In an October 10, 2019 decision from the U.S. Court of Appeals for the Ninth Circuit, the California Insurance Guarantee Association (CIGA) was found not to be a primary plan under the Medicare Secondary Payer (MSP) Act.  The result of this decision, if not reversed on further appeal, is that CIGA would have no responsibility to reimburse Medicare for conditional payments or to allocate funds in a Medicare Set-Aside (MSA) for future medical.  Whether this decision applies to other state guaranty associations or funds depends on whether that state is located within the Ninth Circuit and on the statutory language that established the fund.

Background on CIGA Case

CIGA is a statutorily created association that requires its insurer members to pay premiums, which are then used to discharge an insolvent insurer’s covered claims.  The statute specifically indicates CIGA is a payor of last resort and cannot reimburse state and federal government agencies, including Medicare.

Tower previously reported on CIGA’s suit against Medicare, Federal Court Holds Against Medicare Practice of Over-Inclusive Reimbursement Demands and U.S. District Court Declares CMS Practice of Over-Inclusive Reimbursement Demands to be Unlawful, but Withholds Injunction.  In the lower court, the judge had quickly dismissed CIGA’s argument that it was not a primary plan, subject to the provisions of the MSP Act, by focusing on CIGA’s obligation to pay for workers’ compensation medical benefits for the insolvent insurer.  The judge went on to address the CMS practice of claiming reimbursement for a charge that includes both injury-related and non-injury-related services.  While the District Court for the Central District of California found CMS’s practice unlawful as the state law requires only payment for injury-related charges, the court did not issue an injunction stopping this CMS practice.  

Appeals Court Holds CIGA is Not a Primary Plan

On appeal, the focus shifted back to whether CIGA was a primary plan and thus subject to the MSP Act.  The appellate court indicated the question is not whether CIGA made workers’ compensation payments on a claim from an insolvent insurer, but whether CIGA is a workers’ compensation plan.  The MSP Act, 42 U.S.C. § 1395y(b)(2)(A)(ii), defines entities that are primary plans to Medicare as follows:

payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.

The court found CIGA does not fall into any of these categories and instead falls into the category or class of “insolvency insurance” as it is “an insurer of last resort.”  Based upon a review of the MSP Act and its history, the court found that the primary plan provisions do not preempt state law. (Federal preemption means that when federal and state law are in conflict, the federal law is followed rather than the state law).

To argue its position that the state law is preempted, the federal government cited the 1996 decision from the U.S. Court of Appeals, First Circuit, in U.S. v. Rhode Island Insurer’ Insolvency Fund, 80 F.3d 616 (1^st Cir. 1996), in which the court found this guaranty fund’s statutory provision requiring claimants to seek recovery from any governmental insurance, e.g., Medicare, before seeking reimbursement from the fund, to be preempted by the MSP Act.

The Ninth Circuit distinguishes its decision by noting the Rhode Island statutory scheme deems the fund to be the new insurer upon insolvency of the old insurer.  In other words, the Rhode Island fund steps into the shoes of the insolvent carrier.  In contrast, the court holds that based on the state statute, CIGA does not become the insurer. Instead, CIGA is only authorized to disburse funds for “covered claims” from the insolvent insurer.  A key distinction for the court.

Practical Implications

This decision is only binding upon the federal courts within the Ninth Circuit, namely Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. To determine whether this decision may apply to guaranty funds in those states, each fund would need to review its statutory language against the California statutory language that was determinative in this case.  For funds located outside the Ninth Circuit, this decision may be persuasive to federal district and circuit courts if asked to rule on the issue.  

CMS has the option to first appeal the decision to the full circuit (called en banc), meaning all judges sitting in the Ninth Circuit would hear the case.  If this is turned down, which is likely, then an appeal can be filed with the U.S. Supreme Court, which may or may not choose to hear the case.

Finally, compliments to CIGA for maintaining this litigation, which has resulted in decisions addressing the extent of Medicare conditional payment recovery and defining whether a guaranty fund is a primary plan under the MSP Act.

