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Selecting the Right MSP Compliance Service Provider

Posted on June 30, 2016 by Tower MSA Partners

Please take a moment to read Michael Stack’s article outlining qualities needed in selecting the right MSP compliance service provider.. Medicare Secondary Payer compliance is complicated and penalties can be high. There are a lot of components – Section 111 reporting, Conditional Payments, medical and pharmaceutical interventions, legal interventions, and Medicare Set Aside (MSA) preparation.

Typically these various activities are handled in silos, and time lags and errors can occur during the transfer to the next step. It’s easy to miss a data field or deadline.

In his article, Stack notes that:

“Effective MSP compliance includes a service provider that goes beyond the basics. These providers will offer services that allow members of the claim management team to focus on their job and provide information and resources to comply with Medicare regulations in workers’ compensation claims.”

Tower recognizes that Section 111, Conditional Payments, pre-MSA Triage, all interventions, and MSA preparation through CMS acceptance should occur in a continuous, unbroken process. That’s why we developed an all-inclusive MSP Automation Suite around compliance best practices. Our MSP Automation Suite drives the entire compliance process, automatically updates clients of each activity on the file, escalates medical and pharmacy issues, prompts for interventions and much more.

Claims close faster, quality and accuracy are assured and our clients enjoy smooth settlements. To learn more, contact us at info@TowerMSA.com or 888-331-4941.

 

Related posts on compliance:

Tower’s Medicare Secondary Payer (MSP) Compliance Countdown

The Year in MSP Compliance (2019)

How Do You Know Your MSP Compliance Data is Secure?

 

Opioids in the Life of the MSA… Coming Soon

Posted on June 10, 2016 by Rita Wilson

In a statement released on June 7, 2016, the National Alliance of Medicare Set-Aside Professionals (NAMSAP) announced the 2nd in a series of webinars focused on opioid drugs in the Medicare Set Aside.  The release can be found at NAMSAP Presents “Opioids in the Life of the MSA” Webinar on June 21

 Background

Since the creation of NAMSAP’s Evidence Based Medicine Committee in 2014, opioid use has been in the forefront of attention within NAMSAP.  As a member of NAMSAP’s Board of Directors, I have participated in our organization’s efforts to collaborate with experts on this critical issue, to educate our members as to what is happening when opioid involved MSAs are reviewed by CMS, and now to advocate to entities outside of workers’ compensation.

Our goal is to publicize the conflict between the WCMSA review process and  CMS’s own criteria for opioid addiction triggers, prior authorization requirements and mandatory weaning.   This release explains the rationale and basis for our request: NAMSAP has called for CMS to limit opioids in the MSA review;

The easy answer

Many say the answer to the inconsistencies in the WCMSA review process as it relates to opioids is to stop submitting the MSA to CMS.  “Why feed into a broken system?” is the question I’ve heard.  If opioids aren’t appropriate for life expectancy, if addiction is imminent, if weaning is appropriate, then include this in the MSA and just don’t submit.

I absolutely endorse CMS non-submission as an option.  Where I may differ from others is that I believe it should be decided based on the facts of the case as compared to the objective and subjective nature of CMS’s review and approval process.  Unfortunately, I fear a corporate non-submit strategy is a slippery slope down the path of massaging the MSA to ‘fit’ the needs of the moment.  That is not its intent of the MSA, nor will it be left unchallenged in the long term.

What if?

I believe the prevalence of opioids in workers’ compensation indicates something is broken, but the break is much further up the food chain.  Can and should CMS ‘fix’ a problem that we have allowed and enabled over the life of the claim?  Can an excise tax on opioids fix the problem?

What if we looked at things differently?

  • What if we identify the physicians who don’t write for opioids as first line treatment for pain?
  •  What if we know and use the physicians with a proven track record of getting patients back to work
  •  What if we implement triggers to identify initial onset and changes in opioid dosage and frequency?
  • What if an increase in Morphine Equivalent Dosage was measured and addressed immediately with the physician?
  •  What if we leverage PBM reports and tools to block opioids based  on corporate designated criteria, and then execute an action plan?
  •  What if we use jurisdictional options like UR, IMR, challenging treatment to force dispute resolution and state options to allow the carrier to control physician choice where these options exist?

What if?

