THE WHITTLING AWAY OF CMS OFF-LABEL USAGE ARGUMENTS IN THE WCMSA

With the transition to the new Workers’ Compensation Review Contractor (WCRC), the industry is seeing many changes in the Workers’ Compensation Medicare Set-Aside (WCMSA) review process. One of the biggest changes has been the shift from excluding Lyrica from the WCMSA when it is being prescribed for an off-label use to the inclusion of this medication regardless of usage guidelines.

Pursuant to the Food and Drug Administration, Lyrica is clinically indicated for diabetic peripheral neuropathy, post-herpetic neuralgia, partial onset of seizures, fibromyalgia and neuropathic pain associated with spinal cord injuries. However, Lyrica is highly prescribed in the Workers’ Compensation arena to treat pain complaints associated with industrial injuries.

Effective June 1, 2009, CMS began including Part D covered drugs in WCMSAs even if they were being prescribed for an off-label use.   As a result, many claims were not able to resolve due to the exorbitant price of medications.  However, on May 14, 2010, CMS issued a memorandum stating in pertinent part as follows:

“[C}overed Part D drug” is “a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) . . .” of 42 U.S.C. section 1396r-8(k)(2). 42 U.S.C. Section 1395w-102(e)(1)(A). For a Part D drug to be covered by Medicare, and thus included properly in a WCMSA, the drug should be prescribed for an outpatient use that is approved under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 301 et seq.], or supported by one or more citations included or approved for inclusion in any of the compendia described in subsection (g)(1)(B)(I) of 42 U.S.C. Section 1396r-8.”

This off-label exclusion became effective on June 1, 2010, allowing drugs such as Lyrica to be removed from the WCMSA when they were not prescribed for clinical usage as outlined by the Food and Drug Administration and medical drug compendia.  For over 7 years, the Medicare compliance industry, insurers, employers, claimants and counsel have relied on the exclusion of off-label drugs when settling claims and submitting WCMSAs to CMS for review.

However, without notice or warning, CMS has now started including Lyrica in some WCMSAs raising the cost of these allocations by hundreds of thousands of dollars.  As support for this inclusion, CMS has relied on Section 9.4.6.2 of the WCMSA Reference Guide which states in pertinent part as follows:

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 accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice.

CMS is now including Lyrica in the WCMSA when it has been paid for as part of the claim.  This is contrary to its post-2010 submission review policy.  Since 2010, CMS has not considered payment of Lyrica as a basis for inclusion of the medication in the WCMSA.  Even when payment screens evidenced multiple years of payments, CMS would allow the parties to exclude this medication if it was being prescribed for an off-label use.  CMS is now not only scrutinizing prior payments of Lyrica, but is also whittling away at off-label usage arguments for other prescription medications as well.

As a result of this shift, primary payers are once again being faced with the unknown when it comes to CMS submissions and medication costs.  Because CMS allocates medications for the beneficiary’s entire life expectancy without taking into account usage guidelines, inclusion of these medications could once again preclude settlement.

Understanding CMS trends, reducing drug exposure prior to submission of a WCMSA, or utilizing an evidence based non-submission process are some ways to mitigate prescription drug costs.

For questions regarding this article or for further information on NuQuest services, please contact Bridget Smith, JD at  bsmith@mynuquest.com

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