By Heather Sanderson, Founder and President, Sanderson Firm PLLC
Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility – that is, when another entity has the responsibility for paying before Medicare.
By law, Medicare may not pay for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” 42 U.S.C.§1395 y(b)2(a).
Medicare is a federal health insurance program available to people who: are 65 years of age or older; have been entitled to Social Security Disability Insurance (SSDI) benefits for 24 months or long; or, have end stage renal disease, which is permanent kidney failure that is so severe that it requires dialysis or a kidney transplant.
If an employee is injured on the job and is eligible for Medicare currently or plans on applying for SSDI within 30 months of the settlement occurring, prior to settlement the parties must protect Medicare’s interest by way of incorporating a Medicare Set-Aside (MSA) with the settlement. If this is not accomplished, then the entire amount of the settlement and the payment of the injured worker’s future medical treatment by Medicare is at risk.
For most of you reading this article that have worked with workers’ compensation claims for some time, the above may not be a surprise to you and may even invoke some negative feelings about your current and historic Medicare workers’ compensation claims and frustration with MSAs.
Regarding MSAs which are submitted to the Centers for Medicare & Medicaid Services (CMS), CMS’ contractor, the Workers’ Compensation Review Contractor (WCRC), performs the review and approval of the proposed MSA. Since 2001, the WCRC has been reviewing MSAs which meet their workload/settlement thresholds for review. However, MSAs submitted to CMS historically have been associated with increased costs to the settlement and increased amount of time until the parties can settle the workers’ compensation claim due to the parties waiting on CMS review. Thus, over the last 7-8 years, MSAs which are not submitted to CMS have gained popularity.
CMS’ official policy guidance (WCMSA Reference Guide) confirms that “[t]he WCRC relies on evidence-based guidelines for prescription medications and medical treatment allocations.” – WCMSA Ref. Guide, Section 9.4.3 (WCRC Review Considerations). Unfortunately, while the WCMSA Reference Guide states that the WCRC relies on evidence-based medicine (EBM) to review of WCMSAs, in a practical sense, the WCRC does not apply EBM to the review and approval of WCMSAs. Instead, the WCRC tends to apply a “worst case scenario” possible treatment regimen when reviewing and allocating in a proposed WCMSA. It is well known in the workers’ compensation industry, particularly with WCMSAs involving an opioid regimen, that in many cases where the CMS approved WCMSA allocation involves opioids/prescription drugs, if taken in the manner allocated, it could in fact seriously further harm the already injured Medicare beneficiary employee.
As mentioned previously, since the mid-2010s, Evidence Based Medicare Set-Asides (EBMSAs), which are not submitted to CMS for review and approval, have gained significant popularity amongst workers’ compensation insurance carriers/payers. With the application of EBM to the MSA allocation, comes a more clinically appropriate and reasonable allocation of future medical treatment as it relates to the underlying workers’ compensation claim/settlement. Additionally, many clinical professionals that are preparing MSAs feel an ethical obligation to apply principles and methodologies that are designed to maximize positive outcomes and restore patient health safely and effectively. It should come as no surprise that EBMSAs have continued to gain popularity over time. Furthermore, parties utilizing an EBMSA do not have to wait for CMS to review the MSA, increasing the ease in which settlement occurs.
On January 10, 2022, CMS issued an updated WCMSA Reference Guide to include a new Section 4.3 which seemed to indicate that any non-CMS approved MSA would be unrecognized and deemed a burden shift to Medicare. However, a month later, CMS hosted a webinar addressing frequently asked questions on MSA issues and seemed to backtrack on this policy of not recognizing Non-Submit MSAs. During the webinar, CMS stated that the new Section 4.3 was not a new policy and that it will recognize reasonable Non-Submit MSAs. In March of this year, CMS amended Section 4.3 to mirror these statements provided in the webinar and to clarify confusion around the original January section 4.3 update to the WCMSA Reference Guide, namely, to clarify that reasonable Non-Submit MSAs will be recognized.
Arguably, the most important part of the current updated Section 4.3 is that CMS recognizes that a Non-Submit MSA will not automatically be deemed to be a burden shift to Medicare. CMS notes in the above that when the MSA fully exhausts, parties will have an opportunity to demonstrate that both the initial funding of the MSA was sufficient and utilization of MSA funds was also appropriate. Last but certainly not least, an MSA vendor that will stand behind their MSAs makes this a crucial point for settling parties.
Ultimately, to submit an MSA to CMS or not for review is a risk tolerance decision for the settling parties. However, at the heart of workers’ compensation is a promise to provide reasonable and necessary medical treatment that expedites recovery and return-to-work. Thus, it would seem counterintuitive to not fully support EBM in the MSA process, whether the MSA is submitted or not, as EBM has clearly been proven based upon scientific studies to provide improved clinical outcomes for the Medicare beneficiaries. Improved clinical outcomes is a win-win and benefits ALL parties involved, including the beneficiary, the Medicare Trust Fund, and the workers’ compensation employer/carrier.
About Heather Sanderson
Heather Schwartz Sanderson holds the distinction as one of the foremost nationally recognized legal experts on Medicare Secondary Payer (MSP) Compliance. An awarded blogger and sought-after national speaker, Heather is known for her cutting-edge legal expertise, practical analysis of complex topics, expert technical guidance, and passionate industry advocacy.
Heather previously was Chief Legal Officer of Franco Signor LLC for 6 years, and upon its sale to ISO Claims Partners/Verisk, she founded Sanderson Firm PLLC, a law firm committed to providing expert MSP compliance solutions and first-in-class service commensurate with the skills, principles, and values that Heather has spent her career cultivating. You can learn more about Heather’s background by visiting her LinkedIn profile.
About Sanderson Firm PLLC
Sanderson Firm is a boutique law firm specializing in Medicare Secondary Payer (MSP) services and is proud to be a woman owned business. Our team of legal and clinical professionals have more than four decades of combined experience in the MSP industry, and we are proud to serve as trusted counsel and MSP compliance services vendor to some of the nation’s most well-recognized insurance carriers, self-insured companies, and third-party administrators, as well as smaller, regional insurance carriers and governmental entities. Sanderson Firm, unlike traditional big-box vendors in the MSP industry, provides actionable, legal compliance advice in all areas of MSP, and our clients enjoy the benefits of confidential, attorney-client privilege for all compliance concerns. Whether your organization needs Medicare conditional payment, Medicare Set-Aside, or Medicare Section 111 reporting support, Sanderson Firm is THE compliance authority on MSP.