If you have any questions, please contact Tower’s Chief Compliance Officer, Dan Anders, at daniel.anders@towermsa.com or (888) 331-4941.

On October 7, 2019, the Centers for Medicare and Medicaid Services (CMS) released an updated Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) User Guide (Version 5.9) which adds the capability for both MSA self and professional administrators to electronically submit annual attestations for CMS-approved MSAs.  Previously, the sole option for an MSA administrator was to complete the attestation form and submit to Medicare’s Benefits Coordination & Recovery Center (BCRC) via mail.

Pursuant to CMS rules, once the approved MSA is funded through settlement:

Every year, beginning no later than 30 days after the 1-year anniversary of settlement, the administrator must sign and send a statement that payments from the WCMSA account were made for Medicare-covered medical expenses and Medicare-covered prescription drug expenses related to the work-related injury, illness, or disease.

CMS provides blank attestation letters with the appropriate identification numbers in each CMS WCMSA approval letter for this very use.

Through this new electronic option, MSA self-administrators or those representing MSA self-administrators may login through MyMedicare.gov and by clicking the WCMSA Attestation Information button, may submit a new attestation and view past attestations. 

For professional administrators, they may set up an account in the WCMSAP and manage their authorized cases within the portal.  Per CMS, professional administrators’ access will allow them to “submit account transactions via input file submissions and download response files online, allowing them to administer and keep detailed records for a WCMSA account without the need for submitting an attestation.”

Importantly, final settlement documents must be submitted to CMS, including a professional administration agreement if the MSA is to be professionally administered, before the electronic attestation submission option may be used. 

CMS Webinars to Highlight Enhancements

CMS has scheduled two webinars to highlight the new WCMSA Electronic Attestation Enhancements.  The first webinar, to be held on October 30, 2019 at 1:00 PM ET, will be for Medicare beneficiaries and their representatives.  The second webinar, to be held on November 6, 2019 at 1:00 PM ET, will be for Professional Administrators. 

Practical Implications

Providing for electronic submission of annual attestations will benefit both CMS and MSA administrators as it will allow for better and faster coordination of benefits.  This coordination of benefits ensures that when MSA funds exhaust, either temporarily or permanently,  Medicare payment for the Medicare beneficiary’s injury-related bills will be triggered. 

Tower offers MSA professional administration services through our partner, Ametros.  If you have any questions regarding MSA administration or this enhancement, please contact Dan Anders at daniel.anders@towermsa.com or (888) 331-4941.

On July 19, 2019, the Food and Drug Administration (FDA) approved multiple applications for the first generics of Lyrica (pregabalin). This follows the expiration of Pfizer’s patent on Lyrica at the end of June. The generic is expected to be available at pharmacies in the coming weeks.

Lyrica remains FDA approved for the following indications:

• Diabetic peripheral neuropathy
• Fibromyalgia
• Neuropathic pain associated with spinal cord injury
• Adjunct therapy for the treatment of partial-onset seizures
• Postherpetic neuralgia

If a claimant is being prescribed Lyrica for any of the above indications and such indication is related to the workers’ compensation injury, then it will be included in the MSA. In workers’ compensation injuries, Lyrica is most frequently prescribed for neck or back pain. For years, CMS considered Lyrica non-Medicare-covered for neck or back pain unless such treatment stemmed from a traumatic spinal cord injury. However, CMS recently expanded its interpretation of what is considered a spinal cord injury, explaining in the updated WCMSA Reference Guide released this past January:

Lyrica is considered acceptable for pricing as a treatment for WCMSAs that include diagnoses related to radiculopathy because radiculopathy is a type of neuropathy related to peripheral nerve impingement caused by injury to the supporting structures of the spinal cord.

As a result, MSAs have included Lyrica more frequently.

Red Book currently prices brand-name Lyrica in the range of at $9.36 to $10.30 per pill depending upon the dosage. The MSA for a person taking Lyrica 50mg three times a day over a 20-year life expectancy would allocate $222,580 for the medication. Red Book shows a generic price range of $7.58 to $8.43 per pill depending on the dosage. While not a significant per-pill decrease, the generic switch over the 20-year life expectancy produces an allocation of $163,728 – a $58,752 reduction. The good news is with multiple manufacturers approved to sell the generic; we expect the per-pill price to drop even further.

