Category Archives: Medicare Secondary Payer (MSP)

Medicare Secondary Payer (MSP)

CMS Position on Independent Medical Reviews

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.

CMS’ newly updated WCMSA Reference Guide has arrived!

imageThe Centers for Medicare and Medicaid Services (CMS) released the latest update on July 31, 2017, of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide dated July 10, 2017. To view the reference guide click here. It contains some long-awaited good news for those jurisdictions with State-Specific Statutes, some clarification on several items and further information related to the new Amended Review process.

CMS provides information regarding what is required for approval when preparing a WCMSA according to State-Specific Statutes in Section 9.4.5 (page 24). They also throw out a warning to include this information in the initial submission and note, “Failure to include the required documentation at the time of original submission will not constitute a reason for the request of a re-review.”

Submitters requesting an alteration to pricing based upon state-legislated time limits must be able to show by a finding from a court of competent jurisdiction, or appropriate state entity as assigned by law, the specific WCMSA proposal does not meet the state’s list of exemptions to the legislative mandate. For example, this would apply to Georgia statute limiting future medical to 400 weeks for non-catastrophic cases here the date of injury is after July 1, 2013. While it appears CMS will now honor state statutes with time limits for treatment, a court order or finding confirming the claim does not meet the exemptions under the state law will be required.

CMS also indicates for those states where treatment is varied by some type of state-authorized utilization review board, the submitter shall include the alternative treatment plan from the treating physician confirming what treatment has replaced what was deemed unnecessary by the utilization review board. In California, carriers and Third Party Administrators (TPAs) will no longer be able to rely on the Independent Medical Reviews (IMRs) alone. Going forward, carriers and TPAs will need to seek an alternative treatment plan from the treating physician prior to submission of a WCMSA when treatment has been deemed unnecessary. It also brings up scenarios where no alternative treatment is necessary. If a claimant is receiving duplicate therapy, (such as two skeletal muscle relaxants) and utilization review deems the use of one of them as unnecessary there may be no alternative treatment or replacement for that treatment. In those instances, an argument may need to be made that no replacement is needed. CMS may require a statement from the treating physician to that effect as well.

Information regarding the previously released Amended Review process has been added under Section 16.0; please refer to our prior blog from July 13, 2017, with further details regarding the items needed for this type of review. This section points out several warnings

  • Only cases not yet settled as of the date of the request for re-review qualify for this re-review process;
  • “The approval of a new generic version of a medication by the Food and Drug Administration does not constitute a reason to request a new case review for supposed changes in projected price.” This cannot be the only reason/change for the re-review request;
  • CMS will deny the request for re-review if submitters fail to provide the required information and justifications referenced with the request for re-review. Submitters will not be permitted to supplement the request for re-review. CMS is confirming all required information must be supplied with the Amended Review request or the request will be denied.

Further clarification regarding hearing on the merits of a case in the context of whether the WCMSA should be submitted to CMS is found in Section 4.1.4. Because the CMS prices are based upon what is claimed, released or in effect released, CMS must have documentation as to why disputed cases are compromised and settled with future medical costs allocated for less than the recommended pricing. As a result, when a state WC judge or other binding party approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. This shall include all denied liability cases, whether in part or in full. For example, CMS is asking to see supporting evidence that the burden of proof was not met by the claimant, no causation medical evidence was proffered by the claimant within the statute of limitations period, a judicial decision ruled the employer/defendant was not responsible based upon findings of fact and law. If Medicare’s interests are not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the entire dollar amount of the entire WC settlement. Medicare may also assert a recovery claim, if appropriate.

Spinal Cord Stimulator (SCS) pricing with CPT codes has been added to section 9.4.5. The reference guide goes into great detail on how to price a SCS appearing to suggest pricing for SCS will be different per jurisdiction going forward, instead of the same price for all states across the board, which has been the current allocation methodology utilized by the Workers’ Compensation Review Center (WCRC) up to this point. We will be monitoring this closely for any changes. CMS also differentiates the allocation differences between the non-rechargeable (every seven years) and rechargeable SCS devices (every nine years).

CMS has added a new section addressing changes in the submitter of record, found in Section 19.4, stating “CMS requires a written release from services by the original submitter and a new signed Consent to Release form authorizing the new submitter. Both must be provided in order to continue the WCMSA review process. Submitter changes will not be accepted after settlement.” This has been the process for quite some time but was not previously documented. It is our hope this will also apply to files having been previously approved by CMS but never settled, which in the past CMS has not always been honored.

