January 4, 2023
As we launch into 2023, here’s a look back at the top five Medicare Secondary Payer (MSP) compliance stories of 2022 and what to watch for this year.
Addition of Non-Submit MSA Policy to CMS WCMSA Reference Guide
2022 certainly got off with a bang when CMS added Section 4.3 to the CMS Workers’ Compensation MSA Reference Guide. Entitled “The Use of Non-CMS-Approved Products to Address Future Medical Care,” the policy, which was later amended (See CMS Clarifies Policy on Non-Submit MSAs in Updated Reference Guide), provides as follows:
- A non-submit MSA represents a potential cost shift to Medicare.
- At its sole discretion, CMS may deny payment for injury-related medical up to the total settlement amount less procurement costs and paid conditional payments.
- If the non-submit MSA exhausts, it must be demonstrated that the MSA was sufficiently allocated at the time of settlement and the funds were spent properly.
- Shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after January 11, 2022
- It does not apply to under-threshold MSAs (settlements that do not meet the CMS WCMSA review criteria).
Questions remain. To what extent will CMS issue denials where a non-submit MSA is used? How will this process work when a non-submit MSA exhausts? What steps will CMS take to determine the sufficiency of the MSA when the claim is settled? And what evidence will CMS require to prove the MSA funds were spent correctly?
Ametros Study Confirms Post-Settlement Medicare Denials Do Occur
The question of whether CMS denies payment for injury-related care was answered, at least for CMS-approved MSAs, in an extensive study Ametros published in January 2022. This first-of-its-kind study examined a random sample of five percent of the Medicare beneficiary population over a three-year period. They estimated that the following number of claims were denied because WCMSA funds were responsible for their payment.
- 35,980 in 2018
- 36,060 in 2019
- 30,720 in 2020
The report’s key conclusion is “Medicare is systematically denying MSA recipients’ claims, and with steady frequency.” You can download the free report “A Study of CMS Policy on Treatment Denials for Injured Workers with a Medicare Set Aside from ametros.com/medicaredenials.
CMS Releases Key Metrics on WCMSA Review Program
It was not only Ametros that published data related to the MSP program in 2022. For the first time, CMS released data on its WCMSA review program.
CMS shared statistics for the three-year period of 2020 through 2022. The data compared proposed MSA amounts with the CMS-recommended amounts (what we typically call the “approved” MSA amounts).
Key takeaways from a review of the three years of data:
- MSA reviews are down, a 17% decline over three years.
- Review methodologies remain consistent.
- The average recommended MSA remains consistently between $80K-$85K.
- A billion dollars in recommended MSAs every year.
Please see For the First Time, CMS Release Key Metrics on WCMSA Review Program for more takeaways and a link to the data.
CMS Withdraws Proposed Rule on Future Medicals in Liability
In a surprise move, CMS withdrew its proposed rule on future medicals in liability settlements from review by the White House Office of Information and Regulatory Affairs (OIRA review and approval are required before a proposed rule is published). It was anticipated that CMS would release the proposed rule in 2022 for comment, but we did not even get to that step in the regulatory process.
The future of formal CMS guidance for liability settlements remains unknown. While CMS can resubmit a proposed rule for release, we do not know if it will do so or the timeline if it intends to do so.
Notably, in its recently released solicitation for its next five-year Workers’ Compensation Review Contractor (WCRC) contract, CMS included an option for liability MSAs reviews starting in April 2024. However, while CMS anticipates 19,200 WC MSA submissions per year, the solicitation indicates an expectation of 1,000 per year in LMSAs (with an option to increase to an additional 3,000 per year). In short, even were CMS to put some LMSA review process in place it seems they contemplate a high dollar or some other type of threshold to reviews given the lower number expected.
In response to CMS’s lack of guidance, Tower released an updated version of its guidance document, Navigating Through the Fog: Medicare Future Medicals & Liability Settlements.
First Anniversary of PAID Act Implementation
On 12/11/2021, payers, gained access to the past three years of Medicare beneficiary enrollment status in Medicare Part C (known as Medicare Advantage) plans and Part D (prescription drug) plans through the Section 111 reporting data. Previously, workers’ compensation payers were required to reimburse these plans for conditional payments but did not know which plans the Medicare beneficiary used.
The PAID Act did not introduce new requirements for resolving debts with Part C and D plans. However, it does allow payers, in some cases, to more easily identify and contact these plans. Observations one year out:
- In terms of the technical aspects of the transmission of PAID Act data, there have been minimal problems.
- Not all RREs have chosen to accept the PAID Act data into their claims systems (Tower created a dashboard allowing our reporting clients to access PAID Act data without having to ingest it into their claims system).
- While the enrollment information for Part C and D plans is accurate, the same can’t be said for the contact information. (Note, CMS issued a memo in April 2022 to Part C and D plans asking them to provide contact information which can receive inquiries from Non-Group Health Plans in compliance with the PAID Act.)
- There has been an increase in Tower clients’ pre-settlement requests to contact Part C and D plans to inquire about reimbursement claims.
What to Watch for in 2023
Section 111 Penalties: 2/18/2023 is the due date for CMS to issue final regulations on criteria for imposing Section 111 penalties for improper mandatory reporting. We expect issuance before this date with final regulations becoming effective this year.
MSA Review Contractor: Capitol Bridge, the Workers’ Compensation Review Contractor (WCRC), is in the last year of its five-year contract to review MSAs for CMS. On 1/4/2023 CMS published the solicitation for a new five-year contract set to begin on 4/1/2023.
The new contract contemplates 19,200 WC MSA submissions with no increase over the contract period. What to watch for here is whether CMS keeps Capitol Bridge or brings in a new contractor.
Release of More MSP Metrics: As noted above, we were pleased to see CMS release critical metrics around the MSA review program. We hope this becomes an annual report and expands with more data around MSA administration post-settlement and conditional payment recovery.
Best wishes from your friends at Tower for a healthy, happy and prosperous new year!