Tag Archives: WCMSA

Another Year Without Appeal Rights in Workers Compensation Medicare Set Asides

Insurance LawFrom the very beginning of the Workers’ Compensation Medicare Set-Aside (WCMSA) process, one of the consistent requests by both claimants and employer/carriers has been the inclusion of a review process that would allow both sides the opportunity to challenge Medicare’s decision on a set aside allocation. As Medicare began to require inclusion of prescription medications in WCMSAs, parties began to see their MSAs rejected by CMS more frequently and instead began receiving more and more counter-higher demands from Medicare, sometimes asking for double and triple the amount previously submitted to CMS for approval, and oftentimes even larger than the settlement amount reached by the parties and approved by the workers compensation judge or state commission.

For more than ten years, many of us involved in the MSA industry have been asking CMS for an appeals process that would allow the parties to question the reasonableness of Medicare’s counter-higher demands, and allow the parties to explain the rationality of their proposal. As a result, when the Centers for Medicare and Medicaid Services (CMS) announced its proposed expansion of the WCMSA Re-Review process on February 11, 2014, indicating that all requests for re-review would be handled by the Workers’ Compensation Review Contractor (WCRC) and resolved within 30 business days, I, along with many of our industry professionals, thought we were finally going to have an appeals process in the WCMSA program.

The announcement indicated that “the WCRC would direct the request for re-review to an internal group of experts skilled to review the identified issue. The experts that perform the re-review would not be the same specialists involved in the original determination. In certain situations, a re-review may be elevated by the WCRC to a CMS Regional Office. This level of review would occur in situations such as: failure to adhere to court findings; CMS policy disputes; carrier maintains Ongoing Responsibility for Medicals for treatment that has been included in approved WCMSA, etc.”

The announcement indicated that “CMS proposed to keep the limited current process, allowing for re-review requests to the WCRC at any time if a mathematical error was identified in the approved set-aside amount, or if the original submission included case records for another beneficiary.” In addition, CMS proposed to allow request for re-review submitted to the WCRC if “the original WCMSA was approved within the last 180 days; the case had not settled; no prior re-review request had been previously submitted for the at issue WCMSA; and, the re-review requested a change to the approved amount of 10% or $10,000 (whichever is more) for any of the following reasons:

  • Submitter disagreed with how the medical records were interpreted.
  • Medical records dated prior to the submission date were mistakenly omitted.
  • Items or services priced in the approved set-aside amount were no longer needed or there was a change in the beneficiary’s treatment plan.
  • A recommended drug should not have been used because it may be harmful to the beneficiary.
  • Dispute of items priced for an unrelated body part.
  • Dispute of the rated age used to calculate life expectancy.”

CMS asked for comments on all aspects of its proposal, “including comments on the timeframe, threshold and reasons for granting a re-review.” Comments on each of these were received by the March 31, 2014 deadline. However, although CMS indicated it would “schedule a Town Hall Teleconference and post implementation dates and detailed instructions on its website,” almost a year later, MSP stakeholders are still without a valid and meaningful appeals process to challenge CMS’ rejection of their proposed WCMSAs. Almost 14 years after the WCMSA approval process started, claimants and employer/carriers in work comp cases are still waiting for a re-review or reconsideration process that would allow them the opportunity to be heard, to disagree with and examine CMS’ counter-higher demands, present evidence, including medical records, depositions, and live testimony from medical professionals that can explain the reasonableness of medical services included or omitted in the WCMSA, as well as MSA professionals hired to create such allocations.

As we approach the end of 2014, with yet another year without appeal rights in work comp Medicare set asides, perhaps it is time to give up on the inconsistent CMS approval mechanism and the lack of a meaningful appeals process and instead begin to focus on finding alternative ways to make sure Medicare’s interests are properly considered and taken into consideration when settling entitlement to future medical care and prescription medications related to a work comp claim. Perhaps the time has come for the work comp industry to find a financially sound, secure and trusted way to make sure that by responsibly allocating for such future medical and prescription needs, every allocated dollar toward future medical care and medications related to the claim are in fact spent on such future needs.

At Helios, we assist our clients in taking control of the costs associated with MSP compliance. Whether a self insured, a third party administrator, or insurance carrier, we help our clients assure Medicare compliance by creating products and a process that will make sure such future medical and prescription needs related to the claim are appropriately taken care of at a reasonable and affordable cost.