Working both sides

Every company has its own strategies to address the opioid issue.  Our policy at Tower is to ask every ‘what if‘ question possible as we work with clients throughout the claim and settlement process.  Whatever the answer, whether it’s physician follow up to track weaning, a formal physician peer review to challenge inappropriate treatment, or negotiating a Conditional Payment Notice to dissociate unrelated treatment, our MSP Automation Suite drives and tracks every step in the process.  We push the claim to optimize outcomes and acknowledge when the MSA is ‘ready‘ to submit.

The result of the combined efforts of all stakeholders in workers’ compensation, according the WCRI report on opioids released on June 9, 2016 is that the industry has made positive strides to address opioid issues.  Now NAMSAP is challenging CMS to modify the WCMSA review criteria so that it more closely mirrors its own Part D approvals process.

I hope you will join the webinar as we look at the policy side of the opioid issue within the MSA and that you join our advocacy efforts.

 

CMS to ‘Consider’ Expanding Its Review Process to Include Liability MSAs

Posted on June 10, 2016 by Rita Wilson

compliance-regulations-guidelines

In a News Alert released Thursday, June 9, 2016, the Centers for Medicare and Medicaid Services (CMS) announced is considering expanding its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. CMS will provide future announcements of the proposal and expects to schedule town hall  meetings later this year.

The link to the alert can be found in the ‘What’s New’ section of the Medicare Coordination of Benefits and Recovery Overview page at CMS.gov.

https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Whats-New/Whats-New.html

Background

Signed in June, 1980,

42 U.S.C. §1395y(2)(A)) prohibits Medicare from making payment, except as provided in (B), for any item or service, to the extent that payment has been made, or can reasonably be expected to be made, under a workers’ compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no fault insurance.

42 U.S.C. §1395y(2)(B) – The Secretary may make payment under this title with respect to an item or service if a primary plan as described in Subparagraph (A) has not made or cannot reasonably be expected to make payment with respect to such item or service promptly. Any such payment shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection.

While statutory provisions included Liability cases, there were no LMSA guidelines .  As a result, actions taken to comply with the MSPA statutes in a Liability case ranged from extremely conservative to strategies that earned the LMSA environment its characterization as ‘The Wild West’.  Those who took the conservative route followed the CMS guidelines established for WCMSA.  Other strategies ranged from making the LMSA decisions based on the severity of the injury in a liability case to doing nothing.

CMS’s Review of LMSAs

With no established thresholds for CMS submission and review, those who took the conservative path followed WCMSA guidance and attempted to submit.  While certain of the CMS offices would review an LMSA, acceptance was random.  Eventually, with greater acceptance and use of the WCMSA portal, CMS began to reject LMSAs.  Submitters could make the effort to submit and obtain a letter of rejection.

While not a ‘safe harbor’, the attempt to submit was at least evidence of efforts to follow the guidelines.

CMS’s first attempt to address LMSAs

In June 2012, CMS began the process by releasing an Advanced Notice of Proposed Rulemaking (CMS-6047-ANPRM) to solicit public comment on how to implement an MSP process for liability settlements.  The ANPRM received many public comments.

On August 1, 2013, CMS sent the NPRM to the OMB for their approval.  The NPRM was never made public because the OMB did not approve it, and on 10/8/2014, this last attempt at  ‘guidance’ surrounding Liability MSAs faded into the sunset whenCMS withdrew the NPRM.   The reasons for the OMB’s rejection of the proposal were never made public.

Where are we now?

With the Liability TPOC mandatory reporting threshold of $1,000 beginning January 1, 2015 (and the voluntary threshold of $300), the BCRC now has access to more data on Liability claims than ever.  And with the announcement of the CRC (Commercial Repayment Center) in October, 2015, and its singular focus on payer recovery, the BCRC has greater resources to pursue recovery with Liability settlements.  With this combination of information and resources, it would follow that the absence of documented evidence to show that Medicare’s interests have been considered when settling a liability claim might lead to financial exposure for all stakeholders in the process…. the perfect time to introduce ‘guidance’ for the LMSA.

Tower will continue to monitor associated news on this topic and will actively participate in the TownHall Meetings regarding this topic.

