MSP Compliance Blog

With the signing of A.B. 1124 by Governor Jerry Brown October, California has now joined a handful of states that have adopted closed pharmaceutical formularies in their workers’ compensation systems. While many details have yet to be worked out, the decision comes as good news for injured workers and payers alike.

Closed formularies essentially use evidence-based medicine to identity the prescription drugs that should be allowed for certain injuries. All other medications must go through a preauthorization process. The idea is to ensure the injured worker gets the right medication at the right time for the right reasons – AND to reduce unnecessary pharmacy costs.

Implemented appropriately, a formulary can result in better outcomes and lower costs. In fact, a study last year suggested California’s workers’ compensation system could save between $124 million and $420 million annually by adopting a formulary similar to that in effect elsewhere.

In addition to the states that have already implemented closed formularies or are in the process of doing so, several others are considering the idea. The result could be better efficiencies and significant savings for Tower MSA Partners’ clients in managing workers’ compensation claims even before the Medicare Set Aside review and triage process.

The specifics

Under A.B. 1124, the administrative director of California’s Division of Workers’ Compensation must create a formulary by July 1, 2017 for medications prescribed to injured workers. Between now and then, California regulators must determine a program that best addresses the needs of California’s injured workers.

Four states – Ohio, Oklahoma, Texas and Washington have implemented closed drug formularies. Arizona, Arkansas, California, Louisiana, Maine, Michigan, Montana, Nebraska, North Carolina and Tennessee are among the other states considering the formularies or in the midst of developing them.

There are several different types of formularies in effect. Washington, which adopted the first such formulary in 2004, has a more restrictive program than those in some other states. Texas, on the other hand includes more therapeutic groups and more choices within each group.

Regardless of the type of formulary, the states have touted successes. Texas, Washington and Ohio have all reported lower costs.

Texas, which implemented its closed formulary for new injuries in September 2011 and for all injuries in September 2013, also reported the number of injured employees receiving ‘N’ drugs – those requiring preauthorization – fell 65% and costs dropped 83% for new claims for injuries suffered on or after Sept. 1, 2011. Also important, the formulary has led to a significant reduction in the number of injured workers taking opioids on a long-term basis.

The Ohio Bureau of Workers’ Compensation likewise reported significant utilization and cost declines, including a 74% drop in skeletal muscle relaxants, a 25% decline in narcotics and a total drug cost drop of 16%, for a total of $20.7 million, in fiscal year 2014 compared with fiscal year 2011.

Many decisions must be made before California’s formulary takes effect and a variety of issues must be addressed. For example, the pre-approval process for drugs not allowed, decisions about the strategy for long-time opioid users, and considerations of compound medications must be determined.

Fortunately, a team of workers’ compensation stakeholders involved in helping to craft the legislation ensured some important provisions were included. The law requires the California Division of Workers’ Compensation to update the formulary at least quarterly, establish an independent pharmacy and therapeutics committee, accept public comment and publish two interim status reports

Supporters are confident when all is said and done, California’s formulary will provide effective treatment for injured workers, reduce delays and medical disputes, and reduce costs.

How closed formularies impact claims and MSAs

Closed formularies can serve as a gatekeeper in preventing troublesome medications being prescribed to injured workers. Medical providers in states with closed formularies tend to change their behavior and prescribe more clinically appropriate medications and treatments rather than unnecessary opioids and other drugs that require preauthorization.

While providers need approval to be reimbursed for medications not automatically allowed, supporters say closed formularies do not seek to prevent injured workers from having access to medications that are truly beneficial to them.

Workers’ compensation payers can also look for less adversarial relationships with providers, since there will be fewer questionable medications prescribed for the injured worker. Drugs that are not appropriate for first line therapy are generally those that are not allowed without prior authorization, under the closed formularies.

Many steps must be taken before California’s closed drug formulary will take effect and the devil is surely in the details. However, the fact that the nation’s largest workers’ compensation market is going in this direction is good news indeed!

Expect potential changes in the Medicare’s conditional payment reimbursement process related to a workers’ compensation claim while the claim is still open, possibly more than once. That is among the changes stemming from a revised process to seek reimbursement of conditional payments made in a claim.

Beginning Oct. 5, Medicare is shifting responsibility for its recovery of conditional payments, where the Centers for Medicare and Medicaid Services (CMS) is pursuing recovery directly from a workers’ compensation entity, to the Commercial Repayment Center (CRC), away from the Benefits Coordination & Recovery Center (BCRC). The transition will result in several changes to the process.

Working with the experts at Tower MSA Partners means your claims professionals need not be experts on Medicare Secondary Payer (MSP) compliance or conditional payments. However, payers should be aware of the new process and take steps to reduce any challenges.

Medicare’s Conditional Payment Reimbursement Process: The Plan

The move by CMS for reimbursement recoveries from non-group health plans to the CRC follows CMS’ previous transition of group health plan recoveries. In addition to workers’ compensation entities, the change will also pertain to CMS’ recovery efforts directly from a liability insurer (including a self-insured entity) and no-fault insurer.

The transition will only affect new conditional payment recovery efforts. Actions pending prior to the transition will continue to be managed by the BCRC. The BCRC will also continue to handle recoveries when a beneficiary self reports that a workers’ compensation or other non-group health entity has primary payment responsibility for a claim where Medicare has made a conditional payment.

