On February 17, 2022 the Centers for Medicare and Medicaid Services (CMS) held a webinar session to address workers’ compensation Medicare set-aside (WCMSA) issues. The webinar session was led by John Jenkins, Health Insurance Specialist of the Division of Medicare Secondary Payer Operations. As part of this seventy-five-minute session, CMS touched on several topics, including pricing and allocation guidelines, denials, and the WCMSA re-review process. In addition, CMS discussed its recent WCMSA Reference Guide Updates related to non-submit WCMSAs and evidence-based WCMSAs (EBMSAs).
The following provides a general overview of the main areas addressed by CMS as part of this event:
Leading up to CMS’s webinar, there was much industry interest in what the agency would discuss concerning its recent WCMSA Reference Guide updates regarding non-submit WCMSAs and EBMSAs. Before outlining what CMS discussed on the webinar regarding these issues, it may be helpful to recap recent developments on this front.
By way of background, in January this year, CMS added a new section (Section 4.3) to the WCMSA Reference Guide (v. 3.5) entitled “The Use of Non-CMS-Approved Products to Address Future Medical Care.” Regarding non-submit WCMSAs and EBMSAs, CMS noted, in general, that they view these arrangements as “a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement” and indicated that they will deny medical services to the full amount of the settlement, minus procurement costs, if these arrangements are used.
The full text of Section 4.3 states as follows:
A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.” 42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement. As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.
As part of its webinar, CMS noted that the addition of Section 4.3 was prompted by numerous questions they have received regarding the use of non-submit and EBMSAs over the years and frequent requests for the agency’s position on this practice.
The main points discussed by CMS on the webinar regarding Section 4.3 and other related WCMSA issues included:
- When CMS receives notice of a settlement that includes a CMS approved WCMSA it is noted in their system with the approved amount, and CMS will not make payment until the beneficiary has exhausted the WCMSA funds. However, if a non-CMS approved MSA is used, CMS cannot put a WCMSA amount in their system. Without a set amount, a beneficiary with a non-CMS approved WCMSA may be required to exhaust the net settlement amount.
- Once CMS is advised of the exhaustion of a WCMSA, including a non-CMS approved WCMSA, CMS reserves the right to review for appropriate pricing and exhaustion. On that point, CMS further noted that they may not require the claimant to exhaust the net settlement based on the outcome of that review. CMS restated their position that if a WCMSA is appropriately priced and funded, then CMS should not be billed for any workers’ compensation claim-related treatment.
- Currently, there is no coordination between claim data reported via Section 111 and the WCMSA data in the Common Working File. Because of this, unless a WCMSA was submitted to CMS or CMS was otherwise provided notice of the existence of an MSA, CMS would not place a marker in the Common Working File.
- CMS intends to treat all non-CMS approved MSAs as lump sum settlements regardless of how the allocation is funded.
- Regarding settlements that do not meet CMS’s WCMA review thresholds, CMS stated that it does not expect MSAs included as part of these settlements to be submitted for the agency’s review/approval and does not consider Section 4.3 as changing CMS’s existing policy for claims settling under the WCMSA submission threshold. On these points, CMS indicated they anticipate adding additional clarification to the WCMSA Reference Guide at some point.
- Lastly, CMS attempted to outline its position on whether the application of Section 4.3 was prospective or retroactive to January 11, 2022 (which is the date which CMS released this new section). While CMS appeared to settle on applying Section 4.3 after January 11, 2022, the agency representative did not provide final confirmation on this point.
WCMSA Pricing and Allocation
CMS touched on several topics related to WCMSA pricing and allocations. CMS indicated that their policy is to price services and medication based on what is in the medical records but that they may, in certain situations, take a worst-case scenario view when allocating a WCMSA. For example, CMS noted that if an injured worker is currently non-compliant with treatment recommendations, CMS anticipates the possibility that the claimant will later become compliant and would therefore expect to include the recommended treatment in the WCMSA. In situations where surgery has been recommended, but the injured worker has not been medically cleared to have the surgery, CMS advises they must assume it is possible the injured worker may improve their health to the degree that surgery may proceed. In addition, CMS noted that if an injured worker is released from care by a specialist, CMS indicated that if there is a reasonable expectation of ongoing care of any type, it will be included in the WCMSA allocation.
Denials and State Specific Issues
CMS then discussed situations where a condition or treatment has been denied. CMS stated their position is that for a medical condition to be excluded from a WCMSA as denied, CMS would expect to see a decision issued by a court of competent jurisdiction on the merits of the case supporting the denial. CMS further stated they expect that the decision to be signed by the relevant legal authority, must indicate that the facts of the case were reviewed and indicate that the workers’ compensation carrier does not have responsibility for the condition.
In addition, CMS discussed their position on Independent Medical Reviews (IMRs), stating that if an IMR is being used as part of a WCMSA submission to exclude treatment, CMS would expect to see an alternative course of treatment substituted for the denied treatment, otherwise CMS could default to the original recommendation. CMS also specifically addressed Georgia’s workers’ compensation guidelines, noting that for CMS to recognize a 400-week limitation on workers’ compensation benefits, CMS would expect to see documentation proving that the workers’ compensation benefits would be limited to 400 weeks.
CMS reiterated the importance of submitting required documentation as part of the WCMSA process. CMS specifically noted the importance of submitting settlement documents with claims involving a CMS approved WCMSA.
