According to the latest Social Security Old Age, Survivors, Disability Insurance and Medicare and Medicaid Trustees Report, despite the most recent legislative reforms, Medicare is still in both short term and long term financial distress. As a result, the Centers for Medicare and Medicaid Services (CMS), the federal agency which oversees the day-to-day administration of the Medicare system, has stepped up its enforcement of the Medicare Secondary Payer (MSP) Act. Resulting from amendments to the Act in 2003 and 2007, parties settling no-fault, workers’ compensation and liability cases must consider Medicare’s interests. Consequently, in-house corporate counsel and outside defense counsel have had to learn MSP basics.

MSP Education is Essential

However, in order to appropriately represent the insured and insurer’s interests, it is no longer sufficient just to know the basics of the MSP Act. It is time that all in-house corporate and outside defense counsel become significantly aware of mandatory insurer reporting requirements, the conditional payment reimbursement process, and learn how to determine whether a Medicare Set-Aside is appropriate. In order to assist with this endeavor, Gould & Lamb, the country’s premiere and most trusted corporate MSP compliance partner, has put together a 2-day comprehensive program focusing on mandatory insurer reporting, resolution of conditional payments, and Medicare Set-Aside allocations, approval, and administration.

2-Day MSP Conference

The program will:

Introduce those in attendance to the purpose of the mandatory insurer reporting process and will also discuss in great detail Responsible Reporting Entities (RRE) requirements when submitting information on a quarterly basis to CMS. Gould & Lamb experts will share their knowledge and experience in assisting RREs to submit information electronically on liability insurance (including self-insurance), no-fault insurance, and workers’ compensation claims where the injured party is a Medicare beneficiary.

Offer in-depth analysis of Medicare conditional payments, payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Because primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, Gould & Lamb experts will share their years of expertise in dealing with Medicare’s direct right of action against all primary payers responsible for making such payments, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.

Explore the intricate details of Medicare Set Asides (MSA). From situations where claimant is a current Medicare beneficiary at   the time of settlement, to instances where the claimant is not yet a Medicare beneficiary, but can reasonably be expected to become Medicare-eligible within 30 months of the settlement, Gould & Lamb experts will discuss when and how Medicare expects its interests will be taken into account. The program will include specific presentations on how to arrive at a reasonable allowance for the future projected costs, and what may happen if such an allowance is not made in the form of an allocation or set-aside arrangement for future medicals.

Provide great insight on MSA administration and Special Needs Trusts (SNT) administration. Gould & Lamb experts will share their years of experience administering MSA accounts, making sure such funds are in fact only used to pay for claim related medical care, that Medicare would otherwise approve or cover, at the correct fee schedule. The program will also offer valuable information when dealing with Medicaid recipients, and the necessity for establishing and administering a SNT to protect claimant’s future Medicaid eligibility and thereby reduce insured and insurer’s potential liability exposure.

For more information on the Medicare Secondary Payer Educational Conference hosted by Gould & Lamb , visit the Event Homepage.

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About the Author: Rafael Gonzalez is Director of Medicare Compliance & Post-Settlement Administration. He brings over 20 years of experience in the Workers’ Compensation and Liability insurance industries with a specific focus on Medicare Compliance. Rafael has been responsible for all areas of Medicare Set Aside Allocations (MSAs) including the preparation of MSAs and their approval by the Center for Medicare & Medicaid Services.  At Gould & Lamb, Rafael’s duties include assisting clients with Medicare Compliance issues, specifically on Post-Settlement Administration and client education.

Post Settlement Administration of MSA

A MSA, created as part of the claims settlement, is designed to “reasonably consider Medicare’s future interest” as a Medicare Secondary Payer to workers’ compensation (WC) insurance (or other insurance) regarding a claimant’s post settlement injury-related medical expenses.  This is only part of ensuring a claimant’s Medicare benefits are protected.

