Tower’s structured settlement partner, Arcadia Settlements Group, gave an in-depth overview of how Medicare Set-Asides, structured settlements, and professional administration facilitate workers’ comp settlements during our recent Premiere Webinar. Our Chief Compliance Officer, Dan Anders, moderated the informative session that featured Alisa Hofmann, Arcadia’s VP of Workers’ Comp and Medicare Practices, and Lori Vaughn, who oversees its structured settlement programs.

As you may know, workers’ comp settlements can be paid out in a lump sum or through structured settlements.  Here are some not-so-fun facts about lump sums:

• 25-30% of injured people exhaust lump sum settlement funds within 2-3 months.
• 85-90% of injured people dissipate lump sum settlement funds within 2-5 years.

When injured workers exhaust these funds, if they are Medicare beneficiaries, they turn to Medicare to cover injury-related medical bills. And the whole point of the Medicare Secondary Payer Act is to prevent this.

Structured settlements protect the MSA funds by paying them over time as an annuity. The injured worker receives two years of the MSA allocation at settlement plus the cost of a first procedure or replacement if there are any. The rest of the MSA comes in annual payments, so the injured worker receives a consistent stream of funds for injury-related care over their lifetime.

For payers, this arrangement offers significant savings and a path to faster claim resolution, especially when paired with professional administration. And, like an MSA, the structured settlement shows Medicare that its interests are protected.

A Couple of Takeaways:

• Structured settlements aren’t only for MSAs. They can be used for indemnity and funds for healthcare services and equipment not covered by Medicare. Even attorneys can be paid through these.
• CMS-approved lump sum MSAs can be converted to a structured MSA but require submission to CMS of an attestation from the injured worker agreeing to the change.
• It is easier to submit the MSA to CMS in the structured settlement format as if it is later decided to go with a lump sum there is no need to submit an injured worker letter to CMS agreeing to the change. In short, submitting in this format saves time, money and frustration.

Hofmann and Vaughn also discussed self-administration versus professional administration of the MSA. They urged payers to educate injured workers on the risks, rules, and responsibilities of MSA administration.

CMS prefers professional administration. Plus, some companies like our partner Ametros provide medical and pharmaceutical savings in addition to managing the fund and reporting.

With examples that show how structured settlements are calculated, the webinar is great for new claims representatives and those who want a refresh on settlement tools.  If you’d like to receive more information on structuring an MSA or a link to the recording, please email your request to Dan Anders at daniel.anders@towermsa.com.

The Centers for Medicare and Medicaid Services (CMS) announced the expansion of its Amended Review policy to significantly more MSAs in the latest update to its WCMSA Reference Guide, Version 3.9. The Amended Review process was previously limited to MSAs approved within the last 12 to 60 months.

The 60-month limitation is now gone, opening the door to a second bite at the apple for any MSA approved over 12 months prior.

Does Your MSA Qualify?

CMS provides the following 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 months prior.
• The case has not yet been 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.

A claim that meets these criteria qualifies for an Amended Review.

Other Notable Updates

The CMS Regional Offices no longer approve the MSA before its release to the submitter.  For a brief history, when CMS introduced the MSA review process in 2001 the regional offices reviewed the MSA submissions.  CMS replaced their review responsibility in 2005 by introducing a centralized review contractor, the Workers Compensation Review Contractor (WCRC).  Since then, the regional offices approved the MSA recommendation made by the WCRC.

While no longer putting their stamp of approval on the MSA, the regional offices are still responsible for the receipt and review of final settlement documents to confirm the proper funding of the MSA.

Also, as part of the update, CMS clarified pricing methodology around intrathecal pumps, spinal cord stimulators, and peripheral nerve stimulator replacement frequency.

Practical Implications

The big news is the availability of Amended Review MSAs for any prior approval which otherwise meets the above-defined criteria.  We recommend that payers review their files to identify open medical claims which may now be eligible for an Amended Review. Tower stands ready to assist you with such a review and identify claims that can now be settled.  Please contact us for further consultation.

Workers’ comp payers regularly measure the performance of different aspects of their programs. Understanding injury frequency rates, the average cost per claim, timeliness of claims processing, lost-time and return-to-work rates help them identify cost drivers and improve processes. Payers also evaluate the performance of external partners — provider networks, bill review, pharmacy benefit managers, third party administrators, physical therapy networks, home health and case management vendors, etc.

But do they evaluate their Medicare Set-Aside (MSA) programs and vendors – not so much.