Rafael Gonzalez is Vice President of Strategic Solutions at Helios. With over 25 years of experience in the workers compensation, liability, Medicare and Medicaid industry, Rafael serves as thought leader on all aspects of Medicare and Medicaid compliance, including mandatory reporting, conditional payments, and set asides. You may contact Rafael at rafael.gonzalez@helioscomp.com or 813.612.5592.

Louisiana Appellate Court Sets Aside Settlement Based on Confusion Over MSA

On October 27, 2014, the Louisiana Court of Appeal, First Circuit, published its opinion on McCarroll v. Livingston Parrish Council and Louisiana Workers Compensation Corporation, concluding that since all parties believed that the MSA amount could be used to pay for Mr. McCarroll’s surgery and that Medicare would pay for the surgical costs exceeding the MSA amount, there was no error in the Workers’ Compensation Judge’s finding that defendants’ misunderstanding regarding the MSA was a misrepresentation sufficient to set aside the settlement order of approval. Essentially, the settlement was set aside because there was no meeting of the minds between the parties as to what the MSA would pay for and what Medicare would pay for.

Wendell McCarroll was injured in a work-related accident on December 22, 2003, while employed with the Livingston Parish Council (Council). The Council’s workers’ compensation insurer, Louisiana Workers’ Compensation Corporation (LWCC), began paying medical and indemnity benefits soon thereafter. Mr. McCarroll treated with various doctors, including Dr. Lori Summers, who recommended cervical fusion surgery in July 2008.

Mr. McCarroll initially declined the surgery. Thereafter, in November 2008, LWCC began negotiating a settlement with Mr. McCarroll’s attorney. In early January 2009, the parties agreed to the terms of a settlement, including a MSA. The MSA projected future medical treatment and prescription drug treatment in the amount of $98,684.00. That amount was broken down into an estimate of $44,129.00 for future medical payments and $54,555.00 in future prescription costs. Of the $44,129.00 amount, $21,793.00 was allocated for Mr. McCarroll’s recommended surgery.

The MSA was to be funded through an annuity with seed money in the amount of $32,045.00 and an annual payment of $4,759.91 for a maximum of fourteen years. The MSA was submitted to CMS for review and approval. The MSA was approved by CMS on February 2, 2009.

Sometime after reaching settlement, Mr. Mccarroll decided to proceed with the cervical fusion surgery. LWCC was contacted by the hospital for approval of the surgery. Because of the pending settlement, the request was denied as not needed.

Concerned about the cost of the surgery, Mr. McCarroll’s attorney asked LWCC for an additional $10,000.00. In response, LWCC offered an additional $5,000.00, and Mr. McCarroll accepted that amount.  On February 10, 2009, $5,000.00 was approved for non-covered Medicare expenses.

Mr. McCarroll underwent the cervical fusion surgery on February 16, 2009. Apparently, there were complications, and Mr. McCarroll remained in the intensive care unit for an extended period of time. On March 2, 2009, Mr. McCarroll executed the Settlement Agreement and Release. The settlement documents were approved by the OWC on March 9, 2009.

Although not specifically spelled out in the appellate opinion, it looks like Medicare was billed but denied payment for the surgery because surgery was performed before settlement of the case was actually approved by the OWC and therefore remained the responsibility of the employer/carrier. Although unclear from the appellate opinion, since Medicare believed the cost of surgery was the responsibility of the primary payers, Council and LWCC, Mr.  McCarroll was also unable to use the MSA funds to pay for the surgery costs.

Two years later, on March 10, 2011, Mr. McCarroll filed with the OWC a Petition to Enforce Settlement Agreement or, in the Alternative, to Nullify Court Approval of March 9, 2009. In his petition, Mr. Mccarroll asserted that Medicare had refused to pay for any medical expenses that were incurred prior to the March 9, 2009 approval of the workers’ compensation settlement and that LWCC had refused to pay for any medical treatment from late January 2009 up to the March 9, 2009 approval of the settlement. Mr. McCarroll requested an order from the OWC ordering payment by LWCC of all medical expenses incurred prior to March 9, 2009, or, in the alternative, an order annulling the March 9, 2009 settlement agreement.

