MSP Compliance Blog

Expert summary, analysis and recommendations on issues impacting Medicare Secondary Payer compliance.

Tower MSA Partners Seeks Experienced Salespeople

Posted on January 4, 2012 by Tower MSA Partners

Tower MSA Partners is aggressively seeking experienced salespeople in both workers’ compensation and liability markets. Interested parties should forward their resumes to  To speak with someone directly, please call 888-331-4941 and reference this post.

Centers for Medicaid & Medicare Services (CMS) Town Hall Teleconference Call Summary

Posted on November 29, 2011 by Tower MSA Partners

CMS Town Hall Teleconference Call Summary
November 22, 2011

The most recent Town Hall Teleconference was hosted by the Department of Health and Human Services Centers for Medicare & Medicaid Services (CMS) on Wednesday, November 16, 2011. Areas of technical concern discussed during the teleconference related to Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) mandatory reporting.

Below is a synopsis of the items discussed:

  •  CMS and Coordination of Benefits Contractor (COBC) responded to multiple callers who described scenarios in which Medicare beneficiaries were being denied payment and/or services for medical conditions unrelated to the workers’ compensation injury. In some situations the beneficiary was being directed to contact his/her workers’ compensation, no fault or liability claim adjuster to obtain authorization for procedures NOT related to the beneficiary’s covered injury.The CMS COBC representatives requested that specific examples of improper provider denials be directed to the individuals hosting the call and they would deal with the issues.As an adjunct, CMS restated the instructions in the 3.2 Version of the User Guidelines which direct RRE’s to report as many ICD9 codes as are applicable to the injury, but reinforced that ONLY those codes that describe the injury are to be reported. If ICD9 codes related to other medical conditions are reported, the COBC may assume that services related to these codes are to be covered by the RRE.
  • CMS discussed the ‘51 disposition code’ errors that are being generated when their system is unable to match on 3 of the 4 personal identification data elements being submitted by the RRE noting that it is extremely important that RRE’s go back and confirm that their info is correct.
    If the RRE has a claim to report, but is unable due to the ’51 disposition code’ error, the RRE may still be considered as non-compliant. The clear message was to address the error.
  • CMS and the COBC reminded the RRE’s that claim records are NOT to be submitted until claim responsibility is established. While the claim is under investigation, no submission should occur.The responsibility to report a workers’ compensation, liability or no fault claim only arises where there is a Medicare beneficiary and either the RRE has assumed responsibility for payment of medical benefits or a TPOC event occurs. Absent those two events no information should be reported on the claim input file.
    The one caveat to the above directive occurs in conjunction with the requirement in certain states (TX and MI were examples) that the entity must pay while investigating claims or during claim appeal. In these situations or ORM, the claim needs to be reported.
  • CMS explained that in situations where ongoing responsibility for medical benefits will continue for a term of months or years following a TPOC event, Medicare expects a subsequent notice of ORM termination to be provided at the time of the ORM termination. CMS will not allow RREs to report ORM terminations that are, for instance, one to two years into the future. RREs must report both the TPOC event and the ORM termination date when they occur, independently.
  • Improper reporting of TPOC amount in Liability settlements – In liability cases where several insurers are individually responsible for payment, the following directive was given. If there are separate settlements, only report the amount of your settlement. In cases where there is joint and several liability, each RRE must report the full TPOC amount.
  • Beginning January, 2012, RRE’s will receive emails asking each to confirm the accuracy of the RRE’s profile information in order to renew. Emails will be sent both the authorized representative and to the account manager. The representative must contact the EDI representative to confirm accuracy, or to update the profile. The authorized representative will also need to sign and submit newly assigned profile. If not signed, the RRE’s EDI application might be revoked (If the authorized representative is no longer with company, account manager should get email and can respond). RRE’s should expect this and should let their EDI representative know if either or both leave the company.
    Those were the primary issues discussed during the teleconference, with many questions surrounding the improper denial of Medicare coverage. The next Town Hall Teleconference will occur on Wednesday December 14th, and that call will focus on both policy matters.

For more information on SCHIP 111 , please contact Tower MSA Partners @ 888.331.4941 or email your questions to

Top 10 Drugs Prescribed For Workers’ Compensation Claims

Posted on November 21, 2011 by Tower MSA Partners

A recent study by NCCI Holdings, Inc. reports the top 10 most popular drugs prescribed for workers’ compensation claims.


