Performant Financial Corporation announced on October 5, 2017, that it was awarded the Medicare Secondary Payer Commercial Repayment Center (CRC) contract for identifying and recovering conditional payments in 2018. Performant has significant experience in assisting government organizations in the prevention and recovery of improper payments. Having served as a Recovery Auditor for CMS in the past, we expect a smooth transition between the current contractor, CGI and Performant in January of 2018. We will keep you advised of further developments.
Several changes that may impact your settlement approach in workers’ compensation and liability claims are being implemented in October. The changes involve Medicaid recovery, the ability to close out active medical care under the Arizona WCA provisions and CMS’ addition of a liability or no-fault MSA field to its Common Working File. Highlights of the changes are summarized below. Please refer to our earlier blog postings for a more in-depth analysis of the topics.
Medicaid, just like Medicare, is a secondary payer when a third party has a legal obligation to pay certain medical benefits to a beneficiary under the programs. Before October 1, 2017, Medicaid’s recovery of its payments from the third party settlement was limited to the portion of the settlement that was allocated for future medical expenses. With the October 1, 2017, implementation of the Bipartisan Budget Act of 2013, section 202, also known as the Medicaid Secondary Payer Act, Medicaid will now be allowed to recover its costs from a beneficiary’s total settlement. Given the various state reporting requirements relative to Medicaid beneficiaries, whether through data exchanges or intercepts, we can expect an increase in the amount of reimbursement efforts that will be undertaken by states Medicaid departments. The anticipated decreases in federal contributions to the Medicaid programs will further fuel the recovery efforts.
Medicaid liens should be addressed in settlements and awards. From a practical aspect, the ability to recover from the whole settlement will put Medicaid in a stronger lien negotiating position. Early negotiation efforts, however, that focus on the uncertainty of potential trial results absent settlement, will increase the ability to secure significant Medicaid lien reductions. A systematic claims’ handling approach for cases involving Medicaid liens, in addition to Medicare and Medicare Advantage liens, is recommended in order to prevent future issues with these entities.
Arizona’s Repeal of Section 23-941.01
Arizona’s repeal of Section 23-941.01 that limited the parties’ rights to settle out future medical care in undisputed claims will take effect on October 31, 2017. This provision had prohibited the closure of active medical care, such as surgery, in undisputed claims and only allowed the release of future supportive medical maintenance benefits.
The amended Section 23-041.01 provision allows represented employees to settle future medical but requires the settlement to include the following attestation:
- “The employee understands the rights settled and released by the agreement and was represented by counsel.
- The employee has been provided information from the carrier, special fund or self-insured employer that outlines any reasonably anticipated future medical, surgical and hospital benefits relating to the claimant the projected cost of those benefits and that provides an explanation of how those projected costs were determined.
- The employee understands that monies received for future medical treatment associated with the industrial injury should be set aside to ensure that the costs of such treatment will be paid.
- The parties have considered and taken reasonable steps to protect any interests of Medicare, Medicaid, the Indian Health Service and the United States Department of Veterans Affairs, including establishing a Medicare Savings Account if necessary.
- The parties have conducted a search for and taken reasonable steps to satisfy any identified medical liens.”
When a claimant is unrepresented, the Administrative Law Judge will meet with the claimant to make specific findings regarding whether the above paragraphs are satisfied. Additional requirements and provisions for handling disputed claims are also set forth in the complete amendment.
The repeal will be effective from and after October 31, 2017. (Title 23, Chapter 6, article 3, Arizona Revised Statutes)
As of October 31, 2017, workers’ compensation claims in Arizona may completely close out all future medical rights under certain circumstances. This change presents a new opportunity for final resolution of many workers compensation claims. In order to pursue this, we recommend that the parties secure a future injury-related medical treatment allocation, identify and negotiate liens and fund the future medical allocation in connection with the settlement.
CMS’ addition of a liability or no-fault MSA field to its Common Working File.
As of October 1, 2017, CMS’ Common Working File will now reflect the existence of liability or no-fault MSAs in the system. Medicare Administrative Contractors will be instructed to deny payment of any submitted claims that pertain to the liability or no-fault MSA.
CMS’ addition of a liability or no-fault MSA in its Common Working File further suggests CMS’ interest in offering an eventual review of liability and no-fault MSAs.