Why not? Well, some employers, TPAs, and insurers have their Medicare Secondary Payer (MSP) services integrated into a multi-service contract. As a result, they may assume that MSAs are just part of the process – they are all the same – they take the time they take – and they cost what they cost.

Without metrics to benchmark your performance against some sort of standard, how would you know?

In the case of MSAs, until recently, payers did not have benchmarks to determine what to measure.

In 2022, for the first time, the Centers for Medicare and Medicaid Services (CMS) published some metrics that can give payers a benchmark for comparison. While CMS’ data points are limited, they offer a great place to start.

Average MSA Amount

Providing statistics from fiscal years 2020 through 2022, CMS found the average MSA recommended amount was $84,563.33 in 2020, $80,740.94 in 2021, and $81,571.75 in 2022. (“Recommended” in CMS language means CMS believes the dollar amount of the allocation will be sufficient for the lifetime medical cost of the injury. It’s equivalent to a CMS-approved amount.)

Having captured, benchmarked and analyzed our MSA submitted amounts for more than six years, Tower was excited to see how our outcomes compared to CMS’s published numbers.

One example is the average amount of an MSA. CMS’s average in 2022 was $81,571.75, while the average of Tower’s CMS-approved MSAs was $54,715. That’s nearly $27,000 less than CMS’ number, a whopping 33% less than the CMS’s average amount.

And this didn’t just happen in 2022. The average amounts of Tower’s MSAs were 32% lower in 2021 and 30% lower in 2020.

This is a credit to our powerful and persistent clinical interventions.

Approved Rx Drug Cost

CMS also broke out the cost of prescription drugs on its recommended/approved MSAs. The agency’s average prescription drug cost for 2022 was $20,776, compared to Tower’s $11,405.

Tower’s averages in this category have steadily declined since 2020 when Tower’s average Rx drug cost was $17,941, then $14,079 in 2021. If it seems like we’re boasting a little, we are. Our CEO’s strong background in pharmacy management has paid off over the years.

We have concentrated on pharmacy costs since Tower was founded in 2011. We always examine claims for unnecessary cost drivers like duplicate scripts, discontinued prescriptions, and opportunities to change from brand to generics. And Tower led the charge in identifying inappropriate opioid use on MSAs along with all the prescriptions needed to handle side-effects.  Notably, in 2022, only 15% of Tower’s CMS-approved MSAs included opioids.

We don’t stop at identification, either. Our clinicians work with physicians, gain their agreement to taper injured workers off opioids and follow up to ensure changes happen.

Re-reviews

Tower also doesn’t let CMS get away with errors and misinterpretation of medical records with the MSA submission.  We know our MSAs and we know the rules so that we can confidently challenge CMS when we believe it’s wrong.

While there is no formal appeals process when an MSA comes back higher than proposed, we can submit a re-review request to reduce the MSA.  In 2022 Tower had a 63% success rate at obtaining a partial or full reduction from the CMS MSA counter-higher using the re-review process.

Conditional Payment Disputes and Appeals

When it comes to Medicare conditional payments, in many, many cases, the reimbursement demand is inaccurate. If the client approves, we’ll chase every dollar of savings.  We’re aggressive because we have the records, fee schedules, technology, and CMS response data to fight for our clients. In 2022, our conditional payment disputes and appeals yielded an overall 92% reduction. In 70% of these cases, the demand was reduced to $0.

While CMS did not publish metrics on conditional payments, Tower believes it’s an important point to measure.  There are numerous other areas that we measure and our Chief Compliance Officer Dan Anders is happy to discuss these and work with you on developing metrics for your own program.  Contact him at daniel.anders@towermsa.com.

As we launch into 2023, here’s a look back at the top five Medicare Secondary Payer (MSP) compliance stories of 2022 and what to watch for this year.

Addition of Non-Submit MSA Policy to CMS WCMSA Reference Guide

2022 certainly got off with a bang when CMS added Section 4.3 to the CMS Workers’ Compensation MSA Reference Guide.  Entitled “The Use of Non-CMS-Approved Products to Address Future Medical Care,” the policy, which was later amended (See CMS Clarifies Policy on Non-Submit MSAs in Updated Reference Guide), provides as follows:

• A non-submit MSA represents a potential cost shift to Medicare.
• At its sole discretion, CMS may deny payment for injury-related medical up to the total settlement amount less procurement costs and paid conditional payments.
• If the non-submit MSA exhausts, it must be demonstrated that the MSA was sufficiently allocated at the time of settlement and the funds were spent properly.
• Shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after January 11, 2022
• It does not apply to under-threshold MSAs (settlements that do not meet the CMS WCMSA review criteria).

