Posted on June 20, 2012 by Tower MSA Partners
There is mounting evidence of obesity contributing to the cost of workers compensation. Longitudinal studies by Duke University of its own employees-and by Johns Hopkins University of employees of a multi-site U.S. aluminum manufacturing company-point to substantially higher odds of injury for workers in the highest obesity category. Further, a 2011 Gallup survey found that obese employees account for a disproportionately high number of missed workdays, thus causing a significant loss in economic output. Finally, earlier NCCI research of workers compensation claims found that claimants with a comorbidity code indicating obesity experience medical costs that are a multiple of what is observed for comparable non-obese claimants.
The study shows that, based on Temporary Total and Permanent Total indemnity benefit payments, the duration of obese claimants is more than five times the duration of non-obese claimants, after controlling for primary ICD-9 code, injury year, U.S. state, industry, gender, and age. When Permanent Partial benefits are counted toward indemnity benefit duration as well, this multiple climbs to more than six.
And if the statistics aren’t enough to encourage action, consider this….
Employee is a 54 yr old laborer working for a landscaping company. He is 5’4″ tall and weighs 310 pounds. In 2002, while walking on grass with a bucket of weeds, he tripped on a rock. Injured worker treated conservatively for years for knee and back pain as he was too large for an MRI (even the open ones only take up to 300 pounds). The doctors felt that the only option for treatment was knee replacement surgery, but injured worker was told his obesity precluded him from being a candidate – he needed to lose 100 pounds before surgery was feasible.
By 2004 injured worker was over 350 pounds and unable to work. Employer continued to pay both indemnity and medical. At this point, employer authorized a weight loss program and also paid for gym membership and transport. To be certain progress was being made, employer authorized surveillance. Injured worker was photographed going to gym and sitting.
In February, 2011, injured worker had lapband surgery. He lost 60 pounds in first 6 months -at this point he is down to 250 lbs and requires surgery to remove skin, but still 50 pounds to go before knee surgery can occur.
Injured worker is now 64 yrs old now, not able to work and still waiting for surgery…
This incredible story is also true, and one I’m sure many of us can repeat from our own experiences…. as we’ve all heard many times, “truth is stranger than fiction”.
As a Medicare Set Aside company, Tower MSA Partners is reminded everyday of the significant impact of obesity on future medical cost (Duke University,”Obesity and Workers’ Compensation: Results from the Duke Health and Safety Surveillance System”, 2007, lists mthe edical cost of obese patients as 6.8 times that of patients of recommended weight) . We also see the impact of obesity on both the quality of life and the life expectancy of the Medicare beneficiary. Taking it a step further, when one considers the strong relationship between high opioid narcotic use and the lifestyle changes that almost invaribly lead to obesity, we find yet another reason to work diligently to identify these combination triggers as early in the life of the claim as possible.
The free report is available from NCCI here: NCCI Study on Effect of Obesity in Workers Comp.
Posted on June 18, 2012 by Tower MSA Partners
This advance notice of proposed rulemaking solicits comment on standardized options CMS has considered making available to beneficiaries and their representatives to clarify how they can meet their obligations to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers’ compensation when future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care.
To be considered, comments regarding CMS-6047-ANPRM must be recieved on or before 5pm on August 14, 2012.
The primary purpose of this ANPRM is to respond to affected parties’ requests for guidance on “future medicals” MSP obligations, specifically, how individuals / beneficiaries can satisfy those obligations effectively and efficiently. Currently, individuals involved in certain workers’ compensation situations are able to use Medicare’s formal, yet voluntary, Medicare Set-Aside Arrangement (MSA) review process in order to determine if a proposed set-aside amount is sufficient to meet their MSP obligations related to “future medicals.” To date, Medicare has not established a similar process for individuals/beneficiaries to use to meet their MSP obligations with respect to future medicals” in liability insurance (including self-insurance) situations. CMS is soliciting comment on whether and how Medicare should implement such a similar process in liability insurance situations, as well as comment on the proposed definitions and additional options outlined later in this section. CMS is further soliciting suggestions on options they have not included later in this section. In its own words, CMS is most interested in the feasibility and usability of the outlined options and whether implementation of these options would provide affected parties with sufficient guidance.
