In 2001, The Centers for Medicare and Medicaid Services (CMS) introduced a voluntary Workers Compensation Medicare Set-Aside (WCMSA) review program. Its purpose was to prevent a primary payer (liability, workers compensation, or no-fault carrier/plan/self-insured entity) from shifting its future-care payment burden to Medicare.
In workers compensation settlements with Medicare beneficiaries, parties can protect Medicare’s interests by creating, and having the claimant set aside, funds that are injury-related and that would otherwise be covered by Medicare. If review thresholds are met, CMS will review and approve a proposed WCMSA amount. As the WCMSA review process is voluntary, parties can also incorporate a Medicare Set-Aside (MSA) into a settlement without CMS approval. Post settlement, the claimant then places the WCMSA funds in a separate, interest-bearing checking account and uses the WCMSA funds to pay for injury-related care instead of billing Medicare.
While CMS did institute a process for workers compensation MSAs, CMS, to date, has not created a formal process for Liability Medicare Set-Asides (LMSAs) and No-Fault Medicare Set-Asides (NFMSAs). However, since 2012, CMS has been taking incremental steps, through issued guidance, toward instituting a similar review process for LMSAs and NFMSAs. The LMSA/NFMSA review process could be in place at CMS as early as July 1, 2018. Additionally, even though no formal process is in place, many liability settlements with Medicare beneficiaries are beginning to incorporate LMSAs to protect Medicare’s interests.
Because MSAs have become the established best practice for settlements with Medicare beneficiaries, primary payers have felt a squeeze on settlements due to high MSA amounts. Submitters of MSAs to CMS would be wise to implement both a clinical and legal strategy to the proposed MSA to avoid unnecessary counter-highs and overinflated MSA amounts.
How to Succeed with CMS From a Medication Standpoint
Historically, the primary driver of WCMSA costs has been prescription drugs. Due to the over-simplification of the MSA calculation (current treatment multiplied by the rated life expectancy), a 32-year-old claimant with $2,000 of monthly prescription medication expenses becomes very costly. Beyond the cost, however, is the fact that many of the prescription drugs used for pain (opioids, benzodiazepines, muscle relaxants, anti-epileptics, and antidepressants) are neither FDA-approved nor clinically appropriate for long-term (i.e. rated life expectancy) use.
In addition, their long-term use never stays static—the claimant’s overall condition deteriorates, side effects compound, dosages increase due to tolerance, more drugs are introduced, and premature death is a legitimate possibility—so the simplified calculation does not reflect reality. Finally, CMS has explicitly stated that a WCMSA should not be submitted until the claimant is at maximum medical improvement (MMI). Someone on an inappropriate polypharmacy regimen is by definition not at MMI—she is not as good as she can be. All of this means it is not only financially prudent, but also humane to change the treatment to a regimen that is clinically appropriate now and into the future. That’s easier said than done, to be sure, but it is the right thing to do.
The best way to accomplish change is to create a “package of evidence” that validates that the changed drug regimen is not only more appropriate, but also lasting. CMS does not accept promises or speculation that the existing drug regimen will change/diminish over time, it requires proof that change has occurred and that it will be lasting. Because there are limited appeal processes, this should be done before the WCMSA is submitted. There are several steps involved in this process:
1. Evaluate the current drug regimen via evidence-based guidelines and standard of care for appropriateness. Note that this is not based on cost, but on clinical appropriateness, both now and into the future.
2. If the current drug regimen is inappropriate, in whole or in part, then every effort should be made to implement change with the prescriber(s) that, based on jurisdictional options, can include (but is not limited to) Pharmacy Benefit Manager (PBM) outreach, case manager outreach, telephonic peer-to-peer review, dispute resolution (e.g. utilization review), and litigation.
3. If agreement is reached with the prescriber(s) that a change should be made, agreement in writing should be secured with specific terms regarding what is not appropriate, what would be more appropriate, and how the change should be enacted. This documentation should include not only the agreement, but also the applicable references to evidence-based medicine that establishes the clinical rationale.