Workers compensation medical costs per claim average more than $6,000 and soar to nearly $25,000 for lost-time claims. The report examined workers compensation prescription drug (Rx) use, a medical expense that makes up 19% of all workers compensation (WC) medical costs.

Other key findings of the report on drugs prescribed for workers’ compensation were:

• The indicated Rx share of total medical is 19%; this is slightly higher than the estimate given in the 2010 update
• OxyContin® climbs from the number 3 WC drug in Service Year 2008 to number 1 in Service Year 2009
• Hydrocodone-Acetaminophen drops from the top WC drug in Service Year 2008 to number 3 in Service Year 2009
• Recent overall cost increases are driven more by utilization increases than by price increases
• Physician dispensing continues to increase in Service Year 2009 in almost every state
• Increased physician dispensing is associated with increased drug costs per claim
• Per-claim Rx costs vary significantly by state

Medicare Set-Asides and Third-Party Liability

Posted on November 11, 2011 by Tower MSA Partners

The following legal judgements relate to Medicare Set-Asides and Third-Party Liability

Hinsinger v. Showboat Atlantic City, 420 N.J. Super. 15, 18 A.3d 229 (N.J. Super Ct. Law Div. 2011)

In Hinsinger, the New Jersey court applied the same standard to Medicare set asides created with money obtained from third-party liability claims as it does with money obtained from workers’ compensation claims.  This rationale is premised based on the long understood policy of protecting Medicare’s interests from primary payers.

Based on a personal injury action, the parties to this case reached a settlement agreement in the amount of $600,000.00.  The claimant had become a Medicare beneficiary in 2009.  In order to protect Medicare’s interests, $180,600.00 of the $600,000.00 was allocated to a Medicare set aside account.  After this settlement was reached, the claimant’s attorney filed a petition to recover his attorney fees from the Medicare set aside account.  The trial court held that the attorney could deduct his fees from the Medicare set aside account.

The first issue was whether the same standard should apply to MSA’s created with money from third-party liability cases and MSA’s created from workers’ compensation claims.  The court held that the attorney was able to deduct his fees from the Medicare Set Aside Trust by applying the same standard as a workers’ compensation Medicare Set Aside

The second issue was whether the attorney’s fees could be deducted from the Medicare set aside account.  The court explained that the amount of money deducted from the Medicare set aside account for procurement costs was computed using the ration of the procurement costs to the total settlement or judgment.  The court in this case stated that 42 C.F.R. § 411.37 (2008) was applicable and since the ratio of procurement costs to the total settlement of $600,000.00 was 32.778%, that ratio was applied to the amount of money allocated for the procurement costs.

The court went as far as stating that “the Center for Medicare and Medicaid Services has stated multiple times that the same statutes that necessitate or otherwise apply to Medicare set asides in workers’ compensation cases apply to third-party liability situations.” Once the court determined that parties to a third-party liability action needed to consider Medicare’s interest, the court then applied the workers’ compensation
standard to arrive at the their conclusion that attorneys’ fees incurred to procure a settlement may be deducted from the money allocated to a Medicare set aside.

Zaleppa v. Siewell, 208, 9 A.3d 632 (Pa. Super. 2010)

In Zaleppa v. Siewell, a 69 year old woman was injured in a car accident and
subsequently obtained a judgment in the amount of $15,000.00 against the driver
who hit her vehicle.  The jury determined that $5,000.00 of the $15,000.00 would be allocated to provide for future medical expenses associated with her injuries.  Defendant filed a motion requesting the court to name Medicare as the payee of the $5,000.00 to ensure that Medicare would recover conditional payments. The trial court denied Defendant’s requested relief.

On appeal, the court noted that there was no evidence presented to show that Medicare had even paid any conditional payments to the Plaintiff and that the Medicare Secondary Payer Act bars private entities from essentially asserting the interests of the government by insisting that Medicare be named as payee on the settlement check.


Schexnayder v. Scottsdale Insurance Co., 2011 U.S. Dist. LEXIS 83687 ( July 28, 2011)

This case involved both a workers’ compensation claim as well as a third-party liability claim.