Medicare is considering the options listed below in an effort to develop an efficient and effective means for addressing “future medicals.” Options 1 through 4 would be available to Medicare beneficiaries as well as to individuals who are not yet beneficiaries. Options 5 through 7 would be available to beneficiaries only. CMS is requesting comment on the feasibility and usability of all of the options, and also requests proposals for additional options for consideration.
The seven (7) proposed options include the following:
Option 1. The individual/beneficiarypays for all related future medical care until his/her settlement is exhausted and documents it accordingly.
The beneficiary may choose to govern his/her use of his/her settlement proceeds himself/herself. Under this option, he/she would be required to pay for all related care out of his/her settlement proceeds, until those proceeds are appropriately exhausted. As a routine matter, Medicare would not review documentation in conjunction with this option, but may occasionally request documentation from beneficiaries selected at random as part of Medicare’s program integrity efforts.
Option 2. Medicare would not pursue “future medicals” if the individual/beneficiary’s case fits all of the conditions under either of the following headings:
a. The amount of liability insurance (including self-insurance) “settlement” is a defined amount or less and the following criteria are met:
- The accident, incident, illness, or injury occurred one year or more before the date of “settlement;”
- The underlying claim did not involve a chronic illness/condition or major trauma;
- The beneficiary does not receive additional “settlements;” andShow citation box
- There is no corresponding workers’ compensation or no-fault insurance claim.
b. The amount of liability insurance (including self-insurance) “settlement” is a defined amountor less and all of the following criteria are met:
- The individual is not a beneficiary as of the date of “settlement;”
- The individual does not expect to become a beneficiary within 30 months of the date of “settlement;”
- The underlying claim did not involve a chronic illness/condition or major trauma;
- The beneficiary does not receive additional “settlements;” and
- There is no corresponding workers’ compensation or no-fault insurance claim.
Option 3. The individual/beneficiary acquires/provides an attestation regarding the Date of Care Completion from his/her treating physician.
a. Before Settlement—When the individual/beneficiary obtains a physician attestation regarding the Date of Care Completion from his or her treating physician, and the Date of Care Completion is before the “settlement,” Medicare’s recovery claim would be limited to conditional payments it made for Medicare covered and otherwise reimbursable items and services provided from the Date of Incident through and including the Date of Care Completion. As a result, Medicare’s interest with respect to “future medicals” would be satisfied. The physician must attest to the Date of Care Completion and attest that the individual/beneficiary would not require additional care related to his/her “settlement.”
b. After Settlement—When the individual/beneficiary obtains a physician attestation from his or her treating physician after settlement regarding the Date of Care Completion, Medicare would pursue recovery for related conditional payments it made from the date of incident through and including the date of “settlement.” Further, Medicare’s interest with respect to future medical care would be limited to Medicare covered and otherwise reimbursable items and/or services provided from the date of “settlement” through and including the Date of Care Completion. The physician must attest to the Date of Care Completion and attest that the individual/beneficiary would not require additional care related to his/her “settlement.” CMS requests comment on the efficacy and feasibility of this option.
Option 4. The Individual/Beneficiary Submits Proposed Medicare Set-Aside Arrangement (MSA) Amounts for CMS’ Review and Obtains Approval.
Currently, CMS has a formal process to review proposed MSA amounts in certain workers’ compensation situations. Recently CMS has received a high volume of requests for official review of proposed liability insurance (including self-insurance) MSA amounts. This has prompted them to consider whether to implement a formal review process for proposed liability insurance (including self-insurance) MSA amounts. For more information related to workers’ compensation MSA process, please visit http://www.cms.hhs.gov/Medicare/Coordination-of-Benefits/WorkersCompAgencyServices/wcsetaside.html. CMS specifically solicits comment on how a liability MSA amount review process could be structured, including whether it should be the same as or similar to the process used in the workers’ compensation arena, whether review thresholds should be imposed, etc.