Questions remain.  To what extent will CMS issue denials where a non-submit MSA is used? How will this process work when a non-submit MSA exhausts? What steps will CMS take to determine the sufficiency of the MSA when the claim is settled? And what evidence will CMS require to prove the MSA funds were spent correctly?

Ametros Study Confirms Post-Settlement Medicare Denials Do Occur

The question of whether CMS denies payment for injury-related care was answered, at least for CMS-approved MSAs, in an extensive study Ametros published in January 2022.  This first-of-its-kind study examined a random sample of five percent of the Medicare beneficiary population over a three-year period.  They estimated that the following number of claims were denied because WCMSA funds were responsible for their payment.

• 35,980 in 2018
• 36,060 in 2019
• 30,720 in 2020

The report’s key conclusion is “Medicare is systematically denying MSA recipients’ claims, and with steady frequency.”  You can download the free report “A Study of CMS Policy on Treatment Denials for Injured Workers with a Medicare Set Aside from ametros.com/medicaredenials. 

CMS Releases Key Metrics on WCMSA Review Program

It was not only Ametros that published data related to the MSP program in 2022.  For the first time, CMS released data on its WCMSA review program.

CMS shared statistics for the three-year period of 2020 through 2022.  The data compared proposed MSA amounts with the CMS-recommended amounts (what we typically call the “approved” MSA amounts).

Key takeaways from a review of the three years of data:

• MSA reviews are down, a 17% decline over three years.
• Review methodologies remain consistent.
• The average recommended MSA remains consistently between $80K-$85K.
• A billion dollars in recommended MSAs every year.

Please see For the First Time, CMS Release Key Metrics on WCMSA Review Program for more takeaways and a link to the data.

CMS Withdraws Proposed Rule on Future Medicals in Liability

In a surprise move, CMS withdrew its proposed rule on future medicals in liability settlements from review by the White House Office of Information and Regulatory Affairs (OIRA review and approval are required before a proposed rule is published). It was anticipated that CMS would release the proposed rule in 2022 for comment, but we did not even get to that step in the regulatory process.

The future of formal CMS guidance for liability settlements remains unknown.  While CMS can resubmit a proposed rule for release, we do not know if it will do so or the timeline if it intends to do so.

Notably, in its recently released solicitation for its next five-year Workers’ Compensation Review Contractor (WCRC) contract, CMS included an option for liability MSAs reviews starting in April 2024.  However, while CMS anticipates 19,200 WC MSA submissions per year, the solicitation indicates an expectation of 1,000 per year in LMSAs (with an option to increase to an additional 3,000 per year).  In short, even were CMS to put some LMSA review process in place it seems they contemplate a high dollar or some other type of threshold to reviews given the lower number expected.

In response to CMS’s lack of guidance, Tower released an updated version of its guidance document, Navigating Through the Fog: Medicare Future Medicals & Liability Settlements.

First Anniversary of PAID Act Implementation

On 12/11/2021, payers, gained access to the past three years of Medicare beneficiary enrollment status in Medicare Part C (known as Medicare Advantage) plans and Part D (prescription drug) plans through the Section 111 reporting data. Previously, workers’ compensation payers were required to reimburse these plans for conditional payments but did not know which plans the Medicare beneficiary used.

The PAID Act did not introduce new requirements for resolving debts with Part C and D plans. However, it does allow payers, in some cases, to more easily identify and contact these plans.  Observations one year out:

• In terms of the technical aspects of the transmission of PAID Act data, there have been minimal problems.
• Not all RREs have chosen to accept the PAID Act data into their claims systems (Tower created a dashboard allowing our reporting clients to access PAID Act data without having to ingest it into their claims system).
• While the enrollment information for Part C and D plans is accurate, the same can’t be said for the contact information. (Note, CMS issued a memo in April 2022 to Part C and D plans asking them to provide contact information which can receive inquiries from Non-Group Health Plans in compliance with the PAID Act.)
• There has been an increase in Tower clients’ pre-settlement requests to contact Part C and D plans to inquire about reimbursement claims.

What to Watch for in 2023

Section 111 Penalties:  2/18/2023 is the due date for CMS to issue final regulations on criteria for imposing Section 111 penalties for improper mandatory reporting.  We expect issuance before this date with final regulations becoming effective this year.

MSA Review Contractor:  Capitol Bridge, the Workers’ Compensation Review Contractor (WCRC), is in the last year of its five-year contract to review MSAs for CMS.  On 1/4/2023 CMS published the solicitation for a new five-year contract set to begin on 4/1/2023.

