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Workers' Compensation

Recent Medicare Set-Aside Changes

 By Jennifer C. Jordan, Esq., General Counsel, MEDVAL, LLC

Liability Medicare Set Asides

Of the series of memos released by CMS on September 30, 2011, the most notable established a policy for when a liability Medicare set-aside (LMSA) would not be required [see]. This is the first official policy published by CMS that even addresses the concept of LMSAs. Because CMS had remained silent on the issue for nearly a decade, many believed that MSAs were limited in application to workers’ compensation. So not only does the memo create an absolute exemption for the need to create an LMSA under certain circumstance, but it also infers the inverse in that should you fail to obtain the necessary physician certification that no future medical treatment is required, then Medicare just may have an interest in need of protection. The election to handle the issue in this manner was frankly brilliant on CMS’ part because it was able to establish the need to consider an LMSA without providing any criteria for how to do it.

COMMENTARY: As stated above, this is the only published memo regarding LMSAs, and any requests seeking approval of CMS continue to be granted on a case-by-case basis and wholly dependent upon the discretion of the appropriate regional office. Over the last several months, many CMS regional offices have changed their policies with regard to the discretionary review and approval of LMSAs. In particular, the Philadelphia RO went from reviewing every claim submitted to declining to review based upon limited resources, regardless of the involvement of high dollar settlements. Also, more cases are being reviewed and countered higher in a manner consistent with WCMSAs. With any type of MSA voluntarily sent to CMS for review, be careful of what you ask for and do not place unrealistic contingencies in your settlement agreements based upon CMS action without a back-up plan if it declines to review or counters with an erroneous or unrealistic amount.

WCMSA Web Portal

As the next step to an initiative originally introduced in December 2010, CMS created a pilot program of the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) on July 22, 2011, inviting 10 vendors to participate. During that time, pilot testers submitted a regulated number of WCMSA proposals for review. The WCMSAP is designed to improve the efficiency of the submission process for WCMSAs, including receipt of the proposal by the WCRC. As published on CMS’ website at that time, specific goals of the WCMSAP are to allow attorneys, beneficiaries, claimants, insurance carriers, representative payees, and WCMSA vendors to create a work-in-progress case, submit WCMSA cases, perform case lookups, and append documentation to a case. By submitting a case through the portal, the MSA submitter no longer has to burn PDF files to CD and mail it to Detroit. Instead, the submitter can gather the WCMSA proposal (no LMSAs are permitted) and its supporting documentation for direct upload to the system. In doing this, the role of the COBC is greatly reduced. The submitter inputs the claim information, uploads the documents, and the COBC no longer has to copy files from a mailed CD-ROM to the CMS server.

During the pilot testing, weekly conference calls were held among CMS, its contractors, and the trial submitters to answer questions, promote feedback, and identify technical hang-ups. As the weeks progressed, trial submitters were permitted to upload an increasing number of cases to fully test the system’s operations. A town hall conference call was then held on November 29, 2011 to introduce the WCMSAP to the public and answer questions. CMS directed participants to their website for registration information (a process very similar to Section 111 reporting), links to the WCMSAP application and the WCMSAP Computer-Based Training (CBT) Modules. From the application’s login page, the user manual can be located under Reference Materials in the menu bar. Submission requirements are consistent with those of the mailed submissions published on CMS’ website. All of the necessary supporting documentation, i.e., the consent to release form, rated age quotes and attestation, medical records, and carrier payment history, are to be uploaded along with the WCMSA proposal. Notably, CMS does recommend that you read the entire user manual before attempting to make a submission via the portal.

CMS also announced in the town hall call that there would be a two-strike policy for submitters uploading cases that do not meet the threshold for review. CMS blames much of the 8,000+ backlog that currently exists to the wasted resources involved in processing cases that they will not ultimately review. If you fail to verify eligibility for Medicare or the reasonable anticipation thereof prior to submission and those cases are determined to be non-threshold more than once, CMS warned that the submitter will be blocked from access to the web-portal indefinitely.