CMS further emphasized the role of attestations in the post-settlement WCMSA tracking process, indicating that CMS will flag the Medicare Common Working File for Medicare beneficiaries with WCMSAs. CMS stated that the submission of attestations allows for proper coordination of Medicare benefits. CMS also indicated that they are not seeing the expected use of the electronic attestation process. During the webinar, CMS encouraged the use of the electronic attestation form.
Re-Review and Amended Review
CMS also touched on the WCMSA re-review and amended review processes. CMS indicated that the re-review process is not intended for situations where the parties do not agree with CMS’s initial calculation but emphasized the point of the re-review is for situations where CMS has made a genuine mistake (such as a mathematical error) or if there was information that pre-dates the date of submission that was not initially submitted. Regarding the amended review process, CMS stated that they do not currently anticipate any changes to the timeframe for amended reviews.
CMS certainly discussed a wide range of key issues regarding WCMSAs on this webinar. As noted, CMS’s recent addition of Section 4.3 to the WCMSA Reference Guide addressing non-submit and EBMSAs was likely a main focal point for many who attended the session. On this issue, there were no signs that CMS plans on rescinding or modifying its stated approach or position regarding these practices and there have been reports that since CMS released Section 4.3 some claimants have received letters from CMS regional offices advising them that CMS will deny payment for claim related treatment until the beneficiary demonstrates appropriate exhaustion of the net settlement proceeds in situations where CMS receives notice of a settlement without a CMS approved WCMSA.
As such, parties who have been using non-CMS approved MSAs may wish to consider re-evaluating the risks when settling claims that meet the CMS review thresholds. On this point, while the WCMSA Reference Guide continues to indicate that CMS’s WCMSA submission process is “voluntary,” the agency’s policy statements regarding non-submit and EBMSAs as stated in Section 4.3 and the information discussed by CMS on the webinar regarding these practices, some claimants may wish, or insist, that WCMSAs are submitted to CMS for review to avoid the risk that CMS may deny payment for claim related treatment post-settlement.
Outside of the non-submit/EBMSA issue, the information CMS provided on the remaining topics as outlined above, was generally in line with current CMS messaging around its practices. However, a notable pivot by CMS is the stated requirement that a denial be supported by a judicial determination on the merits, which for many familiar with the CMS approval process for zero WCMSAs marks a significant change. Historically, based on our experience, CMS has only required that (1) the claim be denied and (2) no payments, medical or indemnity have ever been made, to issue approval of a denied claim zero MSA. In fact, as some may recall, in 2016 CMS tried to adjust the zero MSA approval criteria to require a judicial determination on the merits. See our 2016 article. However, CMS ultimately walked back this attempted change a few weeks later in response to significant industry pressure issuing a notice stating: “CMS determined changes had transpired without prior notification. Effective immediately, the WCRC will utilize procedures that were previously in effect. CMS continually evaluates all policy and procedures related to WCMSA reviews and will publish any pending changes when or before they go into effect.” Now in 2022, it appears that CMS is trying to do this again informally and without publishing pending changes or notice. This is an issue that warrants further monitoring going forward.
WCMSA cost-mitigation is the key to reducing allocation amounts – we can help!
From a wider view, CMS’s introduction of Section 4.3 and the discussion it has engendered regarding WCMSAs, has in many respects, called back into focus the importance of building WCMSA cost mitigation strategies in dealing with CMS as part of its WCMSA submission process. While a complete examination into this issue is beyond the scope of this article, it is important to understand that many times you have more options than you may think when it comes to reducing WCMSA amounts and getting CMS approval. In general, building effective WCMSA cost-mitigation strategies involves understanding CMS’s allocation approaches, identifying and reducing allocation cost drivers, and, where appropriate, using CMS’s re-review and Amended Review processes to challenge and reduce allocation amounts.
Effective WCMSA cost mitigation approaches have been the cornerstone of Verisk’s WCMSA services for almost two decades now. We take a proactive and aggressive approach to evaluating treatment in WCMSAs by leveraging our industry-leading clinical and legal expertise to achieve savings through experience and advocacy. We review cost drivers, suggest cost reduction strategies, and assist with obtaining documentation persuasive to CMS in support of exclusion or reduction of treatment and medications in every allocation. Also, our highly successful (and popular) RX Outreach Program monitors medication price reductions and cross-references it against our customers prior completed MSA allocations to identify additional opportunities to reduce allocations even further. In addition, where applicable, we use CMS’s re-review and Amended Review processes to help reduce WCMSAs to ensure that CMS and the WCRC review and apply policies consistently, accurately, and appropriately.
Our efforts consistently deliver savings for our customers allowing them to reduce costs and get claims settled. For example, in 2021 we achieved over $5 million in CMS rebuttal savings, over $158 million in proactive WCMSA cost mitigation, and over $13 million using CMS’s Amended Review process. To learn more about WCMSA cost mitigation, please join us on our February 28th webinar: Reducing WCMSAs and getting claims settled – cost mitigation strategies for success
Please do not hesitate to contact the authors if you have any questions or would like to discuss how we can help you build WCMSA cost mitigation strategies to improve claims outcomes and get claims settled!
Sign up for our WCMSA cost-mitigation webinar!
Time to take back control to reduce WCMSAs and get claims settled! Join us on our upcoming webinar on February 28, 2022 at 2 p.m. ET -- Reducing WCMSAs and getting claims settled – cost mitigation strategies for success In this session, our industry leaders Mark Popolizio, Sid Wong, Brian Cowan, and Angela Wolfe discuss how you can build effective WCMSA cost-mitigation strategies. Topics include understanding CMS’s allocation approaches and trends; identifying key cost drivers; reducing prescription drug allocations; fighting back against CMS; and more!