Text of New WCMSA Legislation Released

We previously posted a blog regarding S 2731, also known as “The Medicare Secondary Payer and Settlement Agreements Act of 2014,” being introduced into the U.S. Senate on July 31st. Now that the full text of the bill has been made publicly available, we would like to provide a more in depth overview and analysis of the bill, specifically the parts of the bill which differ from HR 1982. To access the text of the bill, click here.

The bill seeks to exempt workers’ compensation settlements of $25,000 or less from compliance with the MSP. While it may be logical to exempt low dollar settlements from compliance with the MSP, PMSI’s records demonstrate that a great number of cases with Medicare beneficiaries settle for $25,000 or less. Therefore, this threshold may be too high as it would result in significant loss to the Medicare Trust Fund (a more reasonable threshold might be $10,000).

S 2731 includes provisions to make an MSA “qualified” which was included in HR 1982 previously. However, S 2731 states that in order for the MSA to be qualified, the MSA amount must be based upon the applicable workers’ compensation fee schedule. This would leave out the option for parties to base an MSA upon usual and customary rates (which is currently allowable by CMS). Additionally, the legislation does not provide for how the Part D component of the MSA should be calculated. Most state fee schedules do not address pricing for pharmaceuticals, and currently CMS requires that Average Wholesale Price (AWP) be used for pricing the Part D component of an MSA. Therefore, this component of S 2731 leaves many questions unanswered.

A noteworthy component of S 2731 is that it requires CMS to timely review MSA submissions and reconsiderations of MSA determinations. If CMS does not respond in a timely manner, the parties may appeal directly to an administrative law judge. The industry may recall that CMS was seeking to streamline its reconsideration/re-review process earlier this year and closed its comment period for this process on March 31, 2014. CMS stated that it would be taking comments under consideration and responding with a teleconference to announce the new final changes to the re-review process. Perhaps the filing of S 2731 will push CMS along to finalize this new re-review process which is greatly desired by the industry.

S 2731 still includes an optional direct payment of the qualified MSA amount as was provided within HR 1982. However, this provision still leaves a lot of questions as well. Once CMS receives the qualified MSA amount, will it then pay for any and all medical expenses that the claimant submits? Or will CMS be tracking expenditures related to the workers’ compensation injury and ensuring that it never exceeds payments beyond the qualified MSA amount submitted? If the latter is the case, does CMS have the additional staff and resources to be able to do this?

Lastly, S 2731 provides that providers are unable to bill for a greater payment rate than the amount allocated in the MSA. How will this be enforced? Additionally, the aim of the MSP is to prevent workers’ compensation, liability and self-insurance plans from shifting the burden of care to Medicare upon settlement. Arguably, to now try to apply the MSP to providers would seem to not only be a stretch, but could subject providers to other elements of the MSP.

We welcome your thoughts on S 2731 and encourage comments and questions; you may contact us at asktheexperts@pmsisettlement.com.

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