National Alliance for Medicare Set-Aside Professionals (NAMSAP) Names Tower MSA CEO Rita Wilson To Board

Posted on January 28, 2016 by Tower MSA Partners

Elmhurst, IL, January 26, 2016: On Thursday, January 21, 2015, the Board of Directors of the National Alliance for Medicare Set-Aside Professionals elected the following officers for the 2016 year:

 

    • Vice President: Shawn Deane, JD, MEd, MSCC, CMSP – Assistant Vice President of Product Development of ISO Claims Partners

 

 

    • Secretary: Christine Melancon, RN, CCM, MSCC, CNLCP, CMSP – Vice President of Operations for EZ-MSA Services

 

“I am honored to have been selected by my fellow board members to represent them and our association as president,” said Patureau. “I look forward to working with our team of board members, committee chairs, management staff and all NAMSAP members to continue to strengthen our mission as the leading advocate for an efficient and effective Medicare Secondary Payer (MSP) compliance system. Following the steps of previous leaders and that of my predecessor Kim Wiswell, I am committed to promoting and growing our association, providing our members with the educational and networking opportunities they need for professional development as well as bolstering NAMSAP’s strategic goals”.

NAMSAP would like to thank Benjamin M. Basista, Esq., member of the Board of Directors since 2010 and most recently Vice President for his service to the organization. Basista is a shareholder with Dickie, McCamey & Chilcote, PC and Co-Chair of the firm’s Medicare Compliance Group, in which he concentrates his practice.

Immediate Past President Kimberly A. Wiswell, Director of Operations for MEDVAL, had this to say: “NAMSAP is a better organization thanks to Ben’s time, talent and expertise. Beyond his work on the legislative and bylaw side of the organization, Ben served as the liaison to the Membership Committee and was a consistent presence at all of our events providing his ideas, input, and enthusiasm. On behalf of the NAMSAP board we express our sincere appreciation for his service and wish him the very best in the future.”

In addition to electing officers, the NAMSAP board appointed Rita M. Wilson, CEO of Tower MSA Partners to the vacancy created by Basista’s departure. Ms. Wilson oversees all business development, sales, marketing and operational activities, IT systems development, and identifies new product offerings in support of MSP compliance. Within NAMSAP, she is Chair of the Communications Committee and a member of both the Data and Development Committee (DDC) and Evidence Based Medicine (EBM) Committee.

“Rita’s knowledge and experience in the industry as well as her commitment to NAMSAP make her an excellent addition to the overall team” said Patureau.

The National Alliance of Medicare Set-Aside Professionals (NAMSAP) is the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements. Through the voluntary efforts of our members, NAMSAP is a forum for the exchange of ideas and is a leading resource for information and news in this constantly evolving area of practice. The collective knowledge of our members and NAMSAP’s resources will provide attorneys, nurses, settlement planners, claims professionals, and others with the ingredients essential to their success.

Click here to download this press release.

National Alliance for Medicare Set-Aside Professionals (NAMSAP) Names Tower MSA CEO Rita Wilson To Board

Posted on January 28, 2016 by Tower MSA Partners

Elmhurst, IL, January 26, 2016: On Thursday, January 21, 2015, the Board of Directors of the National Alliance for Medicare Set-Aside Professionals elected the following officers for the 2016 year:

 

    • Vice President: Shawn Deane, JD, MEd, MSCC, CMSP – Assistant Vice President of Product Development of ISO Claims Partners

 

 

    • Secretary: Christine Melancon, RN, CCM, MSCC, CNLCP, CMSP – Vice President of Operations for EZ-MSA Services

 

“I am honored to have been selected by my fellow board members to represent them and our association as president,” said Patureau. “I look forward to working with our team of board members, committee chairs, management staff and all NAMSAP members to continue to strengthen our mission as the leading advocate for an efficient and effective Medicare Secondary Payer (MSP) compliance system. Following the steps of previous leaders and that of my predecessor Kim Wiswell, I am committed to promoting and growing our association, providing our members with the educational and networking opportunities they need for professional development as well as bolstering NAMSAP’s strategic goals”.

NAMSAP would like to thank Benjamin M. Basista, Esq., member of the Board of Directors since 2010 and most recently Vice President for his service to the organization. Basista is a shareholder with Dickie, McCamey & Chilcote, PC and Co-Chair of the firm’s Medicare Compliance Group, in which he concentrates his practice.

