The Centers for Medicare and Medicaid Services recently hosted a webinar on Workers’ Compensation Medicare Set-Asides (WCMSAs). While the webinar covered several topics around MSA submissions, CMS policy toward non-submit and evidence-based MSAs was an attendance-driver, according to its presenter, John Jenkins, Health Insurance Specialist for the CMS Division of Medicare Secondary Payer Operations.

As Tower’s recent articles CMS: Non-Submit MSAs Potentially Shift Costs to Medicare and CMS Letter Confirms Non-Submit MSA Denial is Real noted, the addition of Section 4.3 to the WCMSA Reference Guide has raised many questions and led some payers to reconsider whether non-submit MSAs are the best option for them.

Here is a webinar summary with Tower’s comments on Mr. Jenkins’ statements pertaining to non-submit MSAs along with a breakdown of some of the other matters discussed.

Non-Submit MSAs

Mr. Jenkins explained that the addition of Section 4.3 on non-submit and evidence-based MSAs was in response to industry requests for CMS’s position on such products.

He said that Section 4.3 is consistent with prior policy announcements which advise that Medicare has a right of recovery up to the settlement amount when the MSA is not CMS-approved and is prematurely exhausted.

• Tower comment:  As we indicated in our prior article on Section 4.3, we believed this would be CMS’s position.

Mr. Jenkins could not clear up the question about MSAs that do not meet the CMS WCMSA review thresholds, i.e., Medicare beneficiary and total settlement higher than $25,000.  First, he said CMS treats these as if they never existed, thus the total settlement would be considered available to pay for future medical. However, later he said that if CMS obtains the non-submit MSA amount, that amount may be used to determine the “marker” in their system (This marker determines whether Medicare will pay for a certain treatment). Ultimately, he indicated further policy guidance will be issued around under-threshold MSAs.

• Tower comment:  The common working file is CMS’s system to coordinate benefits to Medicare beneficiaries so that Medicare does not pay when a primary payer is available to pay. CMS places the marker for certain diagnoses to enable it to deny payment for treatment related to those diagnoses codes.  CMS needs to clarify how under-threshold MSAs will be treated. If parties have included a clinically and/or legally reasonable and defensible MSA in the settlement or have acceptable reasons for not including one, CMS should limit the liability for future medicals to the MSA amount. Perhaps CMS will have a post-settlement review process but its details are not clear at this time.

Mr. Jenkins went on to indicate that if CMS receives the non-submit documentation, settlement, and MSA amount, then it will use this information to place a marker in the common working file to deny medical care until such time as the settlement is exhausted.

According to Mr. Jenkins, CMS expects that Medicare should never see an injury-related bill if the non-submit MSA is priced correctly. If the MSA prematurely exhausts, the Medicare beneficiary will have to provide reasons for its exhaustion. Then it would be up to CMS to determine if the allocation and spending of the MSA were appropriate, using the same process used to approve MSAs.

• Tower Comment:  Mr. Jenkins said that they see many instances of CMS-approved MSA funds exhausting and expects the same from non-submit MSAs. Even the best cost projections for future medical care are, in the end, still predictions. Future medical inflation alone will increase costs in addition to changes in treatment and medications. Thus, while a majority of non-submit MSAs will appropriately cover future medical care, some non-submit MSAs–just like some CMS-approved MSAs–will exhaust.

Mr. Jenkins referenced conducting some type of review if non-submit MSA exhausts, similar to the current pre-settlement WCMSA review process. Naturally, this raises more questions.  First, who is completing the review? The current CMS WCMSA review contractor, CMS itself, or some other contractor? What criteria will be used as part of the review? What documentation must be submitted to support the MSA allocation as sufficient and the fund spending as appropriate? To verify adequate funding, the same documentation used at settlement (medical treatment records, prescription histories, and rated ages) would likely be required. We assume appropriate spending of the funds would be determined using healthcare bills and payment receipts.

Mr. Jenkins advised that if a structured MSA’s funds exhaust in any given year, CMS will not temporarily step in to pay for injury-related care as it does with a CMS-approved MSA.