Practical Questions

Will CMS automatically allocate the Lyrica in the MSA at the generic price?

As with any medication, including Lyrica, it is important to keep in mind that CMS will not automatically use the generic price when the treatment records and/or prescription history document brand name use. Instead, it must be proven to CMS typically, through prescription payment history, that the claimant has been switched to the generic. One fill documenting the switch to generic should be sufficient.

What is Tower doing for MSA referrals which include brand-name Lyrica?

If the claim prescription history documents brand Lyrica, we will advise you that a generic version of Lyrica has been approved and is or will soon be available.  Tower will show you the price difference between brand and generic and recommend working with the treating physician and your pharmacy benefit manager to make the switch.  If a statement from the treating physician is required to authorize the switch, Tower can obtain it from the physician (although we will still need prescription history documenting at least one fill of the generic).

If the MSA was previously approved by CMS with brand-name Lyrica can it be re-priced to generic?

CMS will not consider an MSA Re-Review or Amended Review based solely upon a prescription medication pricing change. An Amended Review MSA would need to document not only the switch to generic Lyrica but other changes as well, such as a previously allocated medication having been discontinued.

If you have any questions, please contact Tower’s Chief Compliance Officer, Dan Anders, at (888) 331-4941 or daniel.anders@towermsa.com.

Two years ago, CMS rolled out a policy that enabled submission of a new MSA even if an MSA had previously been approved for the same date of injury. The purpose of this “Amended Review” is to provide parties who have not settled the case an opportunity to update the MSA to better reflect the current and future course of medical care. Since its implementation, this policy has allowed many parties in workers’ compensation cases to move forward with a settlement and closure of medicals.

Does your MSA qualify?

CMS provides the following base criteria for an Amended Review:

Where the following criteria are met, CMS will permit a one-time request for re-review in the form of a submission of a new cover letter, all medical documentation related to the settling injury(s)/body part(s) since the previous submission date, the most recent six months of pharmacy records, a consent to release information, and a summary of expected future care.

• CMS has issued a conditional approval/approved amount at least 12 but no more than 48 months prior,
• The case has not yet settled as of the date of the request for re-review.
• Projected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

If you think your case may qualify, contact Tower to determine whether current medical records support a change in the MSA. Proper medical documentation is critical to ensuring CMS will agree to the Amended MSA. CMS requires an affirmative statement from a treating physician or physicians confirming the originally allocated treatment or medication has changed or is no longer necessary. The following case study illustrates how it works.

Amended Review Case Study

CMS approved an MSA on 5/7/2015 for $147,483. The parties were unable to settle the workers’ compensation case at that time. Nearly four years later, the parties were again ready to consider settlement, but the 2015 MSA no longer reflected the injured worker’s course of medical care.

A review of recent medical records caused Tower to suspect that a supplemental oxygen delivery system was no longer used and that the injured worker could switch from brand-name Crestor to generic. Tower’s Physician Follow-Up service obtained the treating physician’s signed statement regarding the discontinuation of the oxygen system and the injured worker’s current use of the generic, which enabled us to revise the MSA down to $46,171. It was submitted shortly before the Amended Review deadline and approved by CMS on 5/13/2019 for a $101,312 reduction from the previously approved MSA.

Key Takeaways

CMS will agree to a change in the previously approved MSA amount when the medical documentation supports the change. Since the Amended Review is a one-time opportunity, it is vital to conduct the review well before the deadline and to obtain proper medical documentation to support MSA modifications.

Finally, keep in mind that while the CMS Amended Review policy allows for an MSA that better reflects the current and future course of care, CMS does not require the settling parties to submit a new MSA, even when the criteria are met. Per our understanding of CMS WCMSA rules, the original approved MSA does not expire or otherwise become invalid.