The new contract contemplates 19,200 WC MSA submissions with no increase over the contract period.  What to watch for here is whether CMS keeps Capitol Bridge or brings in a new contractor.

Release of More MSP Metrics:  As noted above, we were pleased to see CMS release critical metrics around the MSA review program.  We hope this becomes an annual report and expands with more data around MSA administration post-settlement and conditional payment recovery.

Best wishes from your friends at Tower for a healthy, happy and prosperous new year!

This past October, the Centers for Medicare and Medicaid Services (CMS) withdrew its proposed rule on future medicals in liability settlements from review by the White House Office of Information and Regulatory Affairs (OIRA). (See CMS Withdraws Proposed Rule on Future Medicals in Liability Settlements).

Right now, we don’t know if a proposed rule around Liability Medicare Set-Asides (LMSAs) will be reworked and resubmitted to OIRA for consideration soon or whether CMS is closing out regulations around liability settlements and future medicals for the foreseeable future.

Given the lack of guidance from CMS, we thought this was an opportune time to update our white paper, Navigating through the Fog: Medicare, Future Medicals & Liability Settlements.  Authored by Tower’s Chief Compliance Officer Dan Anders, the paper explores CMS authority to regulate future medicals and provides guidance to the liability practitioner as to how to address future medicals at the time of settlement.

While workers’ comp payers invest considerable resources to manage and settle claims, they don’t always prepare Medicare-eligible injured workers for life after settlement. These patients have usually been in the workers’ comp system for several years. And the system has paid for their injury’s treatment and medication, and in some cases, coordinated their care.

When their claim closes, all that comes to an end. Injured workers are on their own to navigate the healthcare system and handle the bills. They need to pay for doctors’ visits and medication from their Medicare Set-Asides (MSAs). They also need to make sure Medicare doesn’t have to pay for their injury-related care. Post-settlement compliance responsibilities can be overwhelming.

Tower’s recent Premier Webinar: Care, Cost & Compliance Through Professional Administration featured Nicole Chappelle who has nearly 30 years’ experience in all aspects of claims management — before and after settlement. Now Vice President of Settlement Solutions for Tower’s partner Ametros, Nicole joined our Chief Compliance Officer Dan Anders for what could be our liveliest webinar yet.

Here are some takeaways:

• Injured workers who are also Medicare beneficiaries can self-administer their MSA or use professional administration.
• The Centers for Medicare and Medicaid Services (CMS) highly recommends professional administration for beneficiaries who take opioids and other frequently abused controlled substances.
• Professional administration is available for MSAs that are CMS-approved and for those that are not submitted for CMS approval.
• Payers typically cover Ametros’ one-time professional administration fee of $1,000.

Although CMS allows beneficiaries to self-administer an MSA, it strongly recommends they consider professional administration.  So do we.

First, MSA funds can only be used to pay for Medicare-covered medical treatment and prescription drugs related to the claim. Learning what Medicare does and doesn’t cover is challenging at best. It’s even more confusing for an injured worker whose workers’ comp program paid for items that Medicare does not cover, such as a sophisticated power wheelchair, home healthcare, and off-label use of certain medications. Will the typical, older injured worker understand this?

Additionally, MSA funds must be kept in an interest-bearing checking or savings account and used only for the aforementioned Medicare-covered care related to the claim.  Even the interest needs to be used for this purpose.

The administrator has to maintain itemized medical and pharmacy receipts, bank statements, and other records for each transaction from the MSA account. An attestation of these expenditures needs to be submitted to the Benefits Coordination & Recovery Center (BCRC) every year.

If the MSA is funded with an annuity and funds run out in any given year, the administrator must report the temporary exhaustion of funds to the BCRC. Should funds be permanently exhausted, the administrator needs to send the BCRC a final attestation letter confirming the situation.

If MSA funds remain when the beneficiary dies, the executor or administrator is to notify the BCRC and pay for outstanding (related) medical bills from the fund.  But would an executor know to do this?

Some things are best left to professionals.

If you’d like to see the whole webinar, please contact Dan Anders at daniel.anders@towermsa.com for the link and slides. He’s happy to connect you with Nicole Chappelle, too.  And, as always, if you have any questions about MSAs, post-settlement compliance, or other Medicare Secondary compliance issues, get in touch with Dan.

Related posts:

Study Shows Post-Settlement Medicare Treatment Denials Do Occur

Build a Better Tower: Partnerships Speed Settlements of Workers’ Comp Claims with Medicare Set-Asides (towermsa.com)