Other minor changes/additions are found in the following sections:

  • Section 9.4.4 Medical Review: Step 5: Verifies jurisdiction and calculation method
  • Section 16.1 Required Resubmission: If a file is closed by CMS for a year or longer the initial submission will have to be re-done completely (start over)
  • Section 17.1 Administrators: CMS has added a sentence to this section recommending professional administration
  • Section Pharmacy Guidelines and Conditions – Medically Accepted Indications and Off-Label Use: (clarification)
  • Section 10.4 Section 20 – Life Care / Future Treatment Plan: CMS has added the following sentence and made this section in the CMS portal a mandatory addition: “For the purpose of evaluating plan proposals, either a Life Care Plan or Future Treatment Summary is required for submission.”
  • Section 10.5.3 Total Settlement Amount: This section has been expanded with more detail of what the computation of the total settlement amount includes.

We recommend our clients review the updated reference guide to determine if any updates/changes apply to their specific cases. Please continue to watch this site for additional updates, news or trends from CMS as the above updates start to unfold.

You Are Being Watched

All non-group health plans (NGHP) including all property & casualty insurers who insure auto no-fault (Med Pay/PIP) claims, workers’ compensation claims, premises Med Pay claims, get your assumption and/or termination of ongoing responsibility for medicals (ORM) reporting in order, a firm called MSP Recovery is coming after you. A recent 11th Circuit decision in MSPA Claims 1, LLC v. Ocean Harbor Casualty Insurance (Case No. 2015-1946-CA 06) is granting class certification paving the way for recovery of millions of dollars for Medicare or Medicare Advantage plans nationwide.

According to a recent article in Daily Business Review, MSP Recovery, LLC, has the ability to determine if someone who has an incident, such as a car accident or a slip-and-fall and an insurance carrier has reported assumption of ongoing responsibility of medicals (ORM) to the Centers for Medicare and Medicaid Services (CMS) for primary payer responsibility .

MSP Recovery, LLC has developed a sophisticated system to identify no-fault claims by collecting and matching data including CMS reports, police reports, ambulance transport records, insurance declaration sheets, and no-fault personal injury protection/medical payout sheets.

MSP Recovery, LLC plans to file lawsuits across the country on behalf of many Medicare Advantage plans (MAPs) to recover conditional payments in which an applicable plan has demonstrated responsibility to pay by assumption and reporting to CMS of ORM.

Your Data is Being Mined

Presumably, MSP Recovery, LLC is able to use the Medicare Secondary Payer Recovery portal (MSPRP) to identify specific Medicare beneficiaries that have had ORM reported from the police or ambulance reports.

For commercial general liability policies covering premises slip and fall cases, if there is a no-fault/med pay policy provision, then the applicable plan is required to report ORM via Section 111 mandatory insurer reporting (MIR). If a med pay claim is made by the Medicare beneficiary after being treated, these claims can be identified via an ISO Claim Search subscription.

Since compensable workers’ compensation claims involving Medicare beneficiaries are required to report to CMS assumption of ORM, state departments of industrial relations may be accessed as well.

What do I do to avoid being brought into a Class Action?

Do not assume and report ORM if a no-fault claim has not been made by a Medicare beneficiary, where no treatment is sought, or if there is a legitimate statutory or coverage basis for the claim denial.

Do not forget to report to CMS an accurate ORM termination date. ORM should be terminated when policy limits have been exhausted, the policy period has expired, when CMS has approved an MSA after settlement, when there is a settlement that included medical expenses, or where there is a judgment or arbitration award that has occurred that disposed of related medical expenses.

Do not ignore or refuse to pay Medicare or MAPs who have demanded or notified you of potential conditional payments you may owe.

When in doubt, consult us. For questions, please contact Optum Settlement Solutions Division at 888-672-7674 or

Recently Released and Soon to be Released Generics Expected to Reduce Claims Costs

Over the past several years, prescription drug costs related to workers’ compensation claims have risen dramatically, making it increasingly important for claims professionals to carefully evaluate this exposure and mitigate costs when possible. Optum Settlement Solutions understands that keeping up to date on new generic formulations is part of an overall strategic approach to reduce the cost of claims and ultimately the prescription allocation of a Medicare Set-Aside (MSA).

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

There were several brand name medications during 2016 and already in 2017, commonly prescribed in workers’ compensation claims, whose patents expired with their Food and Drug Administration (FDA) approved generic formulations released to the market.