Option 5. The beneficiary participates in one of Medicare’s recovery options.
Recently, CMS implemented three options with respect to resolving Medicare’s recovery claim in more streamlined and efficient manners. Before a demand letter is issued, the beneficiary or his/her representative may participate in one of three recovery options, which allows the beneficiary to obtain Medicare’s final conditional payment amount before settlement. The three recovery options are as follows:
- $300 Threshold—If a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) “settlement” of $300 or less, and does not receive or expect to receive additional “settlements” related to the incident, Medicare will not pursue recovery against that particular “settlement.”
- Fixed Payment Option—When a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) “settlement” of $5,000 or less, and does not receive or expect to receive additional “settlements” related to the incident, the beneficiary may elect to resolve Medicare’s recovery claim by paying 25 percent of the gross “settlement” amount.
- Self-Calculated Conditional Payment Option—When a beneficiary alleges a physical trauma-based injury that occurred at least 6 months prior to electing the option, anticipates obtaining a liability insurance (including self-insurance) “settlement” of $25,000 or less, demonstrates that care has been completed, and has not received nor expects to receive additional “settlements” related to the incident, the beneficiary may self-calculate Medicare’s recovery claim. Medicare would review the beneficiary’s self-calculated amount and provide confirmation of Medicare’s final conditional payment amount.
Each of the options is employed in such a way that Medicare’s interest with respect to future medicals is, in effect, satisfied for the specified “settlement.” Therefore, when a beneficiary participates in any one of these recovery options, the beneficiary has also met his/her obligation with respect to future medicals. CMS solicits comment on proposed expansions of these options and the justification for that proposed expansion, as well as any suggestions about how to improve the three options we recently implemented.
Option 6. The Beneficiary Makes an Upfront Payment.
CMS is currently considering two variations of an “upfront payment option.”
a. If Ongoing Responsibility For Medicals was imposed, demonstrated or accepted and medicals are calculated through the life of the beneficiary or the life of the injury.
If ongoing responsibility for medicals was imposed, demonstrated or accepted from the date of “settlement” through the life of the beneficiary or life of the injury, we may review and approve a proposed amount to be paid as an upfront lump sum payment for the full amount of the calculated cost for all related future medical care. This option would generally apply in workers’ compensation, no-fault insurance situations or when life-time medicals are imposed by law. In effect, this option may be used in place of administering a MSA if we have reviewed and approved a proposed MSA amount. CMS solicits comment on how to develop this process, the efficacy of it, and whether it would be utilized.
b. If Ongoing Responsibility for Medicals was Not Imposed, Demonstrated or Accepted.
If a beneficiary obtains a “settlement,” our general rule stated previously applies to the “settlement,” and ongoing responsibility for medicals has not been imposed on, demonstrated by or accepted by the defendant, the beneficiary may elect to make an upfront payment to Medicare in the amount of a specified percentage of “beneficiary proceeds.” This option would most often apply in liability insurance (including self-insurance situations, primarily due to policy caps. For the purposes of this option, the term “beneficiary proceeds” would be calculated by subtracting from the total “settlement” amount attorney fees and procurement costs borne by the beneficiary, Medicare’s demand amount (for conditional payments made by Medicare), and certain additional medical expenses the beneficiary paid out of pocket. Such additional medical expenses are specifically limited to items and services listed in 26 U.S.C. 213(d)(1)(A) through (C) and 26 U.S.C. 213(d)(2). The calculation of beneficiary proceeds does not include medical expenses paid by, or that are the responsibility of, a source other than the beneficiary. CMS specifically solicits comment on how to develop this process, its efficacy, and whether it would be utilized. CMS further requests comment on the calculation of beneficiary proceeds, the appropriate percentage(s) to be used, and how the percentage(s) is/are justified.Show citation box
Option 7. The Beneficiary Obtains a Compromise or Waiver of Recovery.