The MSA industry has continued to expand, and the education of all involved has included the MSA creation and submission as well as the funding and administration of the funds.   Post settlement administration of MSA allocations is a very intricate part of the entire process and requires adherence to the Center for Medicare and Medicaid Services’ (CMS) rules and regulations, state and federal tax laws, and trust and fiduciary laws.

Pooling Assets Strategy

One strategy used by some throughout the industry is the ‘pooling of assets’ of various MSA accounts.  The sub-accounts are pooled into one account managed by professional money managers allowing for a higher rate of return than would be possible if funds were invested separately.  Overall, it appears to be a great scenario.  It is a benefit from an investment perspective and provides cost savings on the account management side.  This strategy has been used by banks and regulated trust companies for years.   In essence they are creating a “common trust fund”, which again, allows for more profitable investments with less risk.  And, unless the MSA Administrator is a bank, they are placing an enormous amount of risk upon themselves as well as the MSA accounts they manage.

SSI/Medicaid

There is another side to Special Needs Trusts involving means-tested public benefits, where income related benefits, SSI/Medicaid, may be involved.  These individuals are entitled to Medicare Part A and/or Part B and are eligible for some form of Medicaid benefits.  They have a limited income and if eligible, may receive assistance with their out-of-pocket medical expenses from their state Medicaid program.  For those who are eligible for full Medicaid coverage, the Medicaid program supplements their Medicare coverage by providing services that are available under their states Medicaid program. Services that are covered by both will be paid first by Medicare and the difference by Medicaid.  Therefore, in order for beneficiaries with “dual eligibility” to maintain their SSI/Medicaid benefits the MSA must be set up appropriately.

Pooling assets for purposes of investment or operational cost savings seems like an alluring option.   However, there are dangers of administrating MSA accounts in this fashion by non-banking professionals. Non-banking professionals are exposed to financial loss and claimants are exposed to potential loss of their Medicare benefits.

About the Author: Christie Britt, nee Luke, is the Vice President of Operations overseeing the extensive operations of Gould & Lamb.   She has vast knowledge of Medicare Set Asides and Post-Settlement Administration from an insurance claims perspective. Christie is MSCC certified and has her Green Belt Certification in Six Sigma.  She is also a member of the National Association of Medicare Set Aside Professionals (NAMSAP) and the Workers’ Compensation Claims Professionals (WCCP).

Gould & Lamb is a global leader of MSA/MSP Compliance Services in the country, serving domestic and international insurance companies, third-party administrators and self-insured entities.

When Is a Medicare Set Aside Required?

Recently, Gould and Lamb has seen an increase in requests for submission to the Centers for Medicare/Medicaid Services CMS of “zero allocations.” Essentially, the parties to a workers’ compensation case that is either completely contested or where a portion of the claim is disputed believe that evidence or argument can be presented that will result in Medicare’s future interests being quantified as having no value. CMS acknowledges that there are, indeed, circumstances where Medicare’s interests are not at issue and, therefore, the parties are not required to establish a Medicare set-side arrangement.  CMS also recognizes, however, that there are many situations wherein the parties believe that a workers’ compensation zero allocation is warranted, but in fact it is not.

Two Types of Workers’ Compensation Claim Settlements

Medicare has identified two types of settlements in workers’ compensation cases.

One - No future medical care is anticipated based upon the compensable injuries or accident. The second is presented where only the past medical exposure or treatment is the subject of the settlement. Medicare recognizes the second scenario as a “compromise” case. As Medicare is not exposed for future medical care or services and because medical care remains “open” the establishment of an MSA is not necessary. In its policy Memorandum dated April 22, 2003, CMS advised that in true compromise cases, a Medicare Set Aside MSA is not necessary when all of the following factors were present:

• The facts demonstrate that the injured individual is only being compensated for past medical expenses.
• There is no evidence that the individual is attempting to maximize the other aspects of the settlement to Medicare’s detriment, and
• The individual’s treating physicians conclude (in writing) that, to a reasonable degree of medical certainty, the individual will no longer require Medicare-covered treatment related to the workers’ compensation injury.

