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)

The Centers for Medicare and Medicaid Services (CMS) recently released data that provides insight into its Workers’ Compensation Medicare Set-Aside (WCMSA) reviews.  This is the first time CMS has released such detailed metrics.

CMS shared statistics for a 3-year period of 2020 through 2022 (CMS’s fiscal year ends on Sept. 30). The data compared proposed MSA amounts with the CMS-recommended amounts (what we typically call the “approved” MSA amounts).  The data can be found here.

 MSA reviews are down

In 2020 CMS completed 16,517 reviews and by the FY end of 2022, this had dropped to 13,752 reviews, a 17% decline.

The reason for the decline is up for speculation.  There may have been fewer settlements and thus fewer MSAs during the pandemic. However, NCCI’s data* show that claim frequency only declined by about 1% when 2020 and 2021 are considered together.

Another theory is that the reduction reflects a trend of settling parties choosing not to submit the MSA to CMS for approval.  Whatever the reason, there has been less engagement with the CMS WCMSA review program.

 Review Methodologies Remain Consistent

When CMS disagrees with a proposed MSA amount it issues a counter-higher with an amount it recommends for the MSA allocation.  The data provided by CMS show that the variance between total MSAs proposed versus recommended change was 13% (2020), 15% (2021) and 14% (2022). This consistency of result is because CMS’s WCMSA review methodologies have remained largely the same over the last several years.

Average Recommended MSA Is Steady

The year-over-year data show very little change in the average recommended MSA amount from $84,563.33 in 2020 to $81,571.75 in 2022.

 A Billion Dollars a Year

The CMS data show that the amount the agency consistently recommends for all the MSAs comes to over $1 billion annually.  However, this does not necessarily represent $1 billion in savings to Medicare.  Savings result when the MSA is funded in a settlement and the MSA funds are expended for injury-related medical care that Medicare would otherwise cover.

How Tower’s MSAs Stack Up

The release of these statistics gives us a unique opportunity to compare Tower CMS-approved MSAs against all CMS-approved MSAs.

Average CMS-Approved MSA (2021 numbers):

CMS:  $80,741                                                 Tower:  $54,956

Tower’s CMS-approved MSAs are 32% lower than the CMS average approved MSA

And if we isolate just the prescription drug component of the MSA.

Average CMS-approved Rx Amount in MSA (2021 numbers):

CMS: $20,916                                                  Tower:  $14,079

Tower is 33% lower than the CMS average for the prescription drug component.

These comparisons prove that Tower’s MSA allocation methodology along with our focus on cost mitigation through interventions, such as our Physician Follow-up service, reduce MSA allocations. Simply put, what this means to our partner clients is millions of dollars in savings.  These metrics also show that cost reductions can be obtained, even when payers choose the CMS MSA approval process.

The release of data on CMS programs has been a policy initiative of the National Medicare Secondary Payer Network (MSPN), to which Tower belongs. We are pleased that MSPN’s efforts have resulted in this release.

We also thank CMS for publishing these statistics.  Hopefully, it will become an annual report that includes more metrics on WCMSA reviews, such as the percentage of MSA proposals that are developed for information post-submission. It would also be interesting to learn how many MSAs are funded in a lump sum versus those funded via an annuity. In addition, MSPN is interested in metrics surrounding Section 111 reporting and Medicare conditional payments.

If you have any questions about this report or anything else on MSP compliance or MSAs, please feel free to contact Dan Anders, Chief Compliance Officer, at Daniel.anders@towermsa.com or 888.331.4941.

*See Rabb, W., (2022, May 11). “Claims Frequency Up for 2021, but Workers’ Comp Profitability ‘Unprecedented,’” Insurance Journal.

On October 13, 2022, 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 review and approval is required before a proposed rule is published).

While never published to the public, the proposed rule was expected to provide guidance regarding obligations associated with future medical items in liability cases. It was commonly believed these obligations would include the use of a Liability Medicare Set-Aside (LMSA), similar to MSAs used in workers’ compensation, in certain situations.

What is uncertain now is whether a proposed rule around 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. This is the second time CMS has withdrawn a rule on LMSAs, with the first withdrawn in 2014.