The matter went to trial on April 24, 2013. On June 17, 2013, written reasons were issued and a judgment signed by the OWC. The judgment vacated the settlement approved by the OWC on March 9, 2009. The Council and LWCC appealed.

The defendants contend that the OWC manifestly erred in vacating the settlement approved by the OWC on March 9, 2009. The defendants maintain that the cost of Mr. McCarroll’s expected future surgery was funded as part of the settlement. They assert that the clear language of the settlement resolved the entire claim and included past, present, and future medical and indemnity benefits. Because the cost of the cervical fusion surgery was included in the MSA, the defendants contend they are not responsible for anything further.

Mr. McCarroll contends, however, that not only did he think that LWCC and Medicare would pay for the costs of his surgery, but that LWCC also believed that the surgery would be paid out of the MSA, with any additional costs covered by Medicare. Mr. McCarroll asserts that the OWC correctly vacated the approval of the settlement because neither party anticipated that his surgery would not be covered by Medicare and the MSA and that he would be responsible for the costs of his surgery. Therefore, the settlement did not reflect a meeting of the minds.

Mr. McCarroll testified that when he signed the settlement agreement he thought that his medical expenses would be paid by Medicare or the MSA.  He stated that he would not have signed the agreement if he knew that he would have been responsible for the payment of any of his medical expenses.

The court concluded that it could not say that the OWC manifestly erred in vacating the Order of Approval signed on March 9, 2009. The OWC set the approval aside finding that all the parties believed that the MSA amount could be used to pay for Mr. McCarroll’s surgery and that Medicare would pay for the surgical costs exceeding the MSA amount. As a result, the appellate court found that a reasonable basis existed for the factual finding of the OWC, and could not find that it was clearly wrong. Accordingly, the court finds no error in the OWC’s finding that LWCC’s misunderstanding regarding the MSA was a misrepresentation sufficient to set aside the order of approval. For these reasons, the June 17, 2013 OWC judgment vacating the settlement approved on March 9, 2009, was affirmed.

This case is yet another reminder to litigants of the need to be absolutely clear and precise when settling a case where an MSA is involved. Very specifically, in addition to addressing the issues and concerns brought about by the possibility of a counter-higher by CMS, parties must address with specificity the time interval between submission of the MSA to CMS, what happens if the MSA is not approved as proposed, and if approval of the settlement by the work comp judge or court is required, terms regarding any medical bills incurred during this time period. Whether at mediation or hearing, litigants, their attorneys, mediators, and adjudicators must pay attention to such details in order to prevent results like those here. Helios can assist with recommended settlement language that addresses such concerns.

WCMSAP Now Allowing Users to Directly Input Prescription Drug Information

As of yesterday, October 6, 2014, users of the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) can now directly input prescription drug information and calculate the proposed prescription drug portion of a WCMSA proposal. Please see our prior blogs for more information on this release: our blog discussing the initial alert issued by CMS announcing this functionality can be found here, and our secondary blog which links to and discusses a subsequent presentation issued by CMS explaining this functionality can be found here.

Our initial impressions of this functionality show that users must input case information on a claimant/case prior to be able to look up the prescription drug pricing. In other words, users cannot just look up a drug without providing corresponding case information first. This new functionality is going to be extremely helpful and eliminate discrepancies from AWP differences.  We are very pleased that this functionality is now available.

NCCI Publishes Medicare Set Aside and Workers Compensation Study

The National Council on Compensation Insurance (NCCI) is an insurance rating and data collection bureau specializing in workers’ compensation. It is headquartered in Boca Raton, Florida with regional offices throughout the United States. The current president and CEO is Stephen J. Klingel. A board of directors composed of representatives of affiliated insurers and outside organizations oversees its activities.

Owned by its member insurers, NCCI collects data covering more than four million workers compensation claims and two million policies. NCCI uses this information to provide ongoing analysis of industry trends in workers’ compensation costs, workers compensation insurance rate and loss cost recommendations, cost analysis of proposed legislation regarding workers’ compensation regulations and benefits, and analysis of judicial and regulatory decisions on workers’ compensation. NCCI is considered the country’s authority on these issues.

