Author: daniel.anders

Accuracy in Section 111 Reporting of ORM Vital to Avoiding Unnecessary Repayment Demands from Medicare

July 24, 2017

While the Commercial Repayment Center (CRC) has faced some valid criticism over the course of the past year and half in relation to its recovery efforts on behalf of the Centers for Medicare and Medicaid Services’ (CMS), not all problems start with the CRC. CRC’s recovery efforts are driven by the data employers, carriers and self-insured entities report to Medicare through the Section 111 Mandatory Insurer Reporting process. Chief among the data elements reported is acceptance of Ongoing Responsibility for Medicals (ORM) and the termination thereof. If this data is reported inaccurately or there is a failure to report required data, then the applicable plan may be faced with inappropriate recovery demands by the CRC.

Applicable Plan Reporting of ORM is the Catalyst for CRC Recovery Efforts

Since October 5, 2015, the CRC has had responsibility for the recovery of conditional payments where the insurer or employer (including self-insured entities) is the identified debtor, known in CMS terms as the “applicable plan.” The CRC learns of opportunities to recover through the Section 111 Mandatory Insurer Reporting process. In other words, the applicable plan is the catalyst for Medicare conditional payment recovery by its reporting of ORM.

The mandatory reporting provisions of the Medicare Secondary Payer Act require the applicable plan to report to Medicare in three instances – the acceptance of ORM, the termination of ORM and issuance of a Total Payment Obligation to the Claimant (TPOC), settlement judgment, award or other payment. In regard to ORM, two key data elements reported are the date responsibility for ORM is accepted and the accepted diagnosis codes. Once this information is reported the following actions are initiated by CMS’s contractors:

1. The BCRC, which handles Medicare coordination of benefits, should deny payment for medical bills submitted for payment in which the billed diagnosis codes match or is similar to the reported diagnosis codes.

2. The CRC identifies medical claims that Medicare has paid that it deems related to the reported diagnosis codes.

Upon the CRC identifying treatment related to the reported diagnosis codes, it will issue a Conditional Payment Notice (CPN) to the applicable plan which itemizes charges deemed related to the injury. The applicable plan has 30 days from the date on the CPN to dispute charges after which a Demand Letter will issue demanding repayment for the charges identified by the CRC. A Demand Letter provides 120 days from receipt of the letter for the applicable plan to appeal all or some of the charges or issue payment. If payment is not issued within 60 days of receipt, interest begins to accrue from the Demand Letter date.

Reporting Accurate Acceptance of ORM and Diagnosis Codes

The trigger for reporting ORM is a claimant identified as a Medicare beneficiary and the assumption of ORM by the applicable plan. ORM is reported when the applicable plan has made a determination to assume responsibility for ORM, or is otherwise required to assume ORM—not when (or after) the first payment for medicals under ORM has actually been made. Accordingly, the ORM acceptance date is typically the date of injury.

Along with the ORM acceptance date, at least one ICD-10 diagnosis code must be reported for the diagnosis that has been accepted on the claim (If more than one diagnosis has been accepted, then additional diagnosis codes are reported). While medical provider billing records are often used to determine ICD-10 diagnosis codes to report, these should be used as a starting point, not an ending point, in identifying the correct codes to report to Medicare.

Keep in mind that medical providers, and especially hospitals, will often insert into billing records any diagnosis reported to the provider, which are not necessarily the same diagnoses that are being accepted on the claim. Consequently, the person responsible for determining the correct ICD-10 diagnosis code to report, usually the claims handler, must make an independent determination, separate and apart from the medical provider, as to whether the particular diagnosis is being accepted on the claim. If the billing records do not properly represent what is being accepted, or if further diagnosis codes are required to better define what is accepted, then online ICD-10 resources are available to identify codes which correctly represent the accepted body parts and conditions.

Once ORM and the diagnosis codes are reported, ORM is generally not addressed again until the date of ORM termination. However, causally related diagnoses may change over time, either expanding or retracting depending upon the circumstances in the claim. Accordingly, it is important to update the reported ICD-10 codes as necessary over the course of the claim.

ORM Termination Key to Cutting Off Liability to Medicare

Once ORM is accepted, CMS claims the right to recover against the applicable plan through the date of ORM termination. As such, recovery efforts by the CRC may happen years after the ORM was first reported. Further, if there is failure by the applicable plan to terminate ORM when appropriate, then the plan may receive repayment demands from CRC for time periods in which it has no liability to pay for medical treatment. An applicable plan may terminate ORM through the Section 111 Reporting process under the following situations:

Settlement with a release of medicals

No fault policy limit reached

Complete denial of the claim

Statute of limitations has run or medical benefits have otherwise been exhausted pursuant to state law

Judicial determination after a hearing on the merits finding no liability

Statement from treating physician – signed statement from the injured individual’s treating physician that he/she will require no further medical items or services associated with the claim/claimed injuries.

Keep in mind that closing a claim file is not a trigger for ORM termination unless it is accompanied by one of the above situations.

Providing CMS with an ORM termination gives a bookend to recovery by the CRC. If no termination date is provided, then CRC assumes the applicable plan remains liable for injury-related payments.

