Prior to the release of the latest Workers’ Compensation Medicare Set Aside (WCMSA) Reference Guide, the Centers for Medicare and Medicaid Services (CMS) would generally defer to the findings of the Independent Medical Review (IMR) and exclude the denied treatment or drugs. However, since the release of the WCMSA Reference Guide, we are seeing CMS include treatments and medications denied by IMR citing a lack of a documented alternative treatment plan. Further clarification was provided stating “The CMS position is not whether a carrier demonstrates liability, but whether Medicare would reasonably pay for something in the future that should have been covered as it related to the workers’ compensation claim.” In situations involving denied treatment, CMS seeks an “alternative treatment that would be acceptable through the IMR process.”
It is the underlying state workers’ compensation law providing the legal authority controlling Medicare’s recovery rights rather than the Medicare Secondary Payer Act. Medicare’s rights arise from the underlying state law governing the claim granting property rights to parties based on issues of compensability. This is supported by the cases listed below:
In Caldera v. The Insurance Company of the State of Pennsylvania, 716 F.3d 861 (5th Cir. 2013), the Court held the Medicare Secondary Payer Act does not go as far as to eviscerate all state law limitations on workers’ compensation payments.
The California Court in CIGA v. Burwell, 2017 U.S. Dist. LEXIS 1681 (decided January 5, 2017) and CIGA v. Price, U.S. Dist. LEXIS 67589 (May 3, 2017), to be appealed again in 2017 (not precedent setting yet), the court ruled state law creates Medicare’s recovery rights based on concepts of what is compensable versus what is not compensable. The law does not permit Medicare to recover conditional payments for items and services deemed to be unrelated to the compensable workers’ compensation (WC) claim.
In addition and specifically pertaining to California, the 3rd District Court of Appeals has issued a decision in Ramirez v. W.C.A.B., again upholding the constitutionality of the IMR process for Utilization Review determinations. Ramirez is the third in a series of cases where applicant attorneys have attempted to challenge the constitutionality of the IMR process. In these cases, the Court goes on to state:
“To the extent the Board has any jurisdiction to review a utilization review as provided by this regulation, it has jurisdiction only over nonmedical issues such as timeliness of the utilization review as stated in the Final Statement of Reasons and Dubon II. We are not presented with a nonmedical issue. Any question that has the effect of assessing medical necessity is a medical question to be conducted by a qualified medical professional by way of independent medical review (IMR). (California Labor Code § 4610.6, subd. (i) [“In no event shall a workers’ compensation administrative law judge, the appeals board, or any higher court make a determination of medical necessity contrary to the determination of the independent medical review(IMR) organization.”].) Whether the utilization reviewer correctly followed the medical treatment utilization schedule is a question directly related to medical necessity, and is reviewable only by independent medical review.”
In light of CMS’ recent change in position regarding IMR determinations and until there is a formal MSA appeals process, we recommend carriers and Third Party Administrators (TPAs) evaluate cases involving IMRs to determine whether there is an alternative treatment plan adopted by the prescriber and how this may impact an MSA. If an alternative treatment plan has not been established, Optum can assist by having our clinical staff evaluate the claim and discuss the case with the prescriber (if applicable) to collaborate on clinically appropriate and cost-effective treatment alternatives.
Each case should be evaluated individually to determine the best course of action in reference to an MSA, while considering the carrier, TPA, employer risk tolerance and internal procedures. At Optum our knowledgeable staff of professionals are here to assist clients with all their MSP compliance needs.