If the beneficiary obtains either a compromise or a waiver of recovery, Medicare would have the discretion to not pursue future medicals related to the specific “settlement” where the compromise or waiver of recovery was granted. If the beneficiary obtains additional “settlements,” Medicare would review the conditional payments it made and adjust its claim for past and future medicals accordingly. CMS specifically solicits comment on whether this approach is practical and usable, as it relates to “future medicals.”
We encourage you to read and evaluate each of the seven options as they relate to your business and settlement objectives and email us at email@example.com with questions, feedback and suggestions. We will continue our due diligence as well, and will publish our thoughts as to the pro’s and con’s of each option. As noted, we have 60 days to respond with comments and recommendations.
Click here for the complete version of CMS-6047-ANPRM.
Posted on June 18, 2012 by Tower MSA Partners
Introduced into the US House of Representatives on April 27, 2012, the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012 (HR 5284) aims to streamline the settlement of workers’ compensation agreements by creating an exception to Medicare secondary payer requirements. The bill also provides language that could ease the path toward satisfying these requirements by using qualified Medicare set-aside arrangement (MSA) under these agreements.
Designed to apply to certain workers’ compensation settlements agreements, the bill proposes changes if any of the following criteria is present:
- The total settlement is $25,000 or under;
- The claimant is not eligible for Medicare at settlement date and is not expected to be eligible within 30 months;
- The settlement agreement does not limit or eliminate the claimant’s right to payment of future medical bills;
- The claimant is not eligible for future medical bill payments under the settlement.
US representative David Reichert (WA-8) introduced the bill in an attempt to improve the set-aside process for workers’ compensation claims. Current settlements that overlap with Medicare coverage create a lengthy review period on what constitutes the set-aside coverage amounts.
Currently, HR 5284 has been referred to the Subcommittee on Health for review. The bill has gained heavy support from industry organizations, including American Insurance Association (AIA), American Association for Justice (AAJ), American Bar Association (ABA), National Council of Self Insurers (NCSI), Property Casualty Insurers Association of America (PCI), UWC – Strategic Services on Unemployment & Workers’ Compensation (UWC), Washington Self-Insurers Association (WSIA), and Workers Injury Law and Advocacy Group (WILG).
Part of the problem may be that the legislation tries fixing what isn’t governed. There is a lack of any real definition of MSA from a regulatory sense. Would wrapping laws around an undefined practice work?
Also, industry buzz suggests that legislators are treating workers’ compensation issues much like they would group health issues. Also, detractors of the bill believe there is little to address the calculation of allocation amounts and too little consistency in understanding and applying CMS policies.
The success of H.R. 5284 will depend largely on how well the legislation understands the MSA environment. While the idea may be a good one, the actual practice may fall short of its intended goal.
Posted on May 23, 2012 by Tower MSA Partners
While text of the proposed rules have not yet been released, it appears that CMS has developed regulations that will ‘advise’ that parties must determine whether an allocation for future medicals exists within a gross liability award, and then document those efforts in a pre-defined format. If this is the case, this would be the first CMS guidance on future medicals within liability settlements since the CMS memo of September, 2010. If our suspicsions are correct, this represents a significant development in the MSP world.
Guidance as to how parties should address future medicals in liability settlements has been virtually non-existent until now. The first step, in play now, inlcudes internal vetting within the Executive Branch of the federal government. Following Executive Branch approval, CMS will release the proposed regulations to the settlement community for comment. Each comment will be considered, and if appropriate, will lead to modifications and a new comment period prior to CMS enacting the regulation.
When available, a detailed analysis of the proposed regulation will be available on our website.