Recommendations for Ensuring Accurate ORM Reporting

The reporting of ORM acceptance and termination and defining accepted diagnosis codes is so important because it is the applicable plan’s admission of responsibility to pay for medical care during the reported time period and for the reported diagnoses. If an error is made in reporting or there is an omission in reporting, then it can result in attempts by Medicare to recover for conditional payments unrelated to the injury or for time periods during which the applicable plan is not liable. Errors in reporting can also lead to inappropriate denials in the payment of claimant’s medical care by Medicare or Medicare paying for medical care for which the applicable plan is responsible.

Recommendations to avoid these errors and omissions:

1. Train Claims Handlers on ORM Reporting: If a claims handler is responsible for inserting the data required for ORM reporting, then they require training as to when ORM acceptance and termination is to be reported and how to determine the appropriate diagnosis codes to report with ORM acceptance.

2. Effective Quality Assurance of ORM Reporting: Even with training, errors will occur. Additional resources placed into quality assurance of ORM reporting, such as double-checking claims for proper ORM termination and appropriate diagnosis code choices avoids the expenditure of additional resources at a later date to correct errors in reporting and correction of unnecessary recovery demands from the CRC. If you are an employer or carrier relying upon a TPA to report, it is especially recommended that a QA process be in place to check the data entered by the TPA.

3. Ensure Reporting Platform is Accurately Reporting: Section 111 Reporting is electronically based and requires a data exchange with Medicare. Errors can and will occur in this data exchange. Ensure you have a trusted and reliable reporting agent to assist with accurate reporting to Medicare.

Finally, if any correspondence is received from the CRC or the U.S. Treasury Department claiming conditional payment recovery it must be acted upon immediately. Do not assume the letter was issued in error and will simply go away. If you do not believe you are liable for the conditional payments for which the CRC is claiming recovery, first confirm you have correctly reported ORM and then work with your MSP compliance partner to appropriately dispute the charges.

For questions stemming from this article please contact Dan Anders at (888) 331-4941 Daniel.anders@towermsa.com.

Second Chance with MSA Approval!: New CMS Policy Allows for Review of a New MSA Post a Prior Approval

July 12, 2017

While there may be no second chances in life, there is now a second chance for CMS review and approval of an MSA. On July 10, 2017, the Centers for Medicare and Medicaid Services (CMS) quietly rolled out a new policy allowing for a re-review of a previously approved Medicare Set-Aside which is between one and four years post-submission and for which there is a certain dollar amount change in projected future medical care since that time. The policy, which CMS calls an Amended Review, requires the previously approved MSA meet the following criteria:

  • Must have been originally submitted between one and four years from the current date.
  • Cannot have a previous request for an Amended Review.
  • Must result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount (The amount can be greater or less than the previously approved MSA amount).

    • CMS also notes that while you may change from brand-name to generic drug types, this change cannot be the sole reason for the Amended Review request. You must include additional changes such as changes in dosage and/or frequency, additional drugs or drugs no longer taken to qualify for the Amended Review.

    A copy of the policy can be found in Section 12.4.3 of the revised Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) User Guide found here.

    Practical Implications of Amended Review Policy

    Prior to this new policy, CMS, in almost all cases, would not review a new MSA proposal based upon post-submission medical records and pharmacy history once an MSA was approved. Consequently, if parties were unable to settle a case because of a high CMS MSA approval, but came back to the settlement table a couple years later when the claimant’s medical care had subsided, they were unable to obtain a revised MSA approval from CMS which would accurately reflect the claimant’s current and future course of medical care. Under this new policy, these cases which are within 1-4 years post the original MSA submission and meet the 10% or $10,000 (whichever is greater) criteria will have a second chance at CMS review and approval of an MSA.

    Unanswered Questions Regarding Policy

    As with many a new policy CMS left some unanswered questions.

    It is unclear why CMS limited the Amended Review policy to submissions made within four years. We assume this is to limit the number of MSAs submitted for an Amended Review, but there remain cases older than four years which would benefit from this policy.

    While we do not like to look a gift horse in the mouth, it seems unreasonable of CMS to preclude from its Amended Review policy requests which are based solely upon a brand name medication going generic or a claimant otherwise switching to a generic medication. This type of change often results in a significant reduction to the MSA.

    The 10% or $10,000 change (whichever is greater) policy effectively means that there must be a $10,000 change to a previously approved MSA of $100,000 or less before it meets the criteria for an Amended Review. However, the example CMS provides in the User Guide inaccurately reflects a change on an $80,000 MSA of $8,000 as meeting the Amended Review criteria. We believe either the policy or the example is in error. We await CMS correcting this example or clarifying its policy.

    Does My Case Fit the CMS Amended Review Criteria?

    The Amended Review criteria opens the door to the settlement of some older cases where prior CMS approved MSA amounts no longer accurately reflect the claimant’s current and future course of medical care. Please feel free to reach out to Tower MSA Partners for an evaluation as to whether your previous CMS approved MSA may meet the Amended Review criteria. Tower MSA may be contacted at info@towermsa.com or (888) 331-4941.

