CMS Amends the Workers Compensation Reference Guide

Russell S whittle, Esq VP MSP ComplianceOn May 29, 2014, the Centers for Medicare and Medicaid Services (CMS) amended the recently released Workers’ Compensation Reference Guide published in February 2014. The changes affect medical review, treating physician reports, pharmacy records and Merit Orders, among others.

Section 4.1.4, “Hearing on the Merits of a Case,” is particularly noteworthy. With the publishing of the February Guide, no language specifically addressed evidentiary orders from the finder of fact. Presumably, and based upon longstanding CMS and WCRC procedure, evidentiary orders were given deference regarding the