By Christie Britt, Senior VP of Operations, ExamWorks Clinical Solutions
Last week Marty Cassavoy outlined strategies to reduce your Medicare conditional payment liability. Today I will focus on Medicare Set Asides, which are perhaps the most misunderstood aspect of Medicare Secondary Payer concepts.
Believe it or not, Medicare issued its first policy memorandum on Medicare Set Asides eighteen years ago, in July 2001. While a lot has changed in the world during that time, Federal policies regarding MSAs have more-or-less remained intact. Medicare has consistently identified that parties to a workers’ compensation settlement should take care to ensure that the settlement does not shift the burden for future medical care onto the Medicare program. To avoid this burden shift, parties designate money within the settlement to be used solely to pay for future claim-related Medicare-covered medical treatment and prescription drug needs. This money, designated within the settlement, is of course known as a Medicare Set Aside.
While the basics have not changed much in the last twenty years, the details have changed considerably and over time claims professionals have developed deeply held opinions about many aspects of Medicare’s MSA review program. Quick, what’s the average timeframe to receive a response from Medicare’s review contractor? What are the cases that CMS will and will not review and what information is necessary to submit to Medicare to gain a response? Does Medicare require that MSAs be utilized or submitted to the agency for review? And what’s the downside risk if you avoid the issue entirely?
Industry veterans often have deeply held understandings as to those questions, but the fact is that some of the answers have actually changed just within the last twelve months. Let’s examine some common questions that arise when settling a workers’ compensation claim when Medicare is at issue and, as we do so, take a deeper dive into the risks and rewards that may be at play.
Submitting an MSA to CMS: Voluntary or Required?
The simple fact of the matter is that Medicare’s core policy on this point has not changed. Medicare does not require that settling parties submit proposals to CMS to allow the agency to review and approve the parties’ MSA proposal. Medicare will only review two classes of settlements: class one involves workers’ compensation settlements greater than $25,000 involving a Medicare beneficiary and class two involves workers’ compensation settlements greater than $250,000 where the claimant has a “reasonable expectation of Medicare enrollment within thirty months.” Even if the settlement would qualify for review, parties are free to simply move forward with a settlement and skip CMS review if they like.
There a number of good and valid reasons why parties may choose to ignore the CMS approval process. CMS’ review program forces parties to adhere to a very specific set of requirements that enable Medicare to complete the review. And if those requirements are not met, CMS will not issue a response. Moreover, Medicare’s basic policy for including or excluding future medical costs is “you break it, you buy it.” Absent a compelling legal or medical argument, Medicare will expect that the parties set aside funds associated to denied or disputed treatment that was minimally paid for by the employer. Medicare will even ask for a future medical allocation when a claimant steadfastly refuses to pursue a medical option, as long as the claimant’s treating physician identifies the treatment as a possible option for the claimant in the future. The review process often ignores medical or legal responsibility for future care in favor of a color-by-numbers approach for Medicare’s review contractor.
Nevertheless, the approach of ignoring the review process is not entirely without risk and Medicare has taken steps earlier this year to more clearly articulate its policy on CMS review. In the most recent WCMSA Reference Guide (PDF) CMS explained: “Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment” (emphasis added). CMS’ language opens the door for a post-settlement recovery action up to the full amount of the settlement, presumably to the extent of Medicare’s payment for related claims.
If the case does not meet review thresholds have been brought into an even sharper view. The most recent reference guide update illustrates two situations that do not meet review thresholds and explains that “not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.” So, settling parties are placed in peril if they simply expect Medicare to pay for medical treatment post settlement. But we knew that. What are some best practices for cases where submission is either unavailable or the parties decline to submit?