    Additional Changes in Updated WCMSAP User Guide

    Besides the introduction of the Amended Review policy, CMS also made the following notable changes to the WCMSAP:

  • Claimants who are Medicare beneficiaries now have access to the WCMSAP through MyMedicare.gov. Accordingly, claimants are able to view MSA submissions and supporting documentation although will not be able to modify the documentation or otherwise take any actions on the submission which remain solely with the submitter of the MSA, i.e. Tower MSA.
  • For MSA submissions that have been closed for more than 12 months (Usually as a result of a non-response to a Development Letter), an entirely new MSA submission must be made with all documents generally required of a new MSA submission, i.e. two years of medical records. The new MSA submission will be assigned a new Case Control Number.

    • In a Volatile Political Climate MSAs & Professional Administration Provide Much Needed Assurances

    March 17, 2017

    Learn why MSAs and professional administration offers stability in an otherwise volatile and partisan political environment in this joint article between Ametros Financial and Tower MSA Partners

    These first few of months of 2017 have been, to put it mildly, volatile in national politics. The incoming Trump Administration and a Republican Congress are poised to tackle the federal budget, Medicaid, and the Affordable Care Act (Obamacare) among many other federal programs. All of these issues have sharp partisan divides, however no matter where your views lay on the political spectrum, if you are a professional involved in the workers compensation industry, these issues may have a big impact on how you can be successful at your job.

    This article looks at what impact the Trump administration and a Republican-controlled Congress may have on Medicare Set-Asides (MSAs) in the context of the legislative and regulatory history of the Medicare Secondary Payer (MSP) Act and how the uncertainty resulting from potential changes to federal healthcare programs results in MSAs and professional administration being even more relevant in the settlement of workers’ compensation cases.

    The MSP Act Has Been and Remains Bipartisan

    A review of the history of the MSP Act demonstrates a noticeably bipartisan effort to improve and expand its applicability and enforcement mechanisms. The MSP Act was enacted in 1980 during President Carter’s administration. Subsequent to its passage, provisions were added over the Reagan, George H.W. Bush and Clinton administrations, all emphasizing Medicare being secondary to group and non-group health plans. The most notable legislative expansion occurred in 2007 when a Democratic-controlled Congress passed, and President George W. Bush signed into law, the Medicare, Medicaid and SCHIP Extension Act which included Section 111 Mandatory Insurer Reporting provisions for group and non-group health plans. There also continues to be a decade long effort to pass bipartisan legislation which would implement certain reforms to the Workers’ Compensation Medicare Set-Aside (WCMSA) review process. While the most recent WCMSA reform bill died in the last Congress it is expected a new bill will be reintroduced in 2017.

    Besides legislative expansion of the MSP Act, during President George W. Bush’s administration there occurred the release of the July 23, 2001 CMS memo, commonly called the “Patel Memo.” The Patel memo and subsequent CMS memos effectively formalized a process for CMS to review and approve WCMSAs.

    MSA reviews continued, Medicare conditional recovery processes expanded and Section 111 was implemented all during the course of President Obama’s administration. The only legislative change to the MSP Act occurring during the Obama years was the passage of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) which was a successful bipartisan effort to address deficiencies identified in the MSP Act, particularly Section 111 reporting and Medicare conditional payment recovery.

    Since the enactment then of the MSP Act in 1980 it has continued to be expanded and enforced consistently across both Republican and Democratic Presidents and Congresses.

    Why has there not been a partisan divide? The simple reason is that the MSP Act forces entities other than the federal government to pay which has benefits for both political parties. For Democrats it demonstrates their protecting the viability of a federal government entitlement program while for Republicans it demonstrates their protecting taxpayers by shifting costs away from the government. While the Trump administration has to our knowledge never issued any MSP policy statements, based upon the past bipartisanship on this issue, our expectation is the administration will continue and possibly expand the MSP compliance programs at CMS.

    Uncertainty Over Federal Healthcare Programs to Drive Assurance with MSAs

    President Trump has indicated repeatedly that he will not reduce benefits to Medicare beneficiaries. Nonetheless, Medicare beneficiaries are facing premium increases. Notably, a Kaiser Family Foundation report indicated Part D premiums are rising by an average of 9% in 2017. As for Medicaid, the Trump administration is supporting a block grant program which would give more discretion to the states in formulating and implementing their own Medicaid programs compared to the present process which includes significant federal oversight. Finally, and most significant, is the Republican-led initiative to “repeal and replace” the Affordable Care Act, commonly known as ObamaCare. These potential changes to statutory programs create uncertainty for injured workers contemplating settlement of medical in their workers’ compensation cases.

    Uncertainty for injured workers exists with programmatic changes to Medicare and private group health plans which are increasingly driven by a more value-based approach to healthcare delivery. A value-based approach provides incentives to medical providers to be more cautious with prescribing treatments and medications which may have limited value to the patient. This is also usually tied in part to a utilization review process which places limits on care through the use of evidence-based medicine. While in the past some injured workers have settled medical stemming from their work related injury confident that they could shift their ongoing work-related care, if any, to their group health plan, such coverage may now be limited. And when it comes to shifting costs to Medicare, CMS’s long-standing policy is such costs must be accounted for in an MSA.