NCCI produces a number of manuals that govern the details of how workers compensation insurance premiums are calculated in many (but not all) states. Among these manuals are the Basic Manual (which sets out rules on the classification code system, payroll amounts used to compute premiums, and changes in classifications and premiums); Experience Rating Manual (which details how experience modification factors are computed and used in workers compensation insurance premiums); and the Scopes Manual (which details how NCCI intends the various classification codes to be assigned to various kinds of employment).

NCCI hosts an Annual Issues Symposium in May of every year, at the Cypress Hyatt Regency in Orlando, Florida. It normally delivers national trends, statistics, and analysis of recent or pending legislative and regulatory proposals affecting workers compensation rates and costs. During this year’s AIS, NCCI delivered the results of its long anticipated review and analysis of Medicare set aside data. The program was presented on Friday afternoon on May 9, 2014 by Barry Lipton, Practice Leader and Senior Actuary at NCCI. The power point presentation delivered by Mr. Lipton can be found at https://www.ncci.com/Documents/AIS2014-Lipton.pdf.

Mr. Lipton indicated that a sample of approximately 2,200 completed MSAs dating between September 2009 and November 2013 were used. The sample included proposed total settlement, proposed MSA, and final MSA approved by CMS, which included a breakdown of Medicare Parts A & B expenditures (hospital and physician related services) and Part D expenditures (prescription drugs).

Mr. Lipton indicated that almost all MSAs (94%) in the sample were for claimants who were Medicare entitled at the time of settlement. Only 6% were not yet entitled to Medicare, but likely eligible within 30 months of settlement. Of those that were currently entitled to Medicare, 29% were eligible due to age, while 65% were eligible due to entitlement to SSD benefits.

Mr. Lipton reported that in 20% of the MSAs reviewed by CMS, the claimant was younger than 50 years old, 34% were between ages 50 and 59, 37% were between the ages 60 to 69, and 8% were older than age 70. He also reported that 41% of the MSAs reviewed were for settlements less than $100,000, 30% for settlements between $100,000 and $200,000, and 29% for settlements over $200,000.

Mr. Lipton also discussed the amounts of MSAs in the sample. He found that 45% of the MSAs reviewed by CMS had MSA amounts under $25,000, 16% were between $25,000 and $50,000, 18% were between $50,000 and $100,000, 12% were between $100,000 and $200,000, and 8% were over $200,000. Based on this information, Mr. Lipton reported that MSAs are about 40% of proposed total settlements.

Mr. Lipton also provided information of CMS processing time periods. He indicated that after a period of dramatic lengthening (average processing time increasing from 68 days on 1st quarter of 2010 to 274 days on 4th quarter of 2012), CMS’ MSA processing time dropped to 104 days average processing time and 41 days median processing time by the 4th quarter of 2013. The median MSA approved amount however has remained stable since 2010, averaging between $32,349 and $48,634.

Mr. Lipton also informed the audience that the gap between proposed and approved MSAs has been shrinking over the last 3 to 4 years. Since the average proposed MSA has increased from $66,801 to $78,776 from 2010 to 2013, and the average proposed MSA has decreased from $107,082 to $86,397 from 2010 to 2013, the ratio of overall approved to proposed MSAs has declined over the same time period from 1.60 to 1.10.

Mr. Lipton concluded that based on the sampling, the majority of MSAs are for claimants who are Medicare entitled due to disability, not age. He also concluded that MSAs are about 40% of the total settlement amount, with prescription drugs about half of same. He also concluded that MSA processing time has recently declined, and so has the differences between proposed and approved MSAs.

At the end of his presentation, Mr. Lipton indicated NCCI would publish a formal study of these findings in late summer or early fall of 2014. On September 15, 2014, NCCI published its Research Brief on Medicare Set Asides and Workers Compensation. The study can be found at https://www.ncci.com/documents/MSA-Research.pdf.

Rafael Gonzalez is Vice President of Strategic Solutions at HELIOS in Tampa, Fl. HELIOS is a national leader in MSP settlement solutions, including Mandatory Insurer Reporting, Conditional Payment Resolution, and Medicare Set Asides. You may contact Rafael at rafael.gonzalez@helioscomp.com, or at 813.612.5592 to speak with him about HELIOS settlement solutions products and services designed specifically for the challenges of today’s industry as well as the individual needs of each client.