Practical Implications

While the lack of guidance around future medical obligations to CMS may have frustrated parties to liability settlements, these parties could have been even more frustrated if CMS had issued rules. As it is, parties in liability cases continue to have much more discretion in determining how to best consider Medicare’s interests in future medicals at the time of settlement than do parties in workers’ compensation cases.

What should settling parties do, given that no CMS LMSA review policy or process currently exists? Please reference Tower’s “Navigating Through the Fog: Medicare, Future Medicals & Liability Settlements” as a starting point. Of course, always feel free to contact me, Dan Anders, for consultation at Daniel.anders@towermsa.com or 888.331.4941.

Related Posts

Proposed Rules on LMSAs and Section 111 Penalites Again Delayed

CMS Rulemaking Notices Provide Possible Timeline for Criteria on LMSAs and Reporting Penalties

A common question we receive is whether a CMS-approved $0 MSA is still possible.  The answer is, yes– if it meets the criteria.

There are three different ways a $0 MSA can be obtained, each with its own criteria and documentation requirements.

Denied Claim $0 MSA

This is a $0 MSA based on a completely denied workers’ comp claim when no payments have been made for medical treatment or indemnity.  In certain jurisdictions, such as California, some medical payments can have been made during a statutory investigating period. Payments for non-treatment purposes such as IMEs, case management and medical records copies do not impact the ability to obtain a $0 MSA approval.

This type of $0 MSA has significant documentation requirements:

1. Claim Payment History

• A claim payment history printout, even if blank, representing payments since the inception of the claim. All payments must be itemized.
• Printout must be divided into categories for medical, indemnity and expenses with subtotals for each category and a grand total listed. This printout needs to include the print or run date.
• If the claim payment history does not meet the above requirements, then Tower will work with you to identify alternative documentation that meets CMS requirements.

2. Draft or final settlement documents and court orders or rulings or a statement that no such documents exist (see below Financial Detail and Denial Letter). CMS recently added a requirement that there must be a proposed or agreed-to settlement.  Importantly, while CMS requires a proposed settlement, it will reject the $0 MSA if the settlement is finalized, for example with court or commission approval, before CMS’s review and approval of the $0 MSA.

3. First Report of Injury or a statement that no such document exists (See below Financial Detail and Denial Letter).

4. Financial Detail and Denial Letter – At the time of submission Tower will draft a letter for the client to sign that confirms the denial of the claim and any other necessary explanations, such as why no First Report of Injury is available.

5.  Medical Records:  As with a regular MSA, medical records for the past two years must be provided with the submission.

6. CMS Consent to Release form executed by the claimant.

Accepted Claim $0 MSA 

This is a $0 MSA based on medical documentation supporting no further need for injury-related treatment.  In the WCMSA Reference Guide, CMS provides as follows:

The individual’s treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury.

In practice, CMS accepts treating physician statements that say the injury-related treatment has resolved or returned to baseline (when there was a pre-existing condition) and that no further injury-related treatment will be necessary as sufficient to support the $0 MSA.

Keep in mind that CMS will not accept the physician’s statement unless it is consistent with the treatment records/notes.  For example, if the physician states the injury-related has resolved, but treatment notes document ongoing pain to the relevant body part, CMS is unlikely to approve a $0 MSA.  Also, if the injured worker will require a revision or replacement to a body part, e.g., a knee replacement, a $0 MSA will not be approved.

In addition to the physician statement, a claim payment history, medical treatment records and an executed Consent to Release are required.

Judicial Decision $0 MSA

CMS will accept a judicial decision after a hearing on the merits of the case as a basis for a $0 MSA.  This can be on a completely denied claim where the judge upholds the denial of the claim or an accepted claim where the judge finds future medical treatment, if any, is unrelated to the work injury.  The key here is the decision is “on the merits.”  If it in any way looks like an agreement between the parties and the judge just stamped their approval, CMS will not accept it.

In addition to the judicial decision, a claim payment history, medical treatment records and an executed Consent to Release are required.

While there are strict documentation requirements, these $0 MSA approvals remain available for workers’ compensation cases meeting the applicable criteria. Please contact Tower MSA Partners at referrals@towermsa.com or (888) 331-4941 to refer a claim meeting these requirements or for further consultation.