NuQuest is available to assist in all types of lien resolution. Our product line also provides a variety of innovative future medical allocations that suit the needs of the claim. Further information is available upon request.
CMS issued an updated WCMSA Reference Guide, Version 2.6 (Guide) on July 10, 2017. The “State-Specific Statutes” provision under Section 9.4.5 Medical Review Guidelines notes CMS’ willingness to recognize WC state-specific statutes with the important caveat that “the submitter has demonstrated that Medicare’s interests have been adequately protected.” If a state-authorized utilization review board varied the treatment recommendation, CMS requested that the submission include an alternative treatment plan to replace the treatment deemed unnecessary by the utilization review board. Failure to include an alternative treatment plan would result in CMS reverting to its traditional projection model. The “State –Specific Statutes” provision also noted that submissions based on state-legislated time limits must be supported by a finding from the appropriate court or state entity that the specific case “does not meet the state’s list of exemptions to the legislative mandate.”
State-specific requirements and the criteria that must be met for the amended review are further discussed in Section 16.0 “Re-Review.” The Note under this section specifically states: “In the event the treatment has changed due to a state-specific requirement, a life-care plan showing replacement treatment for disallowed treatments will be required if medical records do not indicate a change.”
Recent CMS determinations and our CMS communications are providing data on CMS’ interpretation of the above provisions. The most significant change that we have seen involves the Independent Medical Review (IMR) in California. The IMR determination, if unchanged on appeal, is deemed to be the determination of the Administrative Director (AD) on the issue and binding on all parties. In the past, CMS would defer to the findings of the IMR and exclude the denied treatment or drugs in question.
Since the updated Guide was put out, we have seen CMS include IMR denied care citing a lack of replacement treatment options. Further clarification noted: “The CMS position is not whether a carrier demonstrates liability, but whether Medicare would reasonably pay for something in the future that should have been covered as it related to the WC claim.” In situations involving denied treatment, CMS seeks an “alternative treatment that would be acceptable through the IMR process.” A position that no further care is appropriate appears unacceptable to CMS if the treating physician is recommending care.
In light of CMS’ current interpretation of the IMR and utilization reviews, submissions should include an alternative treatment plan. Although utilization reviews generally consider the medical necessity or reasonableness of a specific treatment, the replacement treatment for disallowed treatments can be provided by the AME/PQME physician or by a different type of “state-authorized” utilization review board. Replacement treatment plans may also look to state specific medical treatment guidelines for the conditions. Opting out of the voluntary CMS review process also remains a viable option. We will keep you advised of further developments.
CMS released its updated WCMSA Reference Guide on July 31, 2017. This update provides some significant changes and is intended to “supplant all historical memoranda in a single point of reference.” (Section 1.0) The revisions cover a wide range of areas. Noteworthy changes are discussed below.
Medicare’s Secondary Payer Status
As mentioned in our prior blog, Section 4.1.4 that addresses CMS view of “Hearing on the Merits of a Case” was revised. The revision may impact the information that a party previously submitted to CMS for review in connection with denied or partially disputed condition submissions. CMS is now seeking “documentation as to why disputed cases settle future medical costs for less than the recommended pricing.” The specific request for this documentation leads to the conclusion that CMS will be independently reviewing the merits of the defenses to determine whether the settlement that is approved after hearing on the merits “adequately” addresses Medicare’s interest.
This exception to Medicare’s willingness to accept the terms of settlement after a hearing on the merits and approval by a state WC judge was noted in prior versions and remains in the current version. It states: “As a result, when a state WC judge or other binding party approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests.”
Post Determination Options
Section 16.0 Re-Review now includes CMS’ Amended Review option that was published in the July 10, 2017 WCMSAP User Guide Version 5.1. This change allows parties in a case with a prior CMS determination that has not settled to seek an amended review of the future care projections when the current care projections differ by 10% or $10,000.00, whichever is greater, from the projections in the prior CMS determination. According to the WCMSA Reference Guide, the following requirements must be met:
- The CMS determination amount was issued at least 12 months ago and no more than 48 months ago from the date of the amended review. Please note this is a bit different that the WCMSAP User Guide that looked to the submission date of the proposal in determining eligibility.
- The Amended Review may only be used once.
- The change in care must result in either a 10% change or $10,000 .00 difference from the CMS determination. The change cannot be due to the use of a new generic version of a drug.
