Reducing WCMSAs and Getting Claims Settled: Cost mitigation strategies for success
It is no secret that high Workers’ Compensation Medicare set-asides (WCMSAs) amounts can complicate claim settlement. However, insurers often have more power than they realize to reduce WCMSA amounts, challenge CMS, and get claims settled. Understanding the available options to reduce WCMSAs can make the difference between settling claims and keeping them open and incurring unnecessary costs and administrative expenses. It is time to roll up our sleeves and focus on reducing WCMSAs to get claims settled!
Toward this goal, the following outlines general steps to take back control in reducing WCMSA costs – and how Verisk can help you:
Have a WCMSA cost-mitigation game plan!
First things first – it is critical to have a WCMSA cost mitigation game plan from day one. At its core, building effective WCMSA cost-mitigation strategies involves identifying potential WCMSA cost drivers and taking proactive steps to mitigate allocation costs. This entails understanding how CMS calculates WCMSA allocations; early identification of potential cost-drivers; a clear plan on how the identified cost drivers will be reduced; and adjuster training to reinforce insurer protocols. Further, effective cost-mitigation strategies often call for a team approach. In addition to the front-line adjuster, your MSP/MSA vendor, nurse case manager, structured settlement broker, professional administration partner, and defense counsel are examples of other specialists who can, depending on the facts of the case, play pivotal roles in helping reduce WCMSAs.
How Verisk can help: Our industry-leading MSA team uses their legal and medical backgrounds to help you build cost-mitigation strategies tailored to meet your specific objectives. We offer a wide array of MSA services provided by dedicated attorney-nurse teams using our unparalleled data and analytic approach. As the largest MSA submitter, we have the most CMS response data which uniquely positions us to instantly calibrate our allocations based on the latest CMS trends.
Understand how CMS calculates WCMSA allocations
Having a general understanding of how CMS calculates WCMSAs in building cost-mitigation strategies is important. While a complete review into all of CMS’s calculation practices is beyond the scope of this review, some examples of common practices involve CMS typically including allocations for diagnostics, which may not be currently recommended, and physician visits in situations where the claimant has not recently been seen by a physician. Another example involves CMS pricing durable medical equipment at invoice pricing rather than the amount actually paid by the insurer.
As for prescriptions, CMS tends to take a formulaic approach despite the policy language in the WCMSA Reference Guide stating that it “[uses] the evidence in the records to determine if the proposal accounts for the reasonably probable future drug needs. This includes the prescription drug history, the treatment notes, provider medication lists, and physician dispensing records.” While CMS states that it uses a “reasonably probable” analysis, in practice, CMS typically prices all claim related medications based on current recommendations and use as reflected in the medical records and pay histories for the past six months and extrapolated over the adjusted life expectancy of the claimant using Redbook average wholesale pricing. But, as discussed more fully below, there are still steps you can take to reduce RX allocation costs.
How Verisk can help: For almost two decades, we have successfully navigated all CMS updates as part of our WCMSA services to keep abreast of CMS trends, help achieve the most reasonable WCMSAs, and drive savings. Our Quality Assurance team plays an integral part in following CMS trends and in developing proactive allocation strategies to reduce WCMSA amounts. For example, in 2021 we delivered nearly $158 million in proactive cost mitigation for our customers.
Clean up the medical records
The claimant’s medical records play a key role in making sure the WCMSA projection only includes treatment and services for accepted body parts and conditions. It is important that the claimant’s medical records are current and accurately outline what conditions are industrially related and the current treatment recommendations. If the records contain references to non-industrial injuries, outdated prescription lists, recommendations that are no longer applicable, or services or medications which are mentioned but not recommended, there is a very good chance that CMS will include these as part of the WCMSA allocation.
For example, the mere mention of a spinal cord stimulator or morphine pump in the treating physician’s record – regardless of how realistic these options may be – will likely result in CMS including those items as part of a WCMSA, absent a statement from the treating provider that they are not recommended or that the claimant is not a candidate for these treatment modalities. Also, if a claimant has stopped taking certain claim-related medications, it is beneficial to have a medical record specifically stating the medication is discontinued. Finally, while high dollar services and medications are more easily identified for cost mitigation, sometimes lower dollar but high-frequency services, like physician visits, may be an ideal situation to obtain clarification from the treating physician. For example, if a claimant regularly saw a physician once a month, but suddenly stopped with no further indication of follow-ups, a statement from the treating physician indicating “as needed” follow-ups visits will reduce the WCMSA accordingly.