4. In many cases of inappropriate polypharmacy regimens, a tapering process will be required to methodically and safely reduce/remove the inappropriate medications. This might require a referral to a functional restoration, substance use disorder, or detoxification program that could take weeks to months to complete. The goal is to reduce/remove drugs and increase resiliency and coping skills that are customized to the individual.
5. An electronic record should be created at the PBM that documents not just the different drugs and dosages via monthly transactions, but also the prior authorizations and/or blocks implemented to ensure the changing drugs do not slip through unintentionally. This could be classified as creating an individualized formulary, and implementing it provides additional documentation on the roadmap.
6. In conjunction with the tapering process and PBM record-keeping, detailed progress reports should document the efforts made by the prescriber(s) and other clinicians involved to change the treatment regimen. Because this involves tremendous attention to detail, a case manager that can purposefully shepherd (and document) the process is key.
CMS is interested to see that changes are permanent, so there should be at least six months’ experience with the different treatment regimen. And that is where the “package of evidence” comes into play as proof that the inappropriate medications have been removed from the regimen and remain discontinued.
How to Succeed with CMS From a Legal Standpoint
CMS has stated it will recognize and honor any non-compensable medical services, provided that a copy of the applicable state law/statute is forwarded to the Coordination of Benefits Contractor (COBC), currently known as the Benefits Coordination and Recovery Center (BCRC). Additionally, CMS’ latest WCMSA Reference Guide provides that CMS will now honor state-specific statutes that address the limits (the length or nature) of future treatment. However, the parties must provide a court order demonstrating the claim does not meet any exemptions under the state’s legislative mandate (see WCMSA Reference Guide, Version 2.6, Section 4.1.4)
Regarding court orders, CMS states that if a workers compensation judge approves a workers compensation settlement after a hearing on the merits, then Medicare will generally accept the terms of the settlement, unless the settlement does not adequately protect Medicare’s interests (see WCMSA Reference Guide, Version 2.6, Section 9.4.5). It is important to note that CMS requires the court order to be issued “after a hearing on the merits”—in other words, a stipulation by the parties that liability is fully disputed is not binding upon CMS. Therefore, if a court order issued after a hearing on the merits of the case would be impactful to the MSA amount, parties should work to obtain such and include with the MSA submission.
With respect to regulations, the MSP states the employer’s responsibility under the Medicare Secondary Payer Act must be demonstrated (see 42 U.S.C. §1395y(b)(2)(B)(ii)). That is, the employer must have or have had the responsibility to make payment with respect to the item or service (e.g, the medical services). As for case law, the recent Caldera v. The Insurance Company of the State of Pennsylvania decision determined that Medicare cannot force an employer/carrier to be responsible for payment regarding injuries/treatment that the carrier would not be responsible for under state law.
With that background in place, let’s look at the practical application of state law and MSAs. It is important to recognize that the contractor reviewing WCMSAs—the Workers Compensation Review Contractor (WCRC)—does have attorneys on staff to review legal issues. However, WCMSA submitters should not expect CMS to figure out the submitter’s legal argument. The submitter must argue the binding nature of the state law and/or the court order to CMS in its WCMSA proposal. More importantly, the submitter must provide a copy of the relevant state law or court order in the submission package. Legal advocacy and persistence in driving the employer’s/carrier’s legal position on the workers compensation claim is imperative when preparing WCMSA submissions for CMS approval. Legal advocacy with state laws and court orders can be extremely helpful to an employer/carrier when submitting WCMSAs to CMS.
The bottom line is that both clinical and legal advocacy in a WCMSA make for a complicated process, but they can create substantial savings when submitting the allocation to CMS. Clinically inappropriate treatment, particularly costly prescription drugs that create more short/long-term harm than benefit, should not be part of the WCMSA submission. Replacing that treatment with less dangerous and more efficacious treatment is complex, challenging, and potentially time consuming. When the costs are high, and a risk to human life exists, the stakes for doing it right are high. In this case, doing it right might require an investment of money and time, but the payoff will certainly be worthwhile.