Skipping the submission line but staying out of the firing line: Best practices
Let’s start with the fundamentals. Medicare will not review cases that do not meet review thresholds or cases where the employer retains responsibility to pay for future medical care. And an MSA – or “plan for future care” – should only be considered in the former set of cases. But, assuming future medical care is being resolved via settlement parties should observe the following best practices:
- 1. Properly classify the case – Identify early on if the case is likely to be a class one (Medicare beneficiary settling for greater than $25,000), class two (“reasonable expectation” of Medicare enrollment within 30 months settling for greater than $250,000), or class three (Medicare beneficiary or “reasonable expectation” claimant but settling for less than the respective review thresholds). If resolving a class one or class two case, then opposing counsel, the judge, or local custom may be expecting that Medicare will review the settlement. Everyone needs to be on the same page regarding Medicare review (or lack thereof) as settlement is discussed and certainly prior to settlement. Mismatched assumptions can lead to delayed resolution, at best.
- 2. Utilize evidence-based medical guidelines – Medicare’s review procedures are often over-inclusive and often result in including funds being set aside to pay for more treatment than a person will likely utilize. Evidence-based techniques that rely upon time-tested industrial injury treatment guidelines and incorporate a “more likely than not” standard not only result in reasonable and appropriate future medical allocations, but future medical allocations that more accurately and appropriately estimate future medical costs.
- 3. Utilize professional administration and structured settlements – A Medicare Set Aside exists to offset the possibility that the burden for future medical care falls to the Medicare program. Professional administrators handle the complicated process of paying providers, accounting for expenditures and ensuring that MSA funds are not mishandled. A structured settlement ensures that the MSA is funded over a number of years, thereby limiting the possibility of premature lifetime exhaustion. Professional administration and structured settlement are a good idea in any MSA, but particularly in cases where CMS review will be skipped.
- 4. Clear language, obligations and expectations – Whatever the approach, a settlement is only as good as the parties’ written agreement. Employers, counsel and the beneficiary should all be on the same page about how the MSA will be funded, who will administer it, when and how Medicare will be notified about the parties’ obligations and – most importantly – what contingencies will engage in the event that the MSA exhausts or CMS attempts subsequent enforcement.
These four key items are the big ones, but there are a number of details that are important to get correct. Have future prescription drug needs been assessed by a PharmD? Was the settlement language reviewed by a lawyer whose practice focuses exclusively on Medicare Secondary Payer matters? Are the professional administration and structured settlement provided independent companies free from all-too-obvious conflicts of interest?
MSA issues can place settling parties in the horns of a dilemma, but it’s possible to challenge expectations around submitting cases to Medicare even as the settlement relieves Medicare of the burden to pay for future medical care.
About Christie Britt MBA, MSCC, CMSP
Christie Britt is the Vice President of Operations overseeing the extensive operations of ExamWorks Clinical Solutions. She has vast knowledge of Medicare set asides and MSP Compliance from an Insurance claims perspective.
Prior to her employment with Gould & Lamb, Christie worked for nearly a decade in claims management, followed by over seven years in all aspects of MSP compliance. She has developed and enhanced products and operational efficiency models supporting growth while ensuring quality.
Christie also served as the Director of Financial Operations for Rising Financial Solutions and the Director of Operations for Health Advocates, Inc. PMSI MSA (Optum PMSI Settlement Solutions). Christie obtained her B.S. in Marketing and Economics from the University of South Florida in 1997. She also earned her MBA from the University of South Florida in 2001 with disciplines in Healthcare Administration, Quality Management, and Economics. Christie is MSCC and CMSP certified and has her Green Belt certification in Six Sigma. She is also a member of the National Association of Medicare Set Aside Professionals (NAMSAP) and the Workers’ Compensation Claims Professionals (WCCP).
About ExamWorks Clinical Solutions
ExamWorks Clinical Solutions is a leading authority on Conditional Payment Resolution, Medicare Set-Asides (MSAs), Evidence-based MSAs, and MMSEA Section 111 reporting. Our Nurses, Certified Life Care Planners, Doctors of Pharmacy, and Attorneys deliver accurate and defensible Legal Nurse Reviews, Life Care Plans, Field Case Management, and settlement strategies on a proprietary platform enabling efficient communications and service delivery.