This is another way Tower delivers on its promise of Compliance by the book, closure by the numbers.

WCI comes a little earlier this year (August 11-14), so make plans to attend now. Tower will present in two back-to-back sessions on August 14. Starting at 9 a.m., “Optimizing Settlement Outcomes by Measuring and Managing MSA Costs” stresses the importance of determining which metrics to use and how to use them to evaluate and improve your MSA program. Moderated by Michael Stack, CEO of AMAXX, the session features American Airline’s Kris Sallee and Tower’s Chief Compliance Officer Dan Anders who will also describe how clinical interventions produce MSAs that balance care, cost, and compliance.

Then, at 10 a.m., “Allaying the MSA Fear at Time of Settlement” examines reasons employers and injured workers avoid settling claims. Employers anticipate the MSA cost will be too high; injured workers worry that the funds will be too low, or they won’t be able to properly administer the MSA. Marques Torbert, CEO of the professional administration firm Ametros, and Joe Bornstein, a structured settlement consultant with Arcadia Settlements Group, join Kris, Dan, and Michael in a lively discussion of these challenges and their solutions and share case studies that resulted in a win-win for the employer and the injured worker.

For more information and to register for the conference, see https://www.wci360.com/conference/

Just like all of us, CMS makes occasional errors. Believe it or not, the government is not infallible! To protect our clients from unnecessary allocation costs, Tower takes a “lead, not follow” approach to deliver Medicare-compliant MSAs that are not overfunded. This means that we don’t just follow CMS’s rules to prepare and submit MSAs, we take the initiative to make sure CMS follows its own rules.

Tower challenges a CMS MSA counter-higher when our clinical and legal review produces a basis for a re-review request (a form of post-determination appeal). We typically submit re-review requests within 48 hours of receipt of the counter-higher and CMS responds in less than 14 days. Our challenges have yielded a 71% success rate and saved our clients hundreds of thousands of dollars.

As the following examples from the past six months demonstrate–whether its $2,000 or $200,000–Tower will dispute CMS’s calculations when we believe they are in error:

Miscalculated surgical pricing

CMS increased the cost of a knee replacement by $8,769. Tower submitted a re-review and stated CMS had incorrectly used the state fee schedule in calculating the surgical cost. After two re-reviews, CMS corrected the pricing to the proposed amount.

Addition of discontinued medication

CMS added a medication, Etodolac, that, per the medical records, had been replaced with another medication, Ibuprofen. Tower referenced the submitted medical records and Rx history on re-review and CMS agreed to remove the medication from the MSA for a $16,704 reduction.

Medication allocated at the wrong frequency

CMS increased the refill schedule of Tylenol #4 from every three months to monthly, increasing the MSA by $8,650. Tower submitted a re-review and cited the prescription payment history as confirming “as needed” use of the medication. CMS agreed and returned the MSA to the originally proposed amount.

Non-Medicare covered medication added

CMS added the medication Lyrica to the MSA resulting in a $205,658 increase in the allocation. Tower argued that Medicare coverage guidelines did not provide a basis for inclusion of Lyrica for treatment of a foot crush injury. After a re-review and escalating to CMS senior management, CMS agreed and removed the Lyrica from the MSA.

Treatment unrelated to the WC injury

CMS added left hip x-rays and MRIs even though the hip was not accepted on the WC claim. Tower disputed the tests’ inclusion and CMS agreed to remove, thus lowering the MSA by $2,657.

Miscalculated Rx pricing

CMS modified the pricing of Morphine Sulfate resulting in a $12,376 increase to the MSA. Tower advised CMS that it had used the incorrect NDC code to price the medication at $1.50 per unit versus the correct $0.73. CMS acknowledged the error and corrected.

Key Takeaways

The good news is that the above errors occur in the minority of MSA submissions. Most of the time CMS gets it right. However, when errors occur, Tower quickly identifies and submits a re-review request to CMS. And, in most cases, our re-review requests yield a cost-savings MSA that is Medicare-compliant. This is another way Tower delivers on its promise of Compliance by the book, closure by the numbers.