Generics released in 2016 and first quarter of 2017:

Intermezzo (Zolpidem sublingual tablet): Sedative/hypnotic which is FDA approved for the treatment of insomnia. This is the only indication The Centers for Medicare and Medicaid Services (CMS) currently accepts for inclusion of Intermezzo (Zolpidem) in an MSA. Brand: $13.60/tab* Generic: $10.03/tab* (all strengths)

Frova (Frovatriptan 2.5mg): Central serotonin-receptor 1B and 1D agonist which is FDA approved for the treatment of acute migraine attacks with or without aura. This is the only indication CMS currently accepts for inclusion of Frova (Frovatriptan) in an MSA. Brand: $88.35/tab* Generic: $72.27/tab*

Nasonex (Mometasone Furoate 50mcg/actuation nasal spray): Medium –potency synthetic corticosteroid with anti-inflammatory, antipruritic, and vasoconstrictive properties which is FDA approved for the treatment of allergic rhinitis and allergic rhinitis prophylaxis. These are the only indications CMS currently accepts for inclusion of Nasonex (Mometasone Furoate) in an MSA. Brand: $16.74/gm* Generic: $15.07/gm*

Voltaren Gel 1% (Diclofenac Gel): Topical non-steroidal anti-inflammatory which is FDA approved for the treatment of osteoarthritis of the feet, ankles, knees, wrists, hands, and elbows. It is utilized most often in workers’ compensation claims for the treatment of inflammation and mild to moderate pain. While not FDA approved indications, CMS recognizes these as “medically accepted” indications for use on the body parts listed above and will include Voltaren Gel (Diclofenac Gel) in an MSA. It is considered to be utilized off-label when applied to other body parts such as the neck, shoulder or back and CMS will exclude this medication from the MSA. Brand: $0.49/gm* Generic: $0.54/gm* (Note: currently the generic formulation is more expensive, but as more manufacturers release their generic products the cost should become more competitive and decrease).

Nuvigil (Armodafinil): A psychostimulant which is FDA approved for the treatment of circadian rhythm disruption, narcolepsy, and sleep apnea. It is utilized most often in workers’ compensation claims off-label for daytime somnolence or fatigue due to the utilization of narcotic pain medications which is not recognized by CMS as an accepted indication (FDA or “medically accepted”); therefore, it would be excluded from the MSA for this diagnosis. Brand: 50mg, $8.86/tab, 150,200, & 250mg, $26.60/tab* Generic: 50mg, $7.26/tab, 150,200,250mg $21.86/tab*.

Seroquel XR (Quetiapine Fumarate Extended Release): Atypical antipsychotic which is FDA approved for the treatment of bipolar disorder, schizophrenia, and depression. These are the only indications CMS currently accepts for inclusion of Seroquel XR (Quetiapine Fumarate Extended Release) in an MSA. It is most often utilized in workers’ compensation claims for the treatment of depression. Brand: e.g., 200mg strength, $19.47/tab* Generic: 200mg, $15.52/tab* (Note: All strengths are available in generic formulation).

Pristiq (Desvenlafaxine Succinate): Serotonin-norepinephrine reuptake inhibitor which is FDA approved for the treatment of depression. This is the only indication CMS currently accepts for inclusion of Pristiq (Desvenlafaxine Succinate) in an MSA. Recently released in March 2017, no generic price available for comparison at this time.

*Current pricing based on lowest Redbook AWP

Generics to be released later in 2017:

Relpax (Eletriptan): Serotonin agonist which is FDA approved for the treatment of acute migraine attacks with or without aura. This is the only indication CMS currently accepts for inclusion of Relpax (Eletriptan) in an MSA.

Proair HFA (Albuterol Sulfate inhaler): Moderately selective short-acting beta -2 receptor agonist which is FDA approved for the treatment of acute bronchospasm and exercise-induced bronchospasm prophylaxis. These are the only indications CMS currently accepts for the inclusion of Proair HFA (Albuterol Sulfate) in an MSA.

Viagra (Sildenafil): Phosphodiesterase type 5 inhibitor which is FDA approved for the treatment of erectile dysfunction (ED) and pulmonary hypertension. CMS accepts the indication of pulmonary hypertension for inclusion of Viagra (Sildenafil) in an MSA; however, Viagra (Sildenafil) is Part D excluded for treatment of erectile dysfunction and would not be included by CMS in the MSA for this diagnosis.

Generics can help to lower the cost of the claim:

As healthcare expenditures continue to climb, the effect has been felt in the workers’ compensation industry. Generic medications play a key role in helping to lower costs. It is important, as an industry, we keep up to date on generic availability and intercede when necessary if generics are not being utilized by the treating physician. Optum, being a leader in the industry, has products and programs which can assist clients with managing and mitigating prescription drug costs. These include identification of claims where generic options are available (based on availability of data) and, when applicable, reaching out to the treating physician to discuss conversion to lower cost prescription drug alternatives.

For questions, please contact our Settlement Solutions Division at 888-672-7674 or