The WCMSA Reference Guide also provides that if the change in care is due to a state specific requirement, a life care plan showing the recommended care should be added. Additional details regarding the manner of the submission and supporting documents are outlined in the Guide.
Section 16.1, Required Resubmission added the requirement that parties must do a full file submission when a prior submission has been closed due to inactivity for one year or more from the submission date.
Section 9.4.4 Medical Review Step 5 now provides clarification on the order of the jurisdictional precedence when it comes to pricing. The order is as follows:
- When the claimant resides in the state where the claim was filed, the claimant’s zip code is used.
- When the claimant resides in a different state from the one in which the claim was filed, the employer’s zip code in the filing state is used.
- When the claimant and employer addresses are in different state from where the claim was filed, the claimant’s attorney’s zip code is used.
- If the claimant is unrepresented, use the WC carrier’s zip code if their address is in the state where the claim was filed. If the WC carrier is in a different state as well, use the WC carrier’s attorney’s zip code.
Section 9.4.5 Medical Review Guidelines
Spinal Cord Stimulator (SCS) projections were addressed in greater detail. Instead of using a 7 year replacement frequency for all types of SCS, the WCRC will use a 7 year replacement for non-rechargeable devices and a 9 year replacement frequency for rechargeable devices. Information regarding pricing for SCS surgeries and corresponding CPT codes was also provided and reflects a departure from the WCRC’s use of default pricing for the SCS.
CMS indicated that state legislated non compensable medical services will be recognized during review. WC state-specific statutes that address the length or nature of future treatment will be recognized as long as the submitter has demonstrated that Medicare’s interests have been adequately protected.
This section is similar to Section 10.4.2 Future Treatment that addresses the impact of a state law that limits the length of time that WC covers work related conditions. This provision is unchanged and states “In order to protect Medicare’s interest, a WCMSA should be funded based on the life expectancy of the claimant unless state law specifically limits the length of time that WC covers work-related conditions. The key is that both the principal amount that is to be set aside and the anticipated interest that it will earn must be sufficient to provide for the worker’s future treatment and administration fees for the worker’s lifetime.”
The updated Section also addresses the impact of state authorized utilization review board decisions on the review. In those situations, the submitter shall include the alternative treatment plan showing the replacement treatment regimen as outlined by the UR board. Failure to include these items will result in projections based on the treater’s recommendations. It is also important to note CMS’ caution that failure to include the required documentation at the time of the original submission will not be a reason for a re-review.
Section 184.108.40.206 Pharmacy Guidelines and Conditions
This section has an interesting change in the discussion of off label drugs. It now refers to Medicare IOM 100-02 Chapter 15 section 50.4.2- Unlabeled Use of Drug (Rev.1, 10-01-03) B3-2049.3 in the discussion of off label. The IOM notes: “An unlabeled use of a drug is a use that is not included as an indication on the drug’s label as approved by the FDA. FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically acceptable, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice.”
In light of this expanded discussion, it is possible that CMS will now include drugs that were previously considered off label non compendia approved, if the WC carrier paid for the drug.
Submissions/MSA Account Administration
Section 10.5.3 Total Settlement Amount now explains the various components that make up the “Total Settlement Amount.”
Section 19.4 Change of Submitter notes that if there is a change in submitter, CMS requires a written release from services by the original submitter and a new signed Consent to Release form authorizing the new submitter. These must be provided in order to continue the WCMSA review process. Submitter Changes will not be accepted after settlement and would not constitute a reason for a re-review. The new submitter should secure information from the prior submitter as CMS will not share copies of existing documents with the new submitter.
Section 17.1 Administrators was modified to reflect CMS’ recommendation that settlement recipients consider the use of a professional administration for their funds.
The updated Guide also provided link to MyMedicare.gov, current BCRC contacts and ICD-10 examples in the Sample Cover Letters.
CMS’ expanded amended review process and apparent willingness to defer to state authorized utilization review board decisions and state law limits is commendable. Of concern, however, is CMS’ interest in determining the worthiness of a defense in denied claims that have a court-approved settlement issued after hearing on the merits. In addition, the updated WCMSA Reference Guide’s discussion of off label drugs now raises the question of whether a carrier’s payment for a drug that had previously been viewed by CMS as off label now makes it Medicare covered. CMS’ actual implementation of these changes will be monitored closely. We will keep you advised.