Rafael Gonzalez, Esq.
Vice President, Strategic Solutions, Helios
The Medicare Secondary Payer Act (MSP) requires liability insurance (including self-insurance), no-fault insurance and workers’ compensation insurance to report claims specific information mandated by Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173). From the very beginning, the Centers for Medicare & Medicaid Services (CMS) made it clear that it would be implementing the Section 111 requirements in phases. CMS informed all MSP stakeholders that “as time passes and it gained experience with Section 111 reporting, the data exchange requirements would continue to be refined and new processes added when necessary.” Since 2007, several changes have been made to the mandatory reporting process, including applicability dates, settlement thresholds, and reporting waivers.
The latest change, effective 1/1/2016, indicates that “where an insurer or workers’ compensation entity has reported to CMS that it has ongoing responsibility for medical (ORM) for specific care or an injury, CMS claims processing contractors will use the information provided by the insurer or workers’ compensation entity through the mandatory insurer reporting (MIR) process to determine whether Medicare is able to make primary payment for those claims.” As a result, CMS has been warning insurers and workers’ compensation entities that notify Medicare of ORM, that they 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 medical bills accordingly.”
Consequently, insurers and workers compensation entities are on notice that incorrectly reported ICD-9 or ICD-10 codes will show up as conditional payments, which will ultimately require reimbursement to CMS. Many therefore have begun wondering whether such misreporting of ICD-9 or ICD-10 will also create similar problems with Medicare Set Asides? In other words, will CMS and its review contractor require inclusion of certain medical care in an MSA, whether related or not to the claim or injury, if an insurer or workers compensation entity misreports ICD-9 or ICD-10 codes in a claim?
About the Case
We recently came across a case that may shed some light on this scenario. The case involved a male claimant, born on 3/7/1948, who had an accident in the course and scope of his employment on 1/26/2006 in the state of California. Because of his age, the claimant was a Medicare beneficiary on the date of his accident, when he reached into a machine, and got his right hand caught/crushed, thereby sustaining injuries to his right shoulder, right wrist, right hand and neck.
In addition to the injuries related to the 1/26/2006 accident, the claimant also alleged repetitive or cumulative trauma injuries to the left shoulder, bilateral knees, lumbar spine, hips, and feet ranging from his work activities between 1/1/1996 and 1/26/2006.
On his own, away from the workers compensation injuries, and completely unrelated to the workers compensation claim at hand, the claimant was also treating with several physicians for headaches, hypertension and hearing loss.
As a result of the 1/26/2006 accident, the claimant was initially treated with x-rays, morphine injections and splinting. The claimant continued to have constant right hand pain and a burning sensation in his right upper extremity. The claimant ultimately underwent multiple surgical procedures, including right hand surgery in 3/2006, right shoulder surgery in 8/2006, another right hand surgery in 9/2006 and a right shoulder rotator cuff repair in 11/2006. Over the next several years, he received treatment with medication and therapy; however, the claimant continued to experience ongoing swelling. On 2/25/13, an orthopedic surgeon indicated that the claimant had reached Maximum Medical Improvement and opined he was Permanent & Stationary.
Another orthopedic surgeon indicated that the claimant’s left shoulder complaints were a compensable consequence of the specific injury involving the right shoulder and that the claimant’s complaints involving his lumbar spine, knees, hips and feet were the result of the continuous trauma at work. As a result, future medical care was indicated to include physician follow-up, medication, physical therapy and/or chiropractic care, left shoulder cortisone injections, lumbar trigger point injections or lumbar epidural steroid injections.
Claimant’s own internists also continued to treat the claimant for his ongoing headaches, high blood pressure and hearing loss. The last known medication regimen for such unrelated, personal impairments consisted of Ramipril, Ibuprofen and Fioricet.
Proposed Medicare Set Aside
After the parties negotiated a proposed settlement in the amount of $140,000, and because claimant was a Medicare beneficiary, on 1/30/2015, the parties decided to submit a Medicare set-aside arrangement (MSA) to CMS for review and approval. Based on the compensable impairments mentioned above, the MSA proposed future medical expenses in the amount of $79,135 and $6,732 for proposed future prescription expenses, thereby totaling $85,867. Because the last set of medical records submitted stopped on 3/12/2013, CMS asked for updated medical records from both authorized and unauthorized physicians treating the claimant, including medical records from claimant’s own personal physicians. As a result, CMS was provided records from claimant’s internist, showing continued treatment for his ongoing headaches, high blood pressure and hearing loss, which included the provision of Ramipril, Ibuprofen and Fioricet.
CMS’ Counter Higher
On 9/28/2015, almost nine months after the parties originally submitted their proposed MSA, CMS finally responded to the parties’ 1/30/2015 submission. The letter indicated that after reviewing the proposed amount of $85,867 to pay for future medical items and services that are covered and otherwise reimbursable by Medicare and are related to the claimant’s workers’ compensation claim, which included $6,732.00 for Medicare-covered prescription drugs, CMS had instead determined that $155,862 adequately considered Medicare’s interests with respect to Medicare-covered future medical items and services, including prescription drugs.