• Tower Comment:  This leaves anyone with a non-submit MSA annuity in a difficult position. They would need to use their personal funds to pay for medical until next annuity payment is received when they could theoretically reimburse themselves. Even if they can reimburse their medical bills from the annuity payment, CMS is not likely to agree that reimbursing interest payments that occurred from putting medical bills on a credit card is an appropriate use of these funds.

Mr. Jenkins was clear in stating that the MSA, whether CMS-approved or not, is an agreement solely between CMS and the Medicare beneficiary.

• Tower Comment:  This indicates that CMS will not take any action against the employer or insurance carrier as they are not seen as a party to the agreement. That said, there remain repercussions to the payer. A Medicare beneficiary claimant may be reluctant to agree to a settlement with a non-submit MSA. Additionally, the workers’ compensation board, commission or other governing authority may be less likely to approve such a settlement.

Mr. Jenkins stated that a large number of CMS-approved MSAs exhaust early and that non-submit MSAs are even more likely to exhaust early.

• Tower Comment:  The allegation that a large number of CMS-approved MSAs exhaust early is, thus far, unsupported by data from CMS.

As to whether Section 4.3 of the reference guide applies retrospectively or just prospectively, Mr. Jenkins said that while what was stated in this section has always been CMS policy, anything after 1/11/22 must meet this requirement.

• Tower Comment:  We believe this statement is still unclear. Does this mean that CMS will only apply this policy to settlements that occur after 1/11/22 or does it apply to settlements that took place before 1/11/22 when MSA funds continued to be used after that date?

Finally, Mr. Jenkins advised that Section 111 reporting and WCMSAs are not connected. Therefore, the agency does not use the Section 111 Total Payment Obligation to the Claimant (TPOC) data to place a marker in the common working file.

• Tower Comment:  While this has been our understanding, CMS’s statement that it does not use Section 111 reporting data to stop Medicare payment for post-settlement medical is significant. It means that unless the settling parties proactively advise CMS of a non-approved MSA, CMS will continue to pay for injury-related care because it is unaware that an MSA was funded.

While the webinar answered some questions around CMS’s approach to non-submit MSAs, many remain. We believe CMS needs to significantly increase its guidance to Medicare beneficiaries surrounding their rights, responsibilities, and the risks they face when settling a claim with a non-submit MSA. At a minimum, CMS may not automatically acknowledge the non-submit MSA amount as the extent of liability for future medical. Consequently, the Medicare beneficiary may be placed in a position to defend the MSA amount and their spend from that amount at some point years in the future.

Other MSA Matters

• Submission of settlement documents:  CMS continues to identify cases where settlement occurred, and the settlement documents were not forwarded to CMS. These documents must be submitted to make the MSA effective in CMS’s system.
• Electronic attestation:   Mr. Jenkins indicated that MSA administrators are not submitting yearly and final attestations electronically even though this option is available. He encouraged its use.
• State statutes:  Advised that parties who wish to limit the MSA per the Georgia 400-week cap need to provide an order from the Georgia Workers’ Compensation Board confirming the claim as non-catastrophic. Also, if a California Independent Medical Review (IMR) confirms the denial of certain care, CMS will not exclude the denied care from the MSA without an “Alternative Treatment Plan” from the treating physician.
• Pricing of Prescription Drugs:  Addressed a question about whether CMS would consider another pricing mechanism for prescription drugs other than Red Book by saying that CMS is always open to a discussion on alternatives.
• Lack of updated medical treatment:  In situations where the claimant has not been treated in several years CMS will not assume that this is sufficient evidence to demonstrate that no further care is necessary. Instead, CMS will consider the worst-case scenario and assume that the claimant will return for care.
• Comorbidities that prevent surgery:  If a comorbidity, such as cardiac or respiratory problems, prevents a surgery from proceeding, CMS will assume that the person will improve and thus allocate the surgery in the MSA.
• Release from care statements:  If a treating physician releases a claimant from care this does not automatically create a presumption of no future care. CMS assumes that if a specialist releases the claimant from care that there may be follow-up with a primary care physician for ongoing maintenance unless otherwise indicated.
• MSA Amended Reviews:  Advised that parties who have a previously approved MSA that falls outside of the 72-month window for submitting an Amended Review can still fund that older approved MSA as it will be the only one on record with CMS.

If you have any questions, please contact Dan Anders, Chief Compliance Officer, at 888.331.4941 or daniel.anders@towermsa.com.