Immediate Past President Kimberly A. Wiswell, Director of Operations for MEDVAL, had this to say: “NAMSAP is a better organization thanks to Ben’s time, talent and expertise. Beyond his work on the legislative and bylaw side of the organization, Ben served as the liaison to the Membership Committee and was a consistent presence at all of our events providing his ideas, input, and enthusiasm. On behalf of the NAMSAP board we express our sincere appreciation for his service and wish him the very best in the future.”

In addition to electing officers, the NAMSAP board appointed Rita M. Wilson, CEO of Tower MSA Partners to the vacancy created by Basista’s departure. Ms. Wilson oversees all business development, sales, marketing and operational activities, IT systems development, and identifies new product offerings in support of MSP compliance. Within NAMSAP, she is Chair of the Communications Committee and a member of both the Data and Development Committee (DDC) and Evidence Based Medicine (EBM) Committee.

“Rita’s knowledge and experience in the industry as well as her commitment to NAMSAP make her an excellent addition to the overall team” said Patureau.

The National Alliance of Medicare Set-Aside Professionals (NAMSAP) is the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements. Through the voluntary efforts of our members, NAMSAP is a forum for the exchange of ideas and is a leading resource for information and news in this constantly evolving area of practice. The collective knowledge of our members and NAMSAP’s resources will provide attorneys, nurses, settlement planners, claims professionals, and others with the ingredients essential to their success.

Growing Press Surrounds Tower MSA’s Groundbreaking MSP Automation Suite

Posted on January 25, 2016 by Tower MSA Partners

An article today posted by Yahoo! Finance discusses the new MSP Automation Suite by Tower MSA. The article cited the groundbreaking and sophisticated technology developed by Tower MSA that drives the MSP process.

Describing the MSP Automation Suite:

“The sophisticated technology drives all the processes Tower has perfected to proactively manage Section 111 Mandatory Insurer Reporting, the recently implemented Conditional Payment Notice process, and to stage workers’ compensation claims for Medicare Set-Asides and closure.”

Our CEO Rita Wilson offered many insights about the new MSP Automation Suite:

“Essentially, it automates our best practices for Medicare Secondary Payer compliance, claims optimization and MSA preparation.”

“Our Pre-MSA Triage identifies barriers to settlement and recommends claim-specific interventions, like physician peer review and clinical oversight, to remove those barriers long before preparing an MSA.”

“Clients don’t need to manually diary activities or call to check on things.”

“The system shows exactly when a phone call was made, and follow-up is due.”

“Automation frees claims professionals to address issues that require a human touch.”

The article went on to say:

“The MSP Automation Suite can track a claim from Medicare beneficiary identification through final settlement. It records every claim activity performed by Tower or its network of practicing physicians and pharmacists and provides clients with 24/7, end-to-end visibility into claims. The system prompts for missing data, conditional payment searches, and medical/pharmaceutical interventions and sends electronic updates to clients at appropriate data points.”

If you would like to read the full article, it is available here on Yahoo! Finance.

Tower MSA Feaured On Yahoo! Finance

Posted on January 21, 2016 by Tower MSA Partners

An excellent article on Yahoo! Finance today features our Tower MSA Pre-MSA Triage Program.

Pre-MSA Triage
“Workers’ compensation payers using Tower MSA Partners’ Pre-MSA Triage have seen their Medicare Set-Aside allocations dramatically reduced.”

The article went on to say:

“Tower’s Pre-MSA Triage analyzes medical and pharmacy records, identifies unnecessary, inappropriate, cost-driving treatment and recommends interventions to improve patient and financial outcomes. The service ensures that MSAs include only accurate and appropriate medical and pharmaceutical allocations.”

The article also cited case studies:

“In another case, more than $210,000 of a $239,006 projected MSA was due to medication costs, including prescriptions no longer being filled. “We believed the medications were no longer necessary and should be discontinued,” Wilson said, “but without proper documentation and the correct MSA language, they would have been included in future treatment and costs.”

The full article on Yahoo! Finance is available here.

Pre-MSA Triage Works!

