Blog Archives

NCCI Releases New Study on Effects of Obesity in Workers Comp

June 20, 2012

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.

Centers for Medicare and Medicaid Services (CMS) Advanced Notice of Proposed Rule Making

June 18, 2012

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 info@towermsa.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.

Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act: 30 Days and Counting…. Can it Succeed?

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.

CMS Proposes Regulations Addressing Future Medicals in Liability Settlements

May 23, 2012

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.

H.R. 5284 – The Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2012

May 17, 2012

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.

Town Hall Teleconference Events – February through June, 2012

February 17, 2012

Mandatory Reporting for Liability Insurance (including Self-Insurance), No-Fault Insurance and Worker’s Compensation

Implementation of Medicare Secondary Payer Mandatory Reporting Provisions in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007
(See 42 U.S.C. 1395y(b)(8))

The CMS will be hosting combined NGHP Policy and Technical Support related teleconference events. For these calls the format is opening remarks and a presentation by CMS, followed by a question and answer session with the audience. Following is the call schedule for the first half of 2012.

NGHP Policy and Technical Support Questions and Answers: These calls will address both policy and technical questions you have regarding Section 111 reporting. Policy discussions will focus on CMS policy supporting the Section 111 NGHP reporting requirements, and how policy is being and has been translated into procedures. Technical support questions will focus on EDI connectivity and data transmission, use of the COB Secure Website, disposition and error codes, and other aspects of the data exchange process. Both CMS staff and representatives of the CMS COBC EDI Department will be available throughout each call.

DATES:

February 23 (Thursday), 2012
March 22 (Thursday), 2012
April 24 (Tuesday), 2012
May 24, (Thursday), 2012
June 19 (Tuesday), 2012

Call-in time for all calls: 1:00 PM – 3:00 PM Eastern time. Participation is by telephone only.

Call-in line for all calls: (800) 603-1774

Pass Code: Section 111

Questions for the call: Please submit questions to PL110-173SEC111-comments@cms.hhs.gov.

Please begin dialing in approximately 20 minutes before the call start time, due to the large number of participants.

Tower MSA Partners Seeks Experienced Salespeople

January 4, 2012

Tower MSA Partners is aggressively seeking experienced salespeople in both workers’ compensation and liability markets. Interested parties should forward their resumes to info@towermsa.com. To speak with someone directly, please call 888-331-4941 and reference this post.
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Centers for Medicaid & Medicare Services (CMS) Town Hall Teleconference Call Summary

November 29, 2011

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 info@towermsa.com.

Top 10 Drugs Prescribed For Workers’ Compensation Claims

November 21, 2011

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

1. OXYCONTIN®
2. LIDODERM®
3. HYDROCODONE-ACETAMINOPHEN
4. LYRICA®
5. CELEBREX®
6. GABAPENTIN
7. SKELAXIN®
8. CYMBALTA®
9. MELOXICAM
10. CYCLOBENZAPRINE HCL

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

November 11, 2011

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 (W.D.la. 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