Clearly, even where medical benefits are not the subject of a claim settlement, the documentary evidence to be presented to Medicare can be extensive as all of the above elements must be satisfied.

Two - The future medical component of a case is resolved as a portion of the settlement fund but where there is evidence that Medicare’s interests are not at issue as no future medical care is reasonably anticipated. These “commutation cases” raise issues of fact and law that make the analysis by the submitter and the CMS reaction to that analysis, critical.

For commutation cases where evidence or legal arguments are utilized to demonstrate that Medicare’s interests are not at issue (and therefore that a CMS zero allocation is warranted) we normally see either an argument concerning the relatedness of treatment to the accident or a legal argument that questions the availability of medical benefits as a matter of law. Gould & Lamb has found that, in Medicare’s inquiry regarding the medical necessity of continued care is centered upon the reports and finding of the treating physician. The opinions of the treating provider will, in most instances, be considered persuasive to CMS. If the reports and physical findings show clearly that the condition or need for care is unrelated to the accident or its sequlae, a zero allocation may be approved. In contrast, if the opinions and findings to support the zero allocation are primarily based upon a records examination of an independent or court ordered evaluator, this evidence seems much less likely to provide the medical support needed for a zero finding by CMS.

Legal arguments regarding the availability of treatment in a commutation case in order to support a workers’ compensation zero allocation, many times, include the running of the statute of limitations, that the individual was not within the course and scope of employment at the time of the injury and/ or myriad other defenses. Medicare has consistently advised that they will respect an evidentiary order as binding on these types of issues. The order must be truly evidentiary, however. Gould and Lamb has seen CMS disregard transcripts of a settlement hearing because no evidence was presented other than the testimony of the parties as to their desire to settle. Certainly, the CMS desire for evidentiary orders seems inconsistent with the overriding desire of the parties to settle case without resorting to the judicial process. Nonetheless, CMS guidance is clear that only hearings where evidence was presented, argument made and an order entered will be considered persuasive support for a zero allocation.

Commutation Cases Require Submitter to Present Both Legal and Medical Analysis

Because the majority of requests for zero allocations are commutation case where both legal and causation arguments are made, the submitter must present both legal and medical analysis if the zero allocation is to be accepted by CMS. CMS has routinely approved zero allocations in commutation cases where a cogent, well supported argument is made which recognizes and incorporates the evidence and positions of the parties with regard to the overall compensability and necessity of the need for care. In the absence of an evidentiary finding, a zero allocation must, in effect, be presented as to leave little doubt regarding the legal and medical underpinnings of the failure to allocate future care dollars. When properly presented, zero allocations should include relevant medical evidence as well as an analysis of the applicable state statutory requirements and the particular factual scenario presented in the case. When including other evidentiary factors including interrogatories, depositions and medical findings, a persuasive document can be created which can significantly increase the probability that a zero allocation will be accepted by CMS and that the parties can proceed with settlement with confidence. Gould and Lamb prepares each zero allocation utilizing our team of legal, medical and claims professionals to maximize the potential of CMS approval of what is, in essence, a legal/medical argument whose form and content are crucial to successful resolution of a disputed claim.

In-house Team of Pharmacists Is Essential for Proper Projection of Part-D Costs in WCMSA

Two recent CMS policy memoranda have had a significant impact on the way Part-D costs are calculated in a Workers’ Compensation Medicare Set Aside (WCMSA) . The April 3, 2009, Centers for Medicare Medicaid Services  (CMS) policy memo dealing with the independent review of prescription medications in conjunction with the May 14, 2010 CMS procedure memorandum  concerning the exclusion of those identified as “off-label,” pharmacists are playing a bigger role in the WCMSA process and their importance to any MSA vendor is invaluable.