The Centers for Medicare and Medicaid Services recently hosted a webinar on Workers’ Compensation Medicare Set-Asides (WCMSAs). While the webinar covered several topics around MSA submissions, CMS policy toward non-submit and evidence-based MSAs was an attendance-driver, according to its presenter, John Jenkins, Health Insurance Specialist for the CMS Division of Medicare Secondary Payer Operations.

As Tower’s recent articles CMS: Non-Submit MSAs Potentially Shift Costs to Medicare and CMS Letter Confirms Non-Submit MSA Denial is Real noted, the addition of Section 4.3 to the WCMSA Reference Guide has raised many questions and led some payers to reconsider whether non-submit MSAs are the best option for them.

Here is a webinar summary with Tower’s comments on Mr. Jenkins’ statements pertaining to non-submit MSAs along with a breakdown of some of the other matters discussed.

Non-Submit MSAs

Mr. Jenkins explained that the addition of Section 4.3 on non-submit and evidence-based MSAs was in response to industry requests for CMS’s position on such products.

He said that Section 4.3 is consistent with prior policy announcements which advise that Medicare has a right of recovery up to the settlement amount when the MSA is not CMS-approved and is prematurely exhausted.

• Tower comment:  As we indicated in our prior article on Section 4.3, we believed this would be CMS’s position.

Mr. Jenkins could not clear up the question about MSAs that do not meet the CMS WCMSA review thresholds, i.e., Medicare beneficiary and total settlement higher than $25,000.  First, he said CMS treats these as if they never existed, thus the total settlement would be considered available to pay for future medical. However, later he said that if CMS obtains the non-submit MSA amount, that amount may be used to determine the “marker” in their system (This marker determines whether Medicare will pay for a certain treatment). Ultimately, he indicated further policy guidance will be issued around under-threshold MSAs.

• Tower comment:  The common working file is CMS’s system to coordinate benefits to Medicare beneficiaries so that Medicare does not pay when a primary payer is available to pay. CMS places the marker for certain diagnoses to enable it to deny payment for treatment related to those diagnoses codes.  CMS needs to clarify how under-threshold MSAs will be treated. If parties have included a clinically and/or legally reasonable and defensible MSA in the settlement or have acceptable reasons for not including one, CMS should limit the liability for future medicals to the MSA amount. Perhaps CMS will have a post-settlement review process but its details are not clear at this time.

Mr. Jenkins went on to indicate that if CMS receives the non-submit documentation, settlement, and MSA amount, then it will use this information to place a marker in the common working file to deny medical care until such time as the settlement is exhausted.

According to Mr. Jenkins, CMS expects that Medicare should never see an injury-related bill if the non-submit MSA is priced correctly. If the MSA prematurely exhausts, the Medicare beneficiary will have to provide reasons for its exhaustion. Then it would be up to CMS to determine if the allocation and spending of the MSA were appropriate, using the same process used to approve MSAs.

• Tower Comment:  Mr. Jenkins said that they see many instances of CMS-approved MSA funds exhausting and expects the same from non-submit MSAs. Even the best cost projections for future medical care are, in the end, still predictions. Future medical inflation alone will increase costs in addition to changes in treatment and medications. Thus, while a majority of non-submit MSAs will appropriately cover future medical care, some non-submit MSAs–just like some CMS-approved MSAs–will exhaust.

Mr. Jenkins referenced conducting some type of review if non-submit MSA exhausts, similar to the current pre-settlement WCMSA review process. Naturally, this raises more questions.  First, who is completing the review? The current CMS WCMSA review contractor, CMS itself, or some other contractor? What criteria will be used as part of the review? What documentation must be submitted to support the MSA allocation as sufficient and the fund spending as appropriate? To verify adequate funding, the same documentation used at settlement (medical treatment records, prescription histories, and rated ages) would likely be required. We assume appropriate spending of the funds would be determined using healthcare bills and payment receipts.

Mr. Jenkins advised that if a structured MSA’s funds exhaust in any given year, CMS will not temporarily step in to pay for injury-related care as it does with a CMS-approved MSA.

• Tower Comment:  This leaves anyone with a non-submit MSA annuity in a difficult position. They would need to use their personal funds to pay for medical until next annuity payment is received when they could theoretically reimburse themselves. Even if they can reimburse their medical bills from the annuity payment, CMS is not likely to agree that reimbursing interest payments that occurred from putting medical bills on a credit card is an appropriate use of these funds.