    MSAs and professional administration A Flight to Certainty

    Accordingly, injured workers and their attorneys when settling their workers’ compensation cases will look for certainty where it can be obtained so that they have the assurance of access to medical care for their future injury-related care. For claimants who are Medicare beneficiaries or are close to becoming Medicare beneficiaries, such assurance can be obtained by a properly allocated MSA which is CMS-approved, when necessary, and professionally administered to maintain the MSA funds over life-expectancy in compliance with CMS rules.

    Tower MSA Partners is committed to providing employers and claimants a reasonable MSA allocation which, along CMS guidelines, properly accounts for future injury-related and Medicare-covered medical care without unnecessary overfunding. This often includes Tower MSA reaching out to treating physicians to confirm current care regimens or clarity regarding ongoing medication and treatment prior to submission of the MSA to CMS.

    While CMS approval of the MSA and subsequent funding provides assurance at the point of settlement that funds for injury-related medical have been provided, equally important is proper administration of those funds such that an injured worker can be assured the funds for his or her care will last over their life expectancy and that there will be a seamless transition to Medicare for payment if the funds every run out.

    Ametros’ professional administration service, CareGuard, secures the injured party discounts on their medical treatment, and prescription costs. All the while they are free from utilization review allowing them to not have to worry about their treatment being rejected. Additionally, CareGuard will makes sure all MSA expenses are accounted for in the eyes of Medicare. Cost-effective programs like CareGuard are in place to protect the injured worker post-settlement and ensure compliance with CMS requirements for MSA administration.

    In this current era of high uncertainty, all parties can rest easy by focusing on known methods to protect themselves and the injured party throughout the claim handling and settlement process. That’s why many believe it is more critical than ever to obtain an adequate MSA that will cover the ongoing medical care of the injured party and, upon settlement, to have a professional administrator help the injured party make the funds last as long as possible and do all the required Medicare reporting.

    For further information or questions om MSAs and professional administration, please contact:

    Tower MSA Partners
    Dan Anders (847) 946-2880 or Daniel.anders@towermsa.com

    Learn more at: www.towermsa.com

    Ametros
    Porter Leslie – (339) 223 9857 or pleslie@ametroscards.com
    or
    Jayson Gallant – (339-234-3420) or jgallant@ametroscards.com

    Learn more at: www.ametroscards.com

    CMS to Begin Referencing 2012 Life Expectancy Table on April 1

    March 13, 2017

    The Centers for Medicare and Medicaid Services (CMS) announced on 3/8/2017 that it “will begin referencing the CDC’s Table 1: Life Table for the total population: United States, 2012, for workers’ compensation medicare set aside (WCMSA) life expectancy calculations on April 1, 2017.” CMS presently uses the 2011 table, thus this announcement represents an expected annual update to the next available CDC table. In most instances the update to the most recen table represents at most a one-year change in the life expectancy used in the MSA report compared to the prior table. All Tower MSA reports completed on or after 4/1/2017 will reference the 2012 table.

    The 2012 Life Table for the total population may be found on Pages 10-11 of the CDC report.

    CMS Provides Another Piece of the Puzzle on Future LMSA Policy

    March 2, 2017

    While the Centers for Medicare and Medicaid Services (CMS) has yet to formally issue a policy regarding review of Liability Medicare Set-Asides (LMSAs), since a June 2016 announcement that it was considering expanding the WC MSA review process to liability and no-fault, CMS has nonetheless provided pieces of the puzzle which will ultimately make up a liability and no fault MSA review process. The most recent piece of the puzzle is an announcement by CMS that effective 10/1/2017, no Medicare payments are to be made to medical providers where a Liability Medicare Set-Aside (LMSA) or No-Fault Medicare Set-Aside (NFMSA) exists.

    The announcement comes via the issuance of a CMS MLN Matters article directed to physicians and other medical providers submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries. It directs these MACs to deny payment for medical care that is covered under an LMSA or NFMSA as identified in the Common Working File (CWF).

    To clear up some of these technical terms, MACs process Medicare Part A and B payments to medical providers on behalf of Medicare. A Common Working File (CWF) is maintained by the CMS Benefits Coordination and Recovery Center (BCRC) and contains information on a particular claimant’s Medicare eligibility and, importantly, when Medicare should be considered secondary such that payment to a medical provider should be denied and directed instead to the primary plan.

    BCRC presently keeps records of all WCMSAs that have been approved by CMS and funded through settlement (This is why CMS requires final settlement documents be submitted to BCRC post-settlement). The WCMSA funding information is placed in the CWF so that the MACs deny payment for medical care associated with the WCMSA until the WCMSA is exhausted. This directive from CMS makes this same process applicable to LMSAs and NFMSAs.

    In response to this announcement, you would be correct in asking, how can CMS deny payment for medical care based upon an LMSA an NFMSA process that does not yet exist? Putting aside that some CMS Regional Offices have reviewed and approved LMSAs at their own discretion for quite some time, this does pose a very good question. CMS responds as follows:

    CMS will establish two (2) new set-aside processes: a Liability Medicare Set-aside Arrangement (LMSA), and a No-Fault Medicare Set-aside Arrangement (NFMSA).