How Verisk can help: Our popular Provider Outreach Program adds two additional services to our industry-leading cost mitigation approach: Record Acquisition and Cost Mitigation. As part of these services, we go directly to the claimant’s provider(s) to obtain necessary records and/or other information to help reduce MSA cost drivers. This service not only optimizes our experience and expertise but also helps promote consistency and simplifies the process for front-line claims handlers.
Get RX drug allocation costs under control
It is likely no surprise that prescription costs are often a main WCMSA cost driver and, thus, why it is important to have a focused strategy in place to reduce these costs. While CMS’s approach to RX drug allocations can present challenges, there are several ways insurers can reduce RX allocations, including:
Brand to Generic - Switching a drug from brand name to generic (if available) is perhaps one of the simplest ways to reduce WCMSA prescription costs. In exploring this option, keep in mind that CMS views the prescribing physician as the ultimate arbiter of the appropriate drug treatment regimen. In jurisdictions where workers’ compensation insurers are permitted to contact the claimant’s treating providers, it may be worthwhile to contact the prescribing physician to see if switching to a generic form of the medication is an option.
Dosage/Formulation changes – Changing drugs currently prescribed dosage and formulation is another potential way to reduce prescription costs. One example here involves Prilosec OTC. This drug is the over-the-counter brand name of the medication omeprazole, which may be utilized effectively in place of the prescription-strength version. Drug formulation changes also present opportunities for savings. For example, the medication Duexis is a combination of ibuprofen and famotidine, which can be expensive when combined into one formulation. However, if ibuprofen and famotidine can be prescribed separately, instead of as a singular combined pill, this could result in significant cost savings. In jurisdictions where insurers may contact the claimant’s treating providers, there may be instances where the insurer may consider contacting the prescribing physician to see if changes to a drug’s currently prescribed dosage and formulation are appropriate.
Off-Label Use – When a prescribed medication is outside of both the Federal Drug Administration (FDA) indications and the approved compendia, it is considered an “off-label” use, and therefore non-Medicare covered. Lidoderm patches and Flexor patches are two historical examples of medications that CMS commonly excludes from its WCMSA approvals due to “off-label” use. When demonstrating that a medication should be excluded due to off-label use, it is critical to understand how the medication is being prescribed, how it is used, and verify the indications in the approved compendia. If the medication falls outside the Medicare coverage criteria, it may be an opportunity to argue that it should be excluded from the WCMSA.
Weaning/Tapering- Evidence of drug weaning and tapering can also present opportunities to reduce prescription allocation costs. However, when considering this potential option, it is important to understand that CMS does not factor in potential tapering of medication, even when recommended by the prescribing physician. Instead, CMS continues allocating the currently indicated dosage and frequency contained in the medical records over the claimant’s adjusted life expectancy. As a result, when trying to factor in a tapering or weaning schedule, the best approach is to wait until the process is complete and the claimant has reached the lowest dosage or completely weaned off the medication before obtaining the WCMSA.
Monitoring pricing changes- Another important strategy in reducing drug allocations involves monitoring prescription drug prices in the Redbook database. CMS prices all medications using the average wholesale price (AWP), which is the average available price a retailer may pay a wholesaler. Redbook AWP prices update regularly and taking advantage of reductions when calculating future WCMSA prescription costs is a simple yet effective WCMSA cost mitigation tool. On this point, the author has found it beneficial to identify substantial reductions in the Redbook AWP pricing every month to compare against completed WCMSAs that have not yet settled. Over the past few years, changes to Redbook AWP pricing have resulted in significant costs savings regarding several drugs commonly seen in workers’ compensation cases such as meloxicam, celecoxib, aripiprazole, and sertraline.
How Verisk can help: Reducing RX costs is a key part of our program. As part of our RX client outreach program, we monitor medication price reductions and cross-reference impacted medications to help our customers identify cost mitigation opportunities. Our program has been extremely successful over the past two years we helped our customers achieve over $1.5 million in MSA RX cost reductions.