Posted on January 21, 2016 by Tower MSA Partners

pills and money

Inappropriate and/or unnecessary prescription drugs, along with recommended medical procedures that are recommended, but never performed, are all too common in workers’ compensation claims. Yet they are often overlooked when moving a claim to settlement. But a new tool is helping payers identify and address obstacles, saving millions of dollars in MSA and settlement costs. Several recent cases bear out the program’s success.

Tower MSA Partners developed this unique service to ensure MSAs include only accurate and appropriate medical and pharmaceutical treatment. The Pre-MSA Triage allows payers to stage claims for optimal outcomes by providing a snapshot of MSA exposure before the MSA. By following our recommended interventions, clients are achieving CMS approval of reduced MSAs, with reductions of more than 50% in many cases.

How it works

Tower analyzes 6 months of medical records to identify care and cost issues, including the projected MSA cost of a claim based on the current medical and pharmacy treatment regimen. The review also provides a snapshot view of the MSA exposure in a non-discoverable (not an MSA) format, and offers an overview of inappropriate, unnecessary treatment and cost drivers that may impact MSA and settlement. For example, the review may uncover denied injuries and/or body parts, recommended surgical procedures that were never pursued, spinal cord stimulators that were recommended but never evaluated, gaps in treatment dates, unrelated medications, and off-label drug usage.

We then recommend various interventions, such as physician peer review, clinical oversight and conditional payment searches/negotiations to effect improved outcomes and savings in the overall claim costs, frequently as much as 50 percent!

Example Case Study

Tower’s Pre-MSA Triage projected the MSA cost for a 46-year-old male at $1,300,000. More than $1,000,000 of the total projection was due to extended prescribing of both long and short acting opioids. Tower recommended a Physician Peer Review followed by direct dialogue with the treating physician. Agreement to wean was obtained in writing and Tower initiated its clinical nurse oversight service to track progress.

Through Tower’s MSP Automation Suite, developed and maintained internally, we were able to drive the weaning process with the physician through tracked monthly calls, and to guide the adjuster as to when discontinued medications should be blocked by the client’s PBM.

Upon finalization of the weaning process, Tower worked with defense to obtain the necessary written language from the treating physician to confirm discontinuation and remove past medications. The final MSA was submitted and approved by CMS for $210,641 – a savings of more than $1,000,000 from the original estimate!

Conclusion

The example provided here is one of many success stories we are seeing, and through our MSP Automation Suite, we’ve been able to manage the process from triage through final CMS submission and approval in a secure, digital environment. Whether handled internally by our team of nurses or through a formal intervention and peer dialogue by one of our physicians, our system drives every step in the process.

Many companies can identify problems, and some even make recommendations. At Tower, we believe the key to successful MSA outcomes is a proactive approach to identify, intervene and remain involved through closure.

CMS Announces Portal Functionality for Final Conditional Payment Process

Posted on January 21, 2016 by Tower MSA Partners

News

In its ‘What’s New’ section, CMS announced on November 9, 2015 that as part of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act), the MSPRP will be modified to include Final Conditional Payment (CP) process functionality by January 1, 2016. This new functionality will permit authorized MSPRP users to notify CMS that a recovery case is 120 days (or less) from an anticipated settlement and request that the recovery case be a part of the Final CP process.

When the Final CP process is requested, any disputes submitted through the MSPRP will be resolved within 11 business days of receipt of the dispute. Once all disputes have been resolved, and the case is within 3 days of settling, the beneficiary or their authorized representative will be able to request a Final Conditional Payment Amount on the MSPRP. Once calculated, this amount will remain the Final Conditional Payment Amount as long as:

The case is settled within 3 calendar days of requesting the Final Conditional Payment Amount, and
Settlement information is submitted through the MSPRP within 30 calendar days of requesting the Final Conditional Payment Amount.

How the NGHP recovery process works today

To understand the value of this announcement to simplify the final demand process, we need to revisit the recent changes in NGHP recovery and the new role of the Commercial Repayment Center (CRC).

Effective October 5, 2015, the CRC assumed responsibility for pursuing recovery directly from the applicable plan. Any recoveries initiated by the Benefits Coordination & Recovery Center (BCRC) prior to the October 2015 transition will continue to be the responsibility of the BCRC. The typical recovery case, where Medicare is pursuing recovery directly from the applicable plan, now involves the following steps:

1. Medicare is notified that the applicable plan has primary responsibility

Medicare may learn of other insurance through a Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 report or beneficiary self-report. If Medicare is notified that the applicable plan is primary to Medicare, Medicare records are updated with this information.