    So CMS readily admits the new set-aside processes will be put in place at some point in the future. Such future date has already been tentatively set based upon CMS’s release, in December 2016, of its request for proposals for the new Workers Compensation Review Contractor which includes an optional provision to expand reviews to LMSAs and NFMSAs effective July 2018 (See prior blog post: CMS MSA Review Expansion to Liability Planned for 2018). Consequently, this directive to the MACs is implementing medical payment processing changes which will be required to be place once the LMSA/NFMSA review process is made available.

    It is important to keep in mind that CMS has yet to release any guidance on such an expansion of the WCMSA review process to liability and no-fault and particularly how such a process would differ from that created for WC. Also note that CMS does not state that effective 10/1/2017 the MACs are to deny payment for all post-liability settlement injury-related medical care, rather, they are to “deny payment for items or services that should be paid from an LMSA or NFMSA fund.” The funds must exist for denial to occur. Accordingly, over 2017, as more pieces of the puzzle come together on CMS’s Liability and No-Fault MSA review policy, Tower MSA will provide further interpretation and guidance on what will be one of the most significant developments in MSAs since CMS formalized the WC MSA review process in 2001.

    Successful Legacy Claim Settlement Initiatives Featured in WorkCompWire Article

    February 15, 2017

    As part of its Leaders Speak series, WorkCompWire recently published a two-part article by Tower MSA Partners’ Chief Compliance Officer, Dan Anders, describing how clinically driven settlement initiatives on legacy or “old dog” workers’ compensation claims yield significant cost savings and become the foundation for best practices on new workers’ compensation claims.

    Part one of the article, How Old Dogs Can Learn New Tricks, details how successful settlement initiatives include a clinical partner who identifies and analyzes legacy claim cost drivers and then works with the employer or carrier to separate claims into those that can immediately move to settlement negotiation, those that may settle after clinical or legal intervention, and those that are unlikely to benefit from intervention and thus cannot settle. The article explains the importance of connecting the appropriate clinical intervention to the legacy claim so as to drive a successful outcome and claim closure.

    Part two of the article, New Tricks for New Claims, focuses on how the lessons learned in resolving legacy claims can be applied to new or ongoing claims and as a result produce significant medical and indemnity cost savings. Highlighted in the article is a large employer whose legacy claim settlement initiative yielded significant reduction in legacy claim costs and continues to save the employer ongoing claim costs as now a new standard for claims handling.

    We encourage you to review the articles and contact Tower MSA Partners to discuss how we can drive case closure on your legacy or old and complex workers’ compensation claims.

    Dan Anders may be contacted at daniel.anders@towermsa.com or (847) 946-2880.

    Federal Court Holds Against Medicare Practice of Over-Inclusive Reimbursement Demands

    February 13, 2017

    The California Insurance Guarantee Association (CIGA) has prevailed in its lawsuit (Cali. Ins. Guar. Ass’n v. Burwell, No. 2:15-cv-01113-ODW (FFMx), 2017 U.S. Dist. Ct. LEXIS 1681) against the Centers for Medicare and Medicaid Service (CMS) challenging the practice of over-inclusive reimbursement demands by CMS. As a consequence of this ruling from the U.S. District Court for the Central District of California, claimants and employers, have judicial support to dispute charges which contain mixed diagnosis codes, some related to the workers’ compensation injury and some unrelated, in CMS’s conditional payment demands.

    A summary of CIGA’s challenge to CMS, CMS’s response to the claim and the Court’s decision is detailed below with a discussion on practical implications of the decision.

    CIGA’s Claim Against Medicare

    CIGA claimed that CMS’s practice of seeking reimbursement for the full amount of a medical charge despite the charge including mixed diagnosis codes, some related to the workers’ compensation injury and some unrelated, goes beyond CMS’s authority under the Medicare Secondary Payer Act.

    By way of background, medical providers include ICD-10 diagnosis codes within billing records that are supposedly associated with the treatment provided. However, it is commonly known that medical providers, especially hospitals, may add any and all diagnoses for which a claimant reports a medical condition, even if such condition is not the subject of the treatment on the bill. For example, a claimant who has a low back injury and seeks treatment at a hospital for a cardiac condition may report on an intake form that he has ongoing low back pain. The hospital may list a low back diagnosis code on the medical bill even though the incurred medical treatment is solely related to the cardiac condition. This is not to say that there may also be situations where actual treatment was received for the work-related injury, but, even then, it may represent only a portion of the overall charge.

    As evidence to support its claim, CIGA presented three examples of recovery demands with mixed diagnosis codes. In one demand the Medicare conditional payment charge included a diagnosis code connected to the work-related back and hip injury, but other diagnosis codes relating to diabetes, insulin use and bereavement. In these cases, CMS issued a formal demand letter seeking recovery for the complete charge for both related and unrelated conditions. CIGA disputed on the basis that the charges “did not fall ‘within the coverage of an insurance policy of the insolvent insurer’” under California law.

    CMS’s Response

    The Court rejected all of CMS defenses as detailed below.

