Medicare Secondary Payer (MSP) is a challenging area of compliance for which federal law, regulations, and policy don’t always provide clear answers. This often conflicts with the processes and procedures outlined by applicable contractors. And in certain situations, the Centers for Medicare and Medicaid Services (CMS) requires actions to be taken that aren’t fully supported by the MSP. That leaves many gray areas that are up for interpretation. Sometimes this opinion is guided by statutory, regulatory, and codified policy and guidance founded upon sound principles of risk management and good-faith claims handling. Other times, it may be based on mere speculation and a misunderstanding of the foundational law and rules.
If a stakeholder dives deep enough into the world of MSP, sooner or later they’ll come across myths. To move past these misconceptions, it’s vital to understand what they are and separate fact from fiction.
Here are 10 pervasive myths about Medicare compliance:
WCMSA myths -- Requirements, thresholds, treatments, and more are misunderstood
Myth #1: Workers’ Compensation Medicare Set-Asides (WCMSAs) are required in any workers’ compensation claim that’s settling future medicals.
- Fact: There are no statutory or regulatory requirements regarding WCMSAs in workers’ compensation claims settling future medicals. An MSP regulation, found at 42 CFR 411.46, provides the basis for the concept that the parties need to protect Medicare’s interests when resolving cases that include future medical expenses, but it does not dictate what steps parties must take. Rather, the WCMSA is the only mechanism that CMS has recognized to date to accomplish this.
Myth #2: If a proposed settlement meets WCMSA review thresholds, it must be submitted to CMS for review.
- Fact: “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requires that you comply with CMS’ established policies and procedures to obtain approval.” See WCMSA Reference Guide, v2.9, Sec. 8.0. CMS will voluntarily review a proposed WCMSA amount in the following circumstances:
- The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000; or
- The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.
As part of their compliance protocols, many claims payers, however, have developed their own internal thresholds for when they may submit to CMS. Moreover, a recent trend in the industry explores alternatives to submission.
Myth #3: If the treatment is related to the workers’ compensation claim, it should be in the WCMSA.
- Fact: MSAs are designed to cover only treatment that is Medicare-covered for the industrial injuries related to the claim.[i] Not all treatment is Medicare-covered for the injuries in any given case. In fact, some treatments are covered for some body parts or injuries and not others. For example, under Medicare Part D, over-the-counter medications are typically not covered. A TENS unit is covered under Medicare for most body parts other than the low back; thus, in cases where the low back is the sole injury, the TENS unit is likely not covered. Any treatment related to the industrial injury not covered by Medicare should be excluded in the WCMSA.
Myth #4: The bigger the WCMSA, the more the claimant can benefit.
- Fact: The ideal WCMSA, for both claimant and carrier, is one that’s allocated only adequately enough to cover the costs for post-settlement Medicare-covered medical expenses and no more. WCMSA funds may be used to pay only for future Medicare-covered expenses related to the industrial injury, so claimants are restricted in how they can spend those funds.i If the WCMSA funds are used for anything else, Medicare could require that the full amount of the settlement (inclusive of attorney fees and other payments) be exhausted before agreeing to pay for any care. For example, a claimant is in a better financial position with an additional $10,000 being included in the settlement outside the WCMSA than they would be if the allocation amount were $15,000 higher than required—because there’s no restriction on how the $10,000 can be used, while there is with the $15,000. In that example, if the claimant attempted to spend the extra $15,000 in the WCMSA for anything other than Medicare-covered treatment for the industrial injuries, risk of exposure for the entire settlement exists.
Myth #5: If a WCMSA is too high for the parties to settle a claim, it cannot be lowered without harming the claimant’s treatment.
- Fact: In many cases, cost mitigation strategies can significantly reduce the cost of a WCMSA without a substantive change to the claimant’s treatment. Sometimes it’s as simple as asking the treating physician to clarify the claimant’s records, so it’s clear that certain treatment is unrelated to the industrial injury. In other cases, it may involve switching from brand to generic medication, changing doses of a medication (e.g., going from one 100mg pill of Tizanidine to two 50mg pills of Tizanidine), or switching from a combination drug to the individual drugs (e.g., changing from Percocet 10-325mg to Oxycodone 10mg and 325mg of acetaminophen or from Vimovo to Nexium 20mg and Naproxen 500mg).