Now with the WCMSAP in effect, registered participants may upload an unlimited number of cases for review. With instant access, submitters can confirm the status of a case at any point. Submitters may also append with additional documentation in response to development requests and submit final, approved settlement documents as a final step to the process. An especially promising development that occurred during the pilot testing of this program were turnaround times of approval letters as fast as the same day and no longer than a month, even with development requests. While this slowed considerably with the opening of the system for public access, approvals continue to be generated in significantly less time than before. CMS asserts that cases are to be handled in the order they are received regardless of the submission method. The hope, nonetheless, is that the increased efficiency of the portal will allow CMS to effectively address its current backlog along with incoming submissions for quicker turnaround times of all submissions.

COMMENTARY: There are currently four contractors that touch every WCMSA submission received through the Detroit post office box, the first being the contractor that physically uploads the materials to the CMS system and the last being the one that physically mails correspondences to the parties involved. The web portal cannot help but be more efficient given that neither of these functions will be necessary for electronic submissions. In addition to all submissions being electronic, all correspondences will be electronic as well. Additionally, WCRC employees will no longer be burdened with phone calls for status updates as status information will be available through the portal as well. Sadly CMS has not automated the review function itself, so subjective human intervention will continue to be a problem, but any improvement in the speed at which determinations are received, good or bad, is a welcome change.

WCMSA Annual Reporting

Due to the MSPRC functions being absorbed by the COBC following the end of the contract held by the Chickasaw Nation Industries, CMS announced on December 27, 2011, that all completed annual WCMSA accounting documentation should be sent to MSPRC—Non-Group Health Plan (NGHP), P.O. Box 138832, Oklahoma City, OK 73113.

Life Expectancy Tables

Effective October 31, 2011, CMS began referencing the CDC’s Table 1: Life table for the total population: United States, 2007, for WCMSA life expectancy calculations. For any cases received and administratively closed prior to the effective date, it is important to understand that the 2007 life table will be applied when the case is reopened.

Post-Settlement WCMSA Amendments

Despite assurances made by CMS that its written opinion can be reasonably relied upon, the MSP industry is reporting an increasing frequency of claims in which carriers are receiving notice post-settlement that CMS has changed its approved amount. These alternations are being made solely upon request by the claimants without so much as notice provided to the carrier or even MSA vendor who submitted the claim. CMS appears willing to consider new evidence obtained post-settlement by the claimant to support an increase or decrease of the approved WCMSA, where as it will not entertain the same from anyone else involved in the process during the original review.

While an amendment higher is of little consequence if the carrier recognizes that there are no obligations to actually fund the difference, lowering the approved and funded amount might be tantamount to theft considering the insurer does not get the funds back. The Code of Federal Regulations expressly excludes Medicare beneficiaries from Medicare to the extent that compensation was received for future medical expenses, so if a carrier paid such medical compensation, who is CMS to tell the beneficiary that he need not spend it on related medical treatment, particularly after CMS sanctioned the amount funded? It is not reasonable for CMS to tell insurers on the one hand that the only way to protect Medicare’s future interests is to pay a certain amount, and then after it is funded, say “never mind”.

Insurance carriers exercise considerable detrimental reliance upon the CMS approval letter, believing it to represent the only means of attaining finality in their MSP related settlements. If CMS can change the approved amount regardless of the settlement already being funded and approved by the state, then the value of the CMS approval is lost and the inherent costs baked into the CMS review are paid for naught. CMS’ recovery rights are no greater than the obligations created under the state law, and therefore if a workers’ compensation settlement was approved by the applicable state agency, particularly one with an approved WCMSA incorporated into the agreement, CMS should not have much luck asserting demands beyond the approved settlement amount.

© Copyright 2012 LexisNexis. All rights reserved. This article was excerpted from the 2012 Supplement of The Complete Guide to Medicare Secondary Payer Compliance (LexisNexis).

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The Complete Guide to Medicare Secondary Payer Compliance, Jennifer C. Jordan, Esq., Editor-in-Chief

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