    CMS withdrawing the demand is not a sufficient basis to dismiss the case

    At some point following the initiation of CIGA’s lawsuit CMS “recalculated” its demands resulting in CMS effectively withdrawing the demands that were the subject of this litigation. CMS claimed that as the demands were withdrawn the case should be dismissed. The court denied the dismissal noting “Indeed, given the timing of the withdrawals (i.e., immediately after a hearing in which the Court made clear that CMS’s practice would not withstand scrutiny), it seems obvious that this is simply a strategic maneuver designed to head off an adverse decision so that CMS can continue its practice in the future.”

    CIGA identifying unrelated diagnosis codes is a sufficient basis to shift the burden to Medicare

    CMS disputed CIGA’s assertion that identifying the non-work related diagnosis codes is sufficient to shift the burden to Medicare to prove otherwise. The Court disagreed and held that it is sufficient to shift the burden to Medicare to prover otherwise, and further, that CMS never challenged CIGA’s claims that the diagnosis codes were unrelated.

    CMS’s claim that the term “item and service” refers to the charge and not the treatment is unsupported

    The Medicare Secondary Payer Act provides “a primary plan . . . shall reimburse [Medicare] for any payment made . . . with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” CMS regulations (42 CFR 1003.101) further define item or service “Any item, device, medical supply or service provided to a patient which is listed in an itemized claim for program payment or a request for payment . . . .”

    CMS asserted the definition of “item or service” for which they are able to recover under their regulations refers to whatever (and how many) medical treatment(s) a provider lumps into a single charge. Not surprisingly, the Court found nothing under the statue nor the intent of Congress in writing the MSP Act to substantiate that “item or service” refers to the listed charge from the medical provider, rather than one medical treatment whether billed as a group with other treatments or listed singly.

    CMS is bound by state law in determining whether the WC employer or carrier has responsibility to reimburse Medicare

    CMS next argued that it is not bound by state law as state law is preempted under the MSP Act (Preemption refers to the principle that between federal and state law federal law trumps state law). The Court cited with approval a prior federal appellate court decision, Caldera vs. Ins. Co. of the State of Pa. 716 F.3d 861 (5th Cir. 2013) which addressed the question of whether CMS’s ability to recover is limited in anyway by state law. In Caldera the Court found “responsibility to make payment with respect to an item or service is generally a matter of state law.” Accepting then that CMS is held to state law in its ability to recovery, the judge in the present matter went on to cite several California state court decisions finding that a compensation carrier is not responsible for making payment on treatment unrelated to the workers’ compensation injury.

    CMS is not entitled to deference in its interpretation of the MSP Act and regulations

    The court rejected CMS claim of deference to its interpretation of the MSP Act and regulations since the Court found such an interpretation of CMS’s regulations actually supports CIGA and, further, its arguments conflict with CMS’s own MSP Manual which provides for medical providers to be reimbursed partially by a primary plan and partially by Medicare if work-related medical treatment is provided concurrently with non-work-related treatment.

    Court Finds the Real Reason CMS Calculates in this Manner

    The Court holds, “At bottom, it is quite clear that the real reason CMS calculates reimbursement demands in the manner that it does is simply because it is too difficult to do otherwise, not because that is what is required (or even permitted) by any statute, regulation, or policy manual.” According to the Court then, CMS must attempt to apportion the charge between covered and non-covered services. It is possible, as the court indicates, that CMS may find apportioning the charge unreasonable. The court further notes that if the charge is apportioned, it takes no position on how CMS should do so in terms of pro rata reimbursement, etc.

    Practical Implications of Decision

    Whether it is Medicare conditional payment recovery or Workers’ Compensation MSAs, CMS regularly asserts that it is not bound by state law in determining items or service for which it may seek recovery or to be included in the MSA. Further, CMS operates under an assumption that the courts will defer to its interpretation of the MSP Act and relevant regulations. At least in the Medicare conditional payment context, this decision completely refutes such assumptions. This is a well written decision which along with the holding in Caldera (mentioned above), is significant in finding that state law places limits on the extent of MSP conditional payment recovery. We applaud CIGA’s pursuit of this decision.

    It should be noted that this is a U.S. District Court decision, not an appellate decision, thus it has limited precedential value for other cases addressing this same issue. Nonetheless, along with the Caldera case, which is an appellate decision, we now have two decisions which limit Medicare recovery. It is unclear at this point whether CMS will appeal the decision to the 9th Circuit Court of Appeals. A decision at that level would provide precedential value for all states within the 9th Circuit and would be on par with the Caldera case which was an appellate decision of the 5th Circuit.

    The court does leave a door open for CMS in that CMS can determine whether it is unreasonable to separate a charge between related and unrelated. It is assumed though that CMS would have to provide evidence to support why it cannot reasonably separate the charges.

    Tower MSA will utilize this important decision to support disputes of mixed diagnosis code conditional payment charges on behalf of our clients. Whether CMS will agree remains uncertain as this is a lower court decision and the decision itself still gives CMS the ability to determine whether it is reasonable to remove unrelated portions of a charge and how the remaining work-related amount of the charge should be apportioned. Tower MSA will continue to keep you apprised of any developments in this area of Medicare conditional payment recovery.