Myth #6: All CMS decisions are final, and the approved amount of a WCMSA cannot be changed.
- Fact: There are two different processes to request reconsideration of the amount of an approved WCMSA:
- Ask for a re-review. In a re-review, the parties request that CMS reconsider the final approved amount for one of two reasons: (1) because there was an obvious mistake in the decision, or (2) because there are new records that were not previously considered.
- The second is the Amended Review Process (available since July of 2017). This allows parties to ask for a new MSA determination on a case that has not settled in which the previous MSA was approved within the last one to four years and where the amount of the MSA is expected to change by the greater of 10 percent or $10,000. See WCMSA Reference Guide v2.9. Sec. 16 (Re-Review and Amended Review)
Every year, our clients see millions of dollars of savings using these tactics.
Liability MSAs requirements confusion
Myth #7: Liability MSAs (LMSAs) are required in all general liability settlements.
- Fact: As with WCMSAs, no legal or regulatory mandate requires incorporating an MSA in a workers’ compensation or liability settlement. In liability matters, formalized guidance is lacking as to when and how Medicare’s interest might be protected following a settlement. The WCMSA program includes a litany of policy memoranda, a formalized voluntary review process, a dedicated contractor (Workers’ Compensation Review Contractor), and the WCMSA Reference Guide. Regarding LMSAs, there are none of these formalities. The Office of Information and Regulatory Affairs (OIRA) released a notice in the latter part of 2018 indicating that CMS plans to issue proposed rules regarding options to address future medicals in relation to liability, workers’ compensation, and no-fault claims. OIRA’s notice further indicated that a Notice of Proposed Rulemaking (NPRM) on this subject is targeted for release by September 2019. While the released notice doesn’t provide any specifics, the forthcoming proposed regulation is believed to be focused on LMSAs, and the industry is closely monitoring to determine if CMS will finally take steps to codify policy around future medicals in liability claims.
Recovery confusion abounds
Myth #8: Once a delinquent debt is referred to the U.S. Department of the Treasury, the debtor has no further recourse, and the debt must be paid.
- Fact: This couldn’t be further from the truth. Even if an unpaid and delinquent debt is referred to Treasury, it can still be contested. There are several reasons why a recovery debt may go to Treasury: errant referral by the contractor, unpaid demand, payment improperly applied to the debt, etc. Regardless of the reason the debt was referred, if there’s a valid basis to contest the demanded charges under the MSP, the debt can be—and often is—successfully challenged and reduced or eliminated.
Myth #9: Medicare will seek recovery only in the event of a settlement.
- Fact: With the institution of the Commercial Repayment Center (CRC) in Non-Group Health Plans (NGHPs) on October 5, 2015, CMS began seeking recovery as soon as a conditional payment is made and assumption for Ongoing Responsibility for Medicals (ORM) is evidenced. This is without regard to a settlement. For workers’ compensation and no-fault (medical payments, PIP, etc.), as soon as ORM is reported and if Medicare is paying for related medicals, then recovery can and will occur by way of Conditional Payment Notice (CPN), which will convert to a demand for repayment. To engage in a dispute or appeal to mitigate costs for unrelated charges (which is prevalent), it’s critical that claims payers review the charges for which the CRC contends it is owed.
Section 111 fines mistaken as already being levied
Myth #10: Medicare is currently levying fines for Section 111 noncompliance.
- Fact: To date, CMS has not levied a civil money penalty (CMP) for failures in Section 111 reporting. In the fall of 2018, the Office of Management and Budget (OMB) issued a notice indicating that CMS is planning to release proposed rules for public comment regarding civil money penalties. At this time, however, there is no regulatory mechanism outlining when CMPs may be imposed. But it’s still critical for Responsible Reporting Entities (RREs) to focus on timely and accurate (error-free) Section 111 reporting in anticipation of formalized guidance around penalties.
Don’t mistake MSP opinion for fact
Don’t believe everything you hear about Medicare Secondary Payer. Get all the facts on any of the above—and more—by contacting ISO Claims Partners. And check our blog regularly for updates.