Pharmacy costs will continue to represent a large portion of a total MSA. Due to their high skill set and command of pharmacotherapy, pharmacists can identify therapeutic duplications, potential drug-drug interactions and contraindications that may result in other costs or expenses if continued without intervention.

Pharmacists Key in Identifying Off-label or Excluded Medications in WCMSA Allocation

Furthermore, some studies have shown that 85% of all prescription drugs may be written off-label and most come with some sort of risk when taken for long-term. Pharmacists are best able and most knowledgeable to identify medications that are appropriate for a claimants’ care and those that may be off-label and therefore excluded from a WCMSA allocation. Pharmacists have command of both drug language and literature retrieval, thereby ensuring that the most up-to-date information concerning prescription medications is reported and properly excluded from the WCMSA.

Pharmacists are highly trained and skilled healthcare professionals well versed in pharmacotherapy, drug information, and appropriateness of prescription medications through many years of didactic coursework and specialized training. Today, the profession of pharmacy is more than a “count, pour, lick, stick” operation of years past. Pharmacists are now an integral part of a healthcare team along with both doctors and nurses as the scope of clinical pharmacy has evolved. Pharmacist-Physician collaboration in a WCMSA to determine an appropriate long-term plan may be one way to contain costs ensuring a practical and beneficial medication regimen is established.

Pharmacists are the true “drug experts” and should work harmoniously and in concert with other members of your organization when preparing and possibly defending a WCMSA.

Pharmaceutical Team Essential in Workers’ Compensation Medicare Set Aside Allocation

If there is anything we can take away from the recent CMS policy memoranda is that having an in-house team of pharmacists are essential to the proper projection of Part-D costs. As prescription drug use will only continue in Worker Compensation Medicare Set Aside Allocation, utilizing a pharmacist may be one way to help contain costs while ensuring appropriate medical care for long-term is achieved.

Medicare Set Aside Allocation Capped at $150,000 

The Georgia Subsequent Injury Trust Fund (SITF) recently instituted a new policy pertaining to the settlement of workers’ compensation claims in cases requiring Medicare Set-Aside (MSA) trusts.

The SITF has now placed a cap on MSA allocation funds as part of a workers’ compensation structured settlement. If the annuity quote, including seed money, exceeds $150,000.00, the SITF will not reimburse any amount over $150,000.00 for the MSA allocation.

In fact, the SITF settlement manager suggests that in some cases the employer/insurer consider contributing the balance above the $150,000.00 threshold if the case is one that, based upon risk analysis, should be settled.  Otherwise, the SITF recommends considering bifurcating settlements, and settling the indemnity portion of the claim while reassessing the medical component of the claim at a later time.

Employer/Insurer Funding Overage Contrary to SITF Risk Mitigation Objective

Clearly, the suggestions of the settlement manager that the employer/insurer consider funding any overage runs contrary to the entire concept of the SITF itself which is designed to mitigate risk and exposure based upon a pre-existing injury that was not completely the responsibility of the subsequent employer/carrier. In crafting settlement policy in the face of the increasing uncertainty surrounding Centers for Medicare and Medicaid Services (CMS) and MSA approval, the settlement manger appears to defeat the purpose of the fund itself.

Based upon the SITF policy and the increasing instances of counter higher demands by CMS across the industry, it is not surprising to see MSA policy being shaped that discourages settlement of medical benefits and workers’ compensation cases in general. Whether an intended consequence of Medicare policy or not, insurers now clearly recognize that the current MSA review and approval process is a significant obstacle to both the delivery of benefits to injured workers and the ability to properly identify risk and exposure in any case.

I believe that similar policies will be offered in the coming months. However, there are alternatives to the CMS / Workers’ Compensation Review Contractor (WCRC) review and approval process that can be utilized in order to ensure both Medicare Compliance and receipt of needed settlement funds to injured workers. Please contact Gould & Lamb client services for any questions regarding MSA settlement strategies and products designed to accomplish these goals.