In Schexnayder, plaintiff was injured in an automobile accident while working.  Settlement was reached in both the plaintiff’s workers’ compensation action and liability action.  The liability settlement provided a Medicare set aside allocation in order to protect Medicare’s interest under the Medicare Secondary Payer Act.  CMS approval was
sought but was however, advised that the proposed Medicare set aside would not
be reviewed or approved in the not too distant future.  The reason for that response from CMS was neither due to the fact that the plaintiff was not a Medicare beneficiary nor
within 30 months of qualifying for Medicare.

The court stated that Medicare does not currently require or approve Medicare set asides when personal injury lawsuits settle, nor do they have a current policy or procedure in effect regarding the adequacy of future medical expenses set aside in liability cases.

The court held that the amount of money allocated to future medical expenses (as evidenced in the settlement agreement), reasonably accounted for Medicare’s interest.

Related: Liability Settlement Solutions

Can a court modify a workers’ compensation settlement agreement?

Posted on October 16, 2011 by Tower MSA Partners

ArvinMeritor, Inc. v. Clifton Johnson, 331 S.W.3d 267 (Ala. Civ. App. Feb 25, 2011)

Can a court unilaterally modify or supplement the essential terms of a workers’ compensation settlement agreement that has been incorporated into a judgment? 

In ArvinMeritor, the claimant filed a claim for workers’ compensation benefits against the employer in 1999.  In 2003, the trial court found the claimant to be 100% permanently disabled as a result of an occupational disease and required employer to pay workers’ compensation disability benefits and all future medical benefits related to claimant’s occupational disease.  Additionally, the claimant filed a third-party claim against tortfeasors for the same occupational disease.

In November, 2008, the claimant reached a settlement with the third-party tortfeasors for an amount in excess of past workers’ compensation payments made by the employer.  In an effort to avoid double compensation pursuant to Ala. Code 1975, § 25-5-11(which gives the employer the right to credit third-party proceeds against its liability for workers’ compensation benefits, and a right to subrogation with respect to employee’s recovery of medical expenses from the third party), the employer and the claimant reached a settlement agreement.

In January, 2009, the employer and the claimant petitioned the trial court for approval of their settlement.  The proposed settlement stated that a Medicare set aside trust would be established and would cost $83,936.17.  However, at this point in time, CMS had not approved the Medicare set aside trust.  The proposed settlement further stated that the employer will contribute up to $65,000.00 to fund the Medicare set aside trust and the remaining balance shall be paid by claimant.  The trial court approved the settlement prior to CMS’s approval of the Medicare set aside trust.

In July, 2009, the claimant filed a petition with the trial court stating that the Medicare set aside trust described in the settlement had not been established and the employer had stopped paying claimant’s medical expenses.  Claimant indicated that he was ready and willing to pay his portion of the Medicare set aside trust ($18,936.17), as set out in the settlement.  At that time, the employer’s counsel stated that CMS required an amount significantly higher than the proposed Medicare set aside trust of $83,936.17.  The employer argued that they were ready and willing to pay the $65,000.00 they had agreed to pay in the approved settlement and the claimant was responsible for the difference.

The trial court essentially concluded that the employer “induced” the claimant to agree to the settlement by making him believe he would only be responsible for the remainder balance of the Medicare set aside of $18,936.17, as the Medicare set aside allocation was not presented to the claimant as a mere estimate.  Based on the above reasoning, the trial court ruled that the employer is responsible for the remainder exceeding $18,936.17 and is required to pay the claimant’s medical expenses until the Medicare set aside trust was funded in its entirety.

On appeal, the Alabama Court of Civil Appeals reversed the part of the trial court’s holding concluding that the court cannot “unilaterally modify or supplement the essential terms of a workers’ compensation settlement agreement that has been incorporated into a judgment.”  The terms of the settlement were ambiguous and the parties had failed to provide in their settlement agreement that the cost of the Medicare set aside agreement may exceed $83,936.17, and it is not the role of the court to advise the parties on settlements.

In addition to holding the trial court in error for “imposing a legally incorrect remedy”, the appellate court also ruled that the employer was responsible for paying medical costs for the claimant’s occupational disease.

For Media Inquires, Contact:

Helen King Patterson

    Subscribe to our blog & news

    Search our blog:

    Contact Us for a FREE Consultation