Posted on May 17, 2012 by Tower MSA Partners
The Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2012, H.R. 5284, was filed in the U.S. House of Representatives by Rep. Dave Reichert (R-WA) on April 27, 2012. The Government Printing Office released the text of the bill o May 7, 2012.
What H.R. 5284 Promises
Rep. Reichert purports that this bill “improves the Medicare Set-Aside process for workers compensation claims” and “provides clear and consistent standards for an administrative process that provides reasonable protections for injured workers and Medicare”.
Provides An Exemption From MSP Statute
H.R. 5284 amends the Medicare Secondary Payer (MSP) statute to provide an exemption from the Medicare Secondary Payer (MSP) statute for workers’ compensation settlements where any of the following occur:
• Total settlement is less than or equal to $25,000;
• Claimant is not eligible for Medicare at settlement date and is unlikely to become eligible for within 30 months;
• Future medical coverage is not included in the settlement;
• Settlement agreement does not limit or extinguish the right of the claimant to payment of future medical bills.
Defines “Qualified Medicare Set-Aside”
A (QMSA), as defined in H.R. 5284, is “a Medicare set-aside that reasonably takes into account the full payment obligation for present and future medical payments”. HR 5284 amends the MSP Statute such that a workers’ compensation settlement that includes a “qualified Medicare Set-Aside” (QMSA) will satisfy any obligation, with respect to present or future payment reimbursement under Section 1395y(b)(2) of the MSP statute.
To be considered as a QMSA, the MSA must give due consideration to:
• The illness or injury, age and life expectancy,
• the reasonableness of and necessity for future medical expenses,
• the duration of and limitations on benefits payable under the workers’ compensation law or plan and the relevant State workers’ compensation regulations and case law.
The QMSA must also:
• Include payment for items, services that are covered by the workers’ comp law or plan involved;
• Be based on the applicable workers’ compensation State fee schedule;
• Can (not must) be calculated using a proportional adjustment for compromised settlements that reduces the QMSA by the same proportion that the total settlement was reduced.
Under H.R. 5284, the current CMS review process remains intact. However, the follow requirements must be met during the review process to be considered a QMSA:
• The Secretary has 60 days to review the QMSA.
• Failure to meet that 60-day deadline will deem the QMSA to be approved.
• If denied, the Secretary must include specific reasons.
In addition, HR 5284 establishes an appeals process, with specific time deadlines, that entitles the dissatisfied party the right to all of the following:
• a reconsideration by the Secretary,
• a hearing before an administrative law judge,
• a judicial review.
Establishes a “Safe Harbor” Amount
Medicare set-asides of $250,000 or less are deemed QMSAs upon written consent of all parties to the settlement agreement, AND if a “safe harbor amount” is paid directly to Medicare.
The safe harbor amount is defined as “15% of the total settlement, excluding repayment of conditional payments and previously settled portions of the claim”. The bill gives the Secretary the authority to modify the safe harbor percentage if it is determined that the 15% rate causes significant negative impact.
Sets Time Limit for Conditional Payment Request
If the Secretary fails to provide conditional payment information within 90 days, then neither the claimant nor the payer is liable for any reimbursement to Medicare with respect to the conditional payment information being requested.
Sets QMSA Payment Not > Workers’ Compensation Fee Schedule
No one shall be liable for any payment amount established under a Medicare set-aside for an item or service provided to the claimant that is greater than the related workers’ compensation fee schedule amount. In addition, a provider may not bill a Medicare set-aside more than the payment rate used in the Medicare set-aside or the Secretary may apply sanctions.
Treatment of state workers’ compensation law
If a workers’ compensation settlement agreement is accepted in accordance with the workers’ compensation law of a jurisdiction, then that acceptance shall be deemed conclusive. That includes determination of reasonableness of the settlement value, any allocation of funds, the projection of future indemnity or medical benefits that may be payable under State workers’ compensation law.
To view the text of H.R. 5248, click here.
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