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 firstname.lastname@example.org.
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