolution of marriage cases where one of the spouses has previously received an MSAMedicare Set-Aside as part of a workers’ compensation or liability settlement. When this occurs, the attorney drafting the settlement agreement (and the parties reviewing it) needs to focus on the exact language describing how these funds should be treated.

^{1. [2012 Ill. App. LEXIS 151 (3rd District, March 7, 2012).]↩}

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By Settlement Solutions, March 16, 2012 11:35 am

Over the past several years, prescription drug costs in workers’ compensation claims have risen dramatically, making it increasingly more important for claims professionals to carefully evaluate this exposure and mitigate costs when possible. PMSI understands that keeping up to date on new generic formulations is part of an overall strategic approach to reduce the cost of claims in addition to the potential for an overall better therapeutic response for the injured worker.

Every brand medication has a patent life that will ultimately expire. Once the patent expires, generic equivalents will become available to the market at a lower cost. Although there is no set brand-versus-generic price differential upon generic entry, PMSI’s recognized clinical analysis shows that on average the generic has a 10% lower price at time of launch over its brand counterpart.

There have been several brand name drugs, commonly prescribed in workers’ compensation claims, which have recently had their patents expire with generic equivalents approved by the FDAU.S. Food and Drug Administration for introduction to the market. All of these generic equivalents will have some impact on prescription costs within the industry (including prescription drug allocations in MSAsMedicare Set-Asides), although some to a greater degree than others.

In the area of pain management, the patent for Kadian expired in the third quarter of 2011, as noted in the March PMSInfo Clinical Services Newsletter. Generic Kadian (Morphine Sulfate CER) was approved by the FDAU.S. Food and Drug Administration in November of 2011, but was just released by its manufacturers for shipment in early 2012. Morphine Sulfate CER is indicated for the treatment of moderate to severe pain that requires around-the-clock analgesia and is available in multiple strengths ranging from 20mg to 100mg. The price differential for brand versus generic ranges from .82 to $5.92 per capsule depending on the strength prescribed. According to PMSI’s Drug Trends Report, Kadian was listed in the Top 20 Brand Medications by Total Transactions for Workers’ Compensation, so the generic equivalent is expected to have a significant impact on reducing prescription costs within the industry.

In early 2012, several brand name psychiatric medications, such as Lexapro, Geodon, and Zyprexa had their patents expire with generic equivalents approved by the FDAU.S. Food and Drug Administration. Psychiatric medications such as these are another highly prescribed classification of drugs in workers’ compensation claims.

Generic Lexapro (Escitalopram Oxolate) is an SSRIselective serotonin reuptake inhibitor indicated for the treatment of depression and GADgeneral anxiety disorder. Before the generic version was released in Feb. 2012, Lexapro was also listed in the Top 20 Brand Medications by Total Transactions for Workers’ Compensation; therefore, its generic equivalent will likely have the greatest impact on cost containment. It is anticipated that the generic formulation will gain popularity due to the savings which can be realized.

Generic Geodon (Ziprasidone) (approved for the treatment of Bipolar I disorder, acute mania, and schizophrenia) as well as generic Zyprexa (Olanzapine) (approved for the treatment of acute psychosis/mania, Bipolar I disorder, schizophrenia and resistant depression in combination with Prozac) are both commonly prescribed for their off-label use in treating depression. The generic versions of these medications will offer a savings of 10 to 11% per unit over their brand counterparts.

As 2012 progresses, PMSI will continue to keep the industry informed of prescription drug updates and changes which will have an effect on prescription drug costs and MSAMedicare Set-Aside allocations.

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By Settlement Solutions, March 9, 2012 10:20 am

PMSI would like to thank all who attended our MSPMedicare Secondary Payer Act Compliance in Liability Settlements Webinar on February 21, 2012. It has become abundantly clear to us based on the amount of questions received during and after the webinar coupled with the  lack of guidance from CMSCenters for Medicare and Medicaid Services in the liability arena, that more education on this topic is desired by the industry. We thought it would be helpful to address some of the questions presented after the webinar¹, as well as the answers which were provided.

Question: Where a liability claim is being settled involving a workers’ compensation claim and the workers’ compensation claim will remain open and continue to provide coverage for the claimant’s medical treatment and all alleged injuries associated therewith, is there any need for the liability settlement to include a protection for future medical payments?

Continue reading 'Liability Future Medical Allocation Questions'»

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By Settlement Solutions, March 2, 2012 2:53 pm

Since Mandatory Insurer Reporting (MIRMandatory Insurer Reporting) requirements came into existence, there have been a substantive number of changes as well as delays in the process as a whole.  As RREsResponsible Reporting Entities - payers subject to Mandatory Insurer Reporting Requirements mandated by Section 111 of the MMSEA and their reporting agents continue to navigate through what can be at times a cumbersome and complex reporting process, looking back to where we began and where we are now can seem like a daunting task.  However, taking a look back at what has happened over the past year can provide RREsResponsible Reporting Entities - payers subject to Mandatory Insurer Reporting Requirements mandated by Section 111 of the MMSEA and their reporting agents an opportunity to learn from past mistakes and inevitably improve and streamline their processes. 

What did we learn about MIRMandatory Insurer Reporting in 2011?

Do not Over-Report

PMSI believes that the most significant way to ease the pain of MIRMandatory Insurer Reporting is to avoid over-reporting. The benefits of reporting only what is required by CMSCenters for Medicare and Medicaid Services are that it:

• Saves Time:  RREsResponsible Reporting Entities - payers subject to Mandatory Insurer Reporting Requirements mandated by Section 111 of the MMSEA are only collecting data on claims which must be reported
• Reduces Reporting Errors: By reporting only clean claims which meet CMSCenters for Medicare and Medicaid Services validations, error rates are reduced
• Reduces the possibility of interfering with a beneficiary’s Medicare benefits: Data issues can potentially interrupt Medicare benefits

Continue reading 'Mandatory Insurer Reporting: What Have We Learned So Far?'»