CRC will manage cases where the Responsible Reporting Entity (RRE) has reported Ongoing Responsibility for Medical (ORM), ORM Termination or Total Payment Obligation to Claimant (TPOC) on Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) and CMS has identified the primary debtor as the RRE.

Changes

One of the biggest changes is in the initial dispute process. Where the BCRC provides a Conditional Payment Letter (CPL), the CRC will issue a Conditional Payment Notice (CPN). Both are information — not requests for payments. Both identify the amount of the current conditional payment, provide a statement of reimbursement, and describe the manner for disputing the charges.

However, where the CPL has no specific date for a response, the CPN must be disputed within 30 days. Failure to do so will result in a demand letter or initial determination issued to the applicable plan for payment. While applicable plans do have appeal rights for recovery demand letters issued on or after April 28, 2015, the demand letter locks the applicable plan in place as the identified debtor. Also, interest accrues from the first day of a demand letter; however it will not be assessed if the debt is paid within 60 days.

The CRC will begin to issue CPNs starting October 25, from Section 111 data processed on or after October 5. A CPN is typically issued when an applicable plan reports under Section 111 that it has ORM or a responsibility for the claim as a primary payer, rather than when a settlement, judgment or award is issued.

To dispute the CPN, the applicable plan may contact the CRC in writing or through the Medicare Secondary Payer Recovery Portal (MSPRP). However, disputes submitted through the portal may only be on the basis of relatedness and in response to a CPN. All other disputes must be in writing.

Applicable plans will have one opportunity to file a dispute. If the CRC does not agree with the dispute, the conditional payments will be reflected in the demand letter.

What you can do

Workers’ compensation payers can help prepare for a smooth transition by taking the following actions:
• Carefully review all correspondence related to conditional payments to determine if they are generated by the CRC or BCRC.
• Develop and implement a process for the timely review of CPNs as well as CPLs.
• Make sure disputes of CPNs are properly filed within the 30-day time limit.
• Ensure Section 111 reporting information is updated.
• Make sure the ORM process is working properly.

More specific details will follow as we track the rollout of this process…. Stay Tuned!

This weekend we had the pleasure of serving as the first overall sponsor of WCI-TV at the Workers’ Compensation Education Conference in Orlando, Florida. Staying the course in our efforts to lead and educate through technological advances and insight, the Tower MSA team curated valuable content over the course of the conference. Hear the thoughts of Tower MSA Partners CEO Rita Wilson on the importance of driving innovation in the industry and why she felt it was necessary to sponsor the conference content through WCI-TV.

Tower MSA Partners – First Sponsors of WCI-TV

As the preparations begin for this week’s WCI – Workers Compensation Education Conference, Tower MSA Partners have yet again positioned themselves as leading innovators in the MSP compliance industry. This year Tower MSA Partners will serve as the first overall WCI-TV sponsors. WCI-TV is as an informational, TV-driven media outlet throughout the course of the conference, produced by Convention News TV.

Workers Compensation Education – WCI-TV

This year’s approach to WCEC convention television programming will include live interviews with key thought leaders in workers’ compensation, valuable recaps of conference content, daily headlines of exciting conference updates and much more. The Tower MSA Partners sponsored interviews with industry leaders will be the highlight of the channel and are set to broadcast across the conference and beyond. Conference attendees and others will have viewing access to the channel via guests rooms, conference areas, websites, and YouTube. The televised coverage of the WCI – Workers Compensation Education Conference combined with the innovative reporting and live segments of thought provoking conference content sponsored by Tower MSA Partners is sure to be a hit. This exciting direction for WCI-TV will continue to move the conference forward in trailblazing fresh new ideas in workers’ compensation education and the industry at large.

Tower MSA is also a key sponsor for the charity event, “Give the Kids the World Dinner and Silent Auction”. The fundraiser will be held on Saturday, August twenty-second at six o’clock in the evening.

Combining the courage of innovation, with the heart of philanthropy; this weekend is sure to be a huge hit for Tower MSA Partners and the 2015 WCI WCEC.

Newly positioned as the Chief Technology Officer of Tower MSA Partners, Anthony Segrich will pilot all components of technology at Tower MSA. Segrich’s experience in the architecture of successful business process management systems serves as a huge asset for Tower’s commitment to innovative systems and practices.

Anthony Segrich brings his history of consulting, designing and implementing valuable process management systems to the table for Tower MSA Partners. He has performed extensive consulting and development for Fortune 25 companies, such as Cingular Wireless/AT&T, National Semiconductor, and Pepsi International. He holds a bachelor’s degree in Computer Science from Boston College. Before joining Tower, he developed major process management systems for institutions like Fannie Mae, while serving as the general manager for Foreclosure.com.

“Anthony’s previous experience designing business process management systems for Fortune 25 companies equipped him to use the latest BPM technologies in our Section 111 modules,” said Tower CEO Rita Wilson.

In 2012, Segrich partnered with Tower MSA to develop its custom MSP compliance tracking software. He also served as the lead architect for the Section 111 Reporting and data mapping for claims eligibility exchange.

“We can convert files into CMS-preferred formats and then back into client-preferred formats and overlay advanced business rules to make MSP compliance as simple and effective as possible,” Segrich said. “We can now achieve in weeks what takes legacy systems months.”

Segrich has played an intricate role in equipping Tower MSA Partners with the latest technology to deliver end-to-end visibility for their client’s MSAs while simultaneously creating straightforward integration with multiple claim system platforms.