Mr. Jenkins was clear in stating that the MSA, whether CMS-approved or not, is an agreement solely between CMS and the Medicare beneficiary.

• Tower Comment:  This indicates that CMS will not take any action against the employer or insurance carrier as they are not seen as a party to the agreement. That said, there remain repercussions to the payer. A Medicare beneficiary claimant may be reluctant to agree to a settlement with a non-submit MSA. Additionally, the workers’ compensation board, commission or other governing authority may be less likely to approve such a settlement.

Mr. Jenkins stated that a large number of CMS-approved MSAs exhaust early and that non-submit MSAs are even more likely to exhaust early.

• Tower Comment:  The allegation that a large number of CMS-approved MSAs exhaust early is, thus far, unsupported by data from CMS.

As to whether Section 4.3 of the reference guide applies retrospectively or just prospectively, Mr. Jenkins said that while what was stated in this section has always been CMS policy, anything after 1/11/22 must meet this requirement.

• Tower Comment:  We believe this statement is still unclear. Does this mean that CMS will only apply this policy to settlements that occur after 1/11/22 or does it apply to settlements that took place before 1/11/22 when MSA funds continued to be used after that date?

Finally, Mr. Jenkins advised that Section 111 reporting and WCMSAs are not connected. Therefore, the agency does not use the Section 111 Total Payment Obligation to the Claimant (TPOC) data to place a marker in the common working file.

• Tower Comment:  While this has been our understanding, CMS’s statement that it does not use Section 111 reporting data to stop Medicare payment for post-settlement medical is significant. It means that unless the settling parties proactively advise CMS of a non-approved MSA, CMS will continue to pay for injury-related care because it is unaware that an MSA was funded.

While the webinar answered some questions around CMS’s approach to non-submit MSAs, many remain. We believe CMS needs to significantly increase its guidance to Medicare beneficiaries surrounding their rights, responsibilities, and the risks they face when settling a claim with a non-submit MSA. At a minimum, CMS may not automatically acknowledge the non-submit MSA amount as the extent of liability for future medical. Consequently, the Medicare beneficiary may be placed in a position to defend the MSA amount and their spend from that amount at some point years in the future.

Other MSA Matters

• Submission of settlement documents:  CMS continues to identify cases where settlement occurred, and the settlement documents were not forwarded to CMS. These documents must be submitted to make the MSA effective in CMS’s system.
• Electronic attestation:   Mr. Jenkins indicated that MSA administrators are not submitting yearly and final attestations electronically even though this option is available. He encouraged its use.
• State statutes:  Advised that parties who wish to limit the MSA per the Georgia 400-week cap need to provide an order from the Georgia Workers’ Compensation Board confirming the claim as non-catastrophic. Also, if a California Independent Medical Review (IMR) confirms the denial of certain care, CMS will not exclude the denied care from the MSA without an “Alternative Treatment Plan” from the treating physician.
• Pricing of Prescription Drugs:  Addressed a question about whether CMS would consider another pricing mechanism for prescription drugs other than Red Book by saying that CMS is always open to a discussion on alternatives.
• Lack of updated medical treatment:  In situations where the claimant has not been treated in several years CMS will not assume that this is sufficient evidence to demonstrate that no further care is necessary. Instead, CMS will consider the worst-case scenario and assume that the claimant will return for care.
• Comorbidities that prevent surgery:  If a comorbidity, such as cardiac or respiratory problems, prevents a surgery from proceeding, CMS will assume that the person will improve and thus allocate the surgery in the MSA.
• Release from care statements:  If a treating physician releases a claimant from care this does not automatically create a presumption of no future care. CMS assumes that if a specialist releases the claimant from care that there may be follow-up with a primary care physician for ongoing maintenance unless otherwise indicated.
• MSA Amended Reviews:  Advised that parties who have a previously approved MSA that falls outside of the 72-month window for submitting an Amended Review can still fund that older approved MSA as it will be the only one on record with CMS.

If you have any questions, please contact Dan Anders, Chief Compliance Officer, at 888.331.4941 or daniel.anders@towermsa.com.