Despite medical records showing otherwise, and payout records that showed no monies had ever been paid by the employer or carrier throughout the history of the workers compensation claim to any physician or other medical care provider for headaches, high blood pressure and hearing loss, or for Ramipril, Ibuprofen and Fioricet, CMS included these conditions and the costs for medical care for such conditions in the MSA. As a result, CMS concluded that the costs that adequately protect Medicare’s interests included future treatment in the amount of $79,888 and future prescription drugs in the amount of $75,974, thereby totaling $155,863, almost double the amount originally proposed, and more than the entire settlement amount agreed upon by the parties.
Request for Re-Review
Although there is still no formal appeals process regarding the amount CMS requires in an MSA, the parties requested re-review of CMS’ determination by providing CMS with copies of legal documents which outlined the compensable diagnoses pertaining to the dates of injuries claimed. The parties also enclosed correspondence from defense counsel assigned to the case further explaining the compensable diagnoses and the non-compensable diagnoses.
The request for re-review made it very clear that the additional information provided to CMS by the claimant’s personal treating physician and the claimant’s personal pharmacy was for care and treatment personal to the claimant which were unrelated to the workers compensation claim. They again explained that the treatment and medications included by CMS were not related to the workers compensation claim, as hypertension and migraines are not part of the compensable injuries stemming from the workers’ compensation accident or the repetitive trauma claimed. These are both non-industrial, preexisting conditions, that have never been alleged or claimed to be part of this claim.
As a result, the parties requested the removal of the Ramipril and Relpax, as well as the diagnostic testing for the hypertension, chest x-rays, EKGs and echocardiograms from the CMS approved MSA. Consequently, the parties requested that CMS re-price the MSA with the removal of the above mentioned items and issue an amended determination letter approving an MSA allocation in the amount of $80,207 (revised future prescription drug amount of $1,843.00 and the prior CMS approved future medical amount of $78,364.00).
On 2/12/2016, the parties received a response from CMS on their request for re-review indicating that based upon the fact that the Responsible Reporting Entity (RRE) workers compensation insurance company, under Section 111, had been and continued to report that they have ongoing responsibility for the claimant’s headaches, hypertension, and hearing loss, CMS will not remove any items or services from the MSA allocation related to the claimant’s headaches, hypertension, and hearing loss.
And there it is! Undeniable first hand evidence that CMS’ workers compensation review contractor is currently using MIR data to determine the correct or appropriate MSA amount. RREs, primary payers, applicable plans should no longer wonder whether misreporting of ICD-9 or ICD-10 will create any problems with Medicare Set Asides, as it is clear that CMS and its review contractor is requiring inclusion of the medical care born from such misreported ICD-9 or ICD-10 codes in such MSAs, whether actually related or not to the claim or injury.
The case clearly highlights the need for a full review or appeals process in the current MSA scheme. Just like it proposed back in February 2014, CMS should provide parties with the opportunity to be able to present evidence to a neutral fact finder that shows or indicates what conditions are related to the claim, what is the correct pricing for such medical services, how long such services would be needed or necessary, and why certain medical items believed to be necessary by CMS, may not necessarily be in claimant’s short term or long term health interests.
Although left with possible open ended liability for any unfunded future medical care related to the claim, including potential exposure for Medicare conditional payments reimbursement in the future, since CMS has indicated submission continues to be a voluntary process, the parties could certainly have decided not to submit the MSA to CMS for review and approval.
If however, given the safety and protection submission provides for all stakeholders, the parties wish to submit their MSA to CMS for review and approval, in order to prevent from this type of situation happening in your claims, it is imperative that claims leadership and handlers in your organization pay attention to the company’s MIR process, and very specifically, pay close attention to the ICD-9 and ICD-10 codes reported to CMS through MIR.
Many organizations use medical codes gathered from their bill review process to gather such ICD-9 and ICD-10 information for MIR purposes. It is critical that such data also be compared with the adjuster’s or claim handler’s information, as well as defense counsel’s arguments on the claim, as these pieces will inevitably be part of the documentation prepared when entertaining settlement of the claim. However, as in the case highlighted above, if the ICD-9 or ICD-10 codes coming out of the insurer’s billing process do not match the actual impairments the claim handler has been paying or defense counsel has legally accepted as compensable conditions, and such ICD-9 and ICD-10 codes are not corrected by the RRE or their reporting agent at ORM or TPOC, the cost for treatment of such unrelated medical codes will find their way into your MSA, thereby significantly increasing the cost of the MSA, and potentially blowing up your settlement.
As the most accurate provider of MIR services in the industry, and one of the country’s largest MIR agents to small and large workers compensation, auto, no-fault, and liability self-insureds, third party administrators, and insurers, Helios Settlement Solutions’ MedicareConnect℠ offers the ability to compare such ICD-9 and ICD-10 codes so that your MSA contains only those conditions that are in fact related to your claim. For more information about our MIR MedicareConnect services, please contact us at 888.672.7674, or at email@example.com.