Tag Archives: Workers’ Compensation MSA

CMS Comments on Hydrocodone Combination Product Coverage Changes in Relation to WCMSAs

Brenda SmithAs of October 6th, 2014, the rescheduling of all hydrocodone combination products to the Schedule II classification went into effect. As previously discussed in our September 15, 2014, “DEA Classification Change for Hydrocodone Combination Products (HCPs)” blog, there were restrictions and changes related to the reclassification that could possibly lead to increase costs and ultimately have an impact on both the medical and the prescription allocations within the MSA.

It was noted that due to more stringent requirements in the areas of distribution, dispensing, record keeping and storage and the changes needed to meet these requirements that there would more than likely be an increase in the costs of the HCPs. We have already seen a rise in costs according to Redbook pricing noted via the CMS portal. For example, in August 2014 when the DEA ruled on the reclassification of the HCPs, generic Norco (Hydrocodone/Acetaminophen 5/325), was $0.342 per tablet. As of October it is now $0.459 per tablet. This is an increase of almost .12 per tablet in 2 months and is already leading to higher prescription costs within the workers’ compensation claim and MSA allocations.

It was also noted the new requirements for HCPs as Schedule II medications would set limitations on prescribing. Schedule II medications must be hand written and may not be faxed (the exception being for Hospice) or called into pharmacies thus making it more difficult for a claimant to obtain their medication. Many states will allow only a one month prescription to be written per visit while others will allow up to a 90 day supply. Previously when under the schedule III classification, the HCPs were valid for up to 6 months. Due to these prescribing limitations it was noted there would be more visits required. As a result, on November 17, 2014, CMS issued a “Notice of Hydrocodone Combination Product coverage changes in Medicare Part D Effective for WCMSA Proposals Submitted on or after January 1, 2015”. It stated that “at a minimum, allocate four healthcare provider visits per year when Schedule II controlled substances (including hydrocodone combination products) are used continuously unless healthcare provider visits are more frequent per medical documentation”. This confirms our previous assumption that there would be an increase in claims costs due to prescribing limitations.

CMS has also indicated that WCMSA cases submitted to CMS before January 1, 2015 that are closed due to missing, incomplete and/or inadequate supporting documentation (or any other reason), and subsequently re-opened after January 1, 2015, will also be subject to a review that includes the C-III controlled substances changes due to rescheduling by the DEA.

CMS methodology continues to highlight that payers that work with Helios Settlement Solutions are well positioned to mitigate pharmacy and their associated costs prior to settlement negotiations and creation of their MSA.

Helios Settlement Solutions will continue to keep you informed of any further changes concerning the HCPs and other medications that will affect drug costs as well as medical costs within the claim and ultimately the allocations within the MSA.

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.

CMS Releases Additional Information Regarding Use of WCMSAP for Prescription Drug Information

We previously posted a blog regarding CMS updating the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) which will allow users to directly input prescription drug information and calculate the proposed prescription drug portion of the WCMSA proposal as of October 6, 2014. To read our prior blog, click here.

CMS has released some additional information regarding how this enhancement will work through a presentation posted on its website. To view the presentation, click here. One part of the presentation that was noteworthy to Helios is that this presentation seems to indicate that submitters will be able to obtain prescription pricing information prior to submitting the MSA to CMS. This will be helpful to submitters so that estimates can be obtained and the most accurate pricing information can be utilized at the time the WCMSA is ready to be submitted.

This enhancement is not yet up on the portal, but should be released on October 6, 2014 as indicated by CMS. Once the enhancement is up and running on the portal, we will provide subscribers with more feedback on its functionality.