    WorkersCompensation.com: Tower MSA Partners’ Rita Wilson Predicts CMS Re-Review Changes Will Help Payers

    January 27, 2017

    Tower MSA Partners CEO, Rita Wilson, was recently interviewed by WorkersCompensation.com following her participation in a January 24, 2017 “State of MSP” webinar presented by the National Alliance of Medicare Set-Aside Professionals (NAMSAP).

    Workerscompensation.com asked Rita to comment on CMS’s December 21, 2016 announcement regarding its plans to update its WCMSA re-review process in 2017. This includes expansion of the process to previously approved MSAs where there has been a substantial change in the claimant’s medical condition and the case has not settled (For details see Tower MSA blog on the announcement: CMS Announces Plans for 2017 Expansion of MSA Re-Review Process & New Policy Regarding URs in MSAs)

    Rita’s comments to WorkersCompensation.com follow:

    “CMS will need to establish the parameters for re-review and define ‘substantial changes.’ We expect costly procedures such as surgeries and spinal cord stimulators to be included,” Wilson said. “A WCMSA involving patients who have weaned off expensive polypharmacy regimens could also qualify.”

    “Tower’s workflow and decision-tree software application identifies recommended, not-yet-performed procedures and intervenes to address inappropriate treatment prior to submitting an MSA,” Wilson said, “But this could be a game-changer for payers with CMS-approved MSAs that they were unable to settle.”

    The full article may be found here.

    Removal of SSN from Medicare IDs Detailed in CMS Open Door Forum

    January 23, 2017

    On January 17, 2017, the Centers for Medicare and Medicaid Services (CMS) held a Special Open Door Forum to detail how the Social Security Number Removal Initiative (SSNRI) impacts the Medicare Secondary Payer (MSP) community. CMS’s explanation is summarized below with Tower MSA’s thoughts on the practical implications of this change.

    SSNRI Explained

    Presently, Medicare beneficiaries are assigned a Healthcare Insurance Claim Number (HICN) which generally includes either their or their spouses Social Security Number (SSN) followed by a letter, commonly an A or B. For the purpose of reducing identify theft involving SSNs, the Medicare Access and CHIP Reauthorization Act of 2015 included a provision requiring CMS to remove SSNs from all Medicare cards by April 2019.

    In accordance with the Act, CMS announced that starting in April 2018 it will begin to issue what will be called Medicare Beneficiary Identifiers (MBIs) to replace the HICNs currently in use. MBIs will be 11-alphanumeric characters in length with letters only in uppercase. The MBIs will be assigned to approximately 60 million current Medicare beneficiaries and 90 million deceased/archived Medicare beneficiaries. CMS targets completion of the assignment of MBIs by April 2019.

    CMS advised there will be significant outreach to Medicare beneficiaries, medical providers, and other stakeholders, such as the Medicare Secondary Payer community, prior to implementation of this change.

    CMS has a dedicated website regarding the SSNRI which may be found here.

    SSNRI Impact on MSP Compliance

    In regard to Medicare Secondary Payer compliance processes, the MSP compliance community currently exchanges data with CMS through Section 111 Mandatory Insurer Reporting, the Medicare Secondary Payer Recovery Portal (MSPRP) and the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP). CMS made the following statements concerning the SSNRI’s impact on this exchange of information:

    • Fields presently identified as HICN will be retitled “Medicare ID.”
    • As the HICN fields currently accept 11 characters there will be no expansion of these fields as a result of the implementation of MIBs.
    • SSNs can continue to be used for querying whether a particular claimant is a Medicare beneficiary through the Section 111 Reporting process and for communication through the MSPRP and WCMSAP.
    • Use of partial SSNs will continue to be permitted for querying Medicare eligibility.
    • After April 2018 the CMS response to a Section 111 query will either provide the HICN or the MBI, depending upon whether the particular Medicare beneficiary has been issued an MBI.
    • Outgoing documentation through the MSPRP or WCMSAP will include the HICN or MIB, depending upon what was most recently reported. For example, if an MSA is submitted to CMS for review through the WCMSAP and contains a HICN, then the response from CMS will include the HICN. On the other hand, if an MIB is submitted, then the CMS response will include the MIB.

    Treasury Department to No Longer Include Medicare ID

    Also announced during the forum is an impending change by the Treasury Department to no longer include the HICN (or the MIB when it becomes active) in its correspondence stemming from Medicare conditional payment recovery. Instead, the Treasury Department will only list the Case Recovery ID that has been assigned to the case by either the Benefits Coordination and Recovery Contractor (BCRC) or the Commercial Repayment Center (CRC). This change is expected to occur before the end of 2017.

    Practical Implications

    An important takeaway from CMS’s explanation of the SSNRI is that for MSP compliance purposes we can continue to use SSNs in communicating with CMS and its contractors. What we should recognize is that as of April 2018 besides SSNs, claimants may be providing MIBs rather than HICNs. Further, it should be recognized that the Section 111 query process may return an MIB, rather than an HICN, starting in April 2018.