2. CRC searches Medicare records for claims paid by Medicare

The CRC begins identifying claims that Medicare has paid that are related to the case, based upon details about the type of incident, illness, or injury alleged. The claims search will include claims from the date of incident to the current date. If a termination date for Ongoing Responsibility for Medicals (ORM) has already been reported, the CRC will collect claims through and including the termination date.

3. CRC issues Conditional Payment Notice (CPN) to the applicable plan

The CPN provides conditional payment information. It advises the applicable plan that certain actions must be taken within 30 days of the date on the CPN or the CRC will automatically issue a demand letter. This notice includes a claims listing of all items and services that Medicare has paid that are related to the case. It also explains how to dispute any items and services that are not related to the case. A courtesy copy of the CPN is sent to the beneficiary and beneficiary’s attorney or other representative. The applicable plan’s recovery agent will also receive a copy of the CPN if the recovery agent’s information was submitted on the applicable plan’s MMSEA Section 111 report or the applicable plan has otherwise appointed a recovery agent by submitting a written authorization to the CRC.

Note: If a beneficiary or his or her attorney or other representative reports a no-fault insurance or workers’ compensation situation before the applicable plan submits a Section 111 report, the applicable plan will receive a Conditional Payment Letter (CPL). The CPL provides the same information as a CPN, but there is no specified response timeframe. When this occurs, the applicable plan is encouraged to respond to the CPL to notify the CRC if it does not have ORM and will not be reporting ORM through Section 111 reporting or if the applicable plan would like to dispute relatedness.

4. Applicable plan submits a dispute

The applicable plan has 30 days to challenge the claims included in the CPN. The applicable plan may contact the CRC or use the Medicare Secondary Payer Recovery Portal (MSPRP) to respond to the CPN.

5. CRC issues recovery demand letter advising plan of monies owed to Medicare

The demand letter advises the applicable plan of the amount of money owed to the Medicare program and requests reimbursement within 60 days of the date of the letter. A courtesy copy of the demand letter is sent to the applicable plan’s recovery agent, the beneficiary and the beneficiary’s attorney or other representative. The demand letter includes the following:

The beneficiary’s name and Medicare Health Insurance Claim Number (HICN);
Date of accident/incident;
A claims listing of all related claims paid by Medicare for which Medicare is seeking reimbursement from the applicable plan; and
The total demand amount (amount of money owed) and information on administrative appeal rights.
If the CRC agrees with disputes submitted timely, unrelated claims will be removed from the case before the demand letter is issued. Please note that the demand letter may include related claims that Medicare paid after the CPN was issued. Relatedness disputes on all claims included in the demand letter may be addressed by submitting an appeal.

6. Applicable plan submits an appeal

An applicable plan has 120 days from the date the applicable plan receives the demand letter to file an appeal. Receipt is presumed to be within 5 calendar days absent evidence to the contrary.

7. Applicable plan submits payment

If the CRC receives payment in full, it will issue a letter stating that the specified debt has been resolved. The letter will also note that new cases may be created if the applicable plan maintains ORM or the CRC receives information on additional items or services paid by Medicare during the period of ORM.

Facilitating timely and more accurate final demands

Because the CRC retains the right to create new cases as long as the applicable plan maintains ORM, timely notification of a final settlement is extremely critical to terminate the recovery efforts of the CRC. We applaud the addition of CP process functionality to the MSPRP as a segue to real time information and data exchange, and a more predictable outcome.

With more timely submissions and a published timeline for the final demand, this new extension of the SMART Act will facilitate better accuracy, a better path to closure and fewer last minute surprises…. all good things for those who represent the settlement interests workers’ compensation and liability carriers.

Closed Formularies Hold Promise for Workers’ Compensation Pharmacy Management

Posted on January 21, 2016 by Tower MSA Partners

pills and money

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

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

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

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

The specifics

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

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

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

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

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

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

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

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

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

How closed formularies impact claims and MSAs

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

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

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

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

For Media Inquires, Contact:

Helen King Patterson
813.690.4787
helen@kingknight.com

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