Fight back! Yes, you can challenge CMS!
If CMS approves a WCMSA proposal for a higher amount than submitted, can this be challenged and possibly reduced? The answer is “yes” in many instances. CMS has two processes to challenge these counter-higher approvals called “Re-review” and “Amended Review.”
As part of CMS’s “Re-Review” process, a counter-higher approval could be challenged for a “mathematical error” or “missing documentation.” CMS describes mathematical errors to include situations where CMS’s “determination contains obvious mistakes (e.g., a mathematical error or failure to recognize medical records already submitted showing a surgery, priced by CMS, that has already occurred).” However, of note, disagreement about the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error. Alternatively, CMS’s decision could be challenged in certain instances where there is additional medical evidence that was not considered by CMS and which predates the WCMSA submission date. As part of WCMSA services, we have often successfully utilized Re-Review to get CMS to reduce its approved WCMSA amount. By way of just a few recent examples, in one case we successfully argued that Medicare erred by including ketamine injections as part of a WCMSA, which were not medically necessary, and that a functional restoration program was more appropriate. In another case, we were successful in arguing that the inclusion of Frova, which is FDA indicated for menstrual migraines, was not a medically accepted indication when used by a male claimant.
CMS’s Amended Review process is a potential game-changer in reducing a counter-higher WCMSA amount. Under this process, in certain situations, CMS will consider new medical evidence after the date of the WCMSA proposal. In this regard, Amended Review can be helpful in reducing a high WCMSA approval in situations where the claimant’s medical treatment and needs have subsequently changed.
In terms of criteria, Amended Review can be used one time for unsettled cases and applies to WCMSA approvals dated “at least 12 but no more than 72 months” prior to the Amended Review request. In addition, Amended Review requests must involve situations where the claimant’s “[p]rojected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.” Of note, prescription drug changes from brand to generic cannot be the basis for an Amended Review request.
Common examples where Amended Review may be applicable include situations where surgery has occurred, there has been a change in the claimant’s medication regimen, a significant reduction in treatment, and a change in the claimant’s personal health and rated age. Any of these items, and potentially others, could present an opportunity to submit an Amended Review request to lower a prior WCMSA approval on an unsettled claim based on a change of circumstances. Given the significant opportunity Amended Review could offer, it may be worthwhile for insurers to review their claims inventory to determine if they have opened claims which could qualify under Amended Review.
How Verisk can help: Our MSA Second Look Service can help guide customers through the CMS’s Amended Review process. MSA Second Look, which can be used on a per case basis or as part of a larger settlement initiative, has been extraordinarily successful in helping our customers reduce WCMSA allocation approval. Over the past two years, we achieved nearly $15 million in MSA Second Look savings for our customers to help our clients settle stalled claims.
Tying all together
When the dust settles, the considerations outlined above can serve as solid starter blocks toward erecting successful WCMSA cost mitigation strategies. As part of this exercise, keep the following closing takeaways in mind as you build your cost mitigation approach. First, be analytical. Identify issues and opportunities by having a process in place for early identification of cost drivers. Second, be proactive. Keep in mind, that cost-mitigation principles may be applied even before a WCMSA is requested --- and very often addressing the cost drivers before requesting a WCMSA allocation can be helpful. Third, be creative. Do not be afraid to think outside the box or test arguments – this often leads to strategies for future cases. Finally, be resilient. Keep in mind that CMS’s approaches to WCMSA evaluations continually evolve. So, it is important to make sure a process is in place to monitor CMS trends and updates.
 CMS’s WCMSA Reference Guide (Version 3.6, March 15, 2022), Section 9.4.4 (WCRC Review Process), step 9.
 CMS’s WCMSA Reference Guide (Version 3.6, March 15, 2022), Section 184.108.40.206 (Medically Accepted Indications and Off-Label Use).
 CMS’s WCMSA Reference Guide (Version 3.6, March 15, 2022), Section 16.1 (Re-Review).
 CMS’s WCMSA Reference Guide (Version 3.6, March 15, 2022), Section 16.2 (Amended Review).