    Our Tower MSP Automation Suite will seamlessly transition to recognition and reporting of MBIs for Section 111 Reporting purposes starting in April 2019. We do recommend to our clients that they confirm their internal claims database will be fully capable of recognizing the MBIs when they become active for Medicare beneficiary claimants.

    Finally, the Treasury Department’s removal of any Medicare beneficiary identifier from its conditional payment recovery correspondence may present some difficulty to workers’ compensation, liability and no-fault plans in identifying the particular claimant from which the demand stems. Tower MSA will work with our clients to address any uncertainty, but we also recommend to our clients that they work with us to actively resolve Medicare conditional payments on open and settling claims such that these demands never are referred to the Treasury Department.

    If you have any questions regarding the SSNRI, please contact Tower MSA Partners Chief Compliance Officer, Dan Anders, at (847) 946-2880 or Daniel.anders@towermsa.com

    CMS MSA Review Expansion to Liability Planned for 2018

    January 4, 2017

    We are not even a week into 2017, but already have news to share regarding Medicare’s planned expansion of its Workers’ Compensation MSA review process to liability in 2018. In its recently released Request for Proposal for the Workers Compensation Review Contractor (WCRC), the Centers for Medicare and Medicaid Services (CMS) includes an option allowing CMS to expand the responsibilities of the WCRC to review of Liability Medicare Set-Asides (LMSAs) and No-Fault Medicare Set-Asides (NFMSAs) effective July 1, 2018.

    The CMS WCRC RFP Solicitation may be viewed here.

    Background on CMS Review of MSAs

    Since 2001 CMS has had in place an official voluntary review process for Worker’ Compensation Medicare Set-Asides (WCMSAs). A WCMSA, as CMS states, is a “financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury.” The purpose of the review then is “to independently price the future Medicare-covered medical services costs related to the WC injury, illness, and/or disease and to price the future Medicare covered prescription drug expenses related to the WC injury, illness and/or disease thereby taking Medicare’s payment interests appropriately into account.”

    These WCMSA reviews were initially handled by the CMS Regional Offices spread throughout the country, but eventually transitioned to a centralized WCRC in 2005 (The CMS Regional Offices must still approve the review recommendation of the WCRC before it is released to the WCMSA submitter). CMS’s RFP solicitation for the new WCRC contract indicates the contract is to be awarded by June 30, 2017 with a contract term running for five years from July 1, 2017 to June 30, 2022.

    Expectations for Liability MSA Reviews

    Presently, CMS allows its 10 Regional Offices to accept voluntary requests for review of LMSAs at each office’s discretion. Some Regional Offices have consistently refused to review any LMSAs while other offices agree to review based upon criteria that seemingly changes over time and bears no indication that it is indeed the official policy of CMS. It appears then that just as it did in 2005 when CMS took the responsibility away from the Regional Offices for reviewing WCMSAs, CMS is now considering centralizing the process of reviewing LMSAs with a contractor, leaving the Regional Offices to only approve of the contractor’s recommendations.

    Some may recall CMS launched a prior initiative to establish a formal policy for consideration of future medicals in liability settlements when it issued an Advanced Notice of Proposed Rulemaking in 2012. This initial effort was ultimately withdrawn by CMS in 2014. CMS’s new initiative began with this June 9, 2016 notice on the CMS website:

    The Centers for Medicare and Medicaid Services (CMS) is considering expanding its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. CMS will provide future announcements of the proposal and expects to schedule town hall meetings later this year. Please continue to monitor CMS.gov for additional updates.

    No town hall meetings were scheduled in 2016, however, based upon this RFP indicating LMSA reviews will not begin until at least July 1, 2018, CMS has given itself 18 months to develop and implement a formal LMSA review policy. In terms of how many liability settlements such a review process would impact, CMS seems uncertain. A Statement of Work attached to the RFP indicates “reviews could represent as much as 11,000 additional cases (based on all FY2015 NGHP demands), or as little as 800 additional cases annually, depending upon industry response.”

    Tower MSA Takeaways

    Over the past 15 years, starting with the formalized review of WCMSAs, continuing with the implementation of Section 111 Mandatory Insurer Reporting and recent stepped up efforts at denying injury-related medical care and recovery of conditional payments for medical care related to workers’ compensation, liability and no-fault claims, CMS has expanded its enforcement under the Medicare Secondary Payer Act. It is not surprising then that CMS’s next objective is formalizing a voluntary review process for LMSAs.

    It has been our experience that when CMS does implement new policy and procedures it does take a deliberative approach evidenced by the at least 18-month timeframe signaled with this RFP to expand the MSA review process to liability and no-fault. Our expectation then is over the next 18 months or longer, CMS will provide additional announcements concerning the rules and procedures around expansion of the review process.

    Tower MSA will be involved in these discussions and will keep you abreast of relevant developments. In the interim, there remain important obligations of parties to liability settlements and no-fault claims under the Medicare Secondary Payer Act. Rest assured that you can rely upon Tower MSA’s team of MSP compliance experts for consultation and expert guidance in liability and no-fault matters.

    If you have any questions, please contact Tower MSA Partners, Chief Compliance Officer, Dan Anders, at (847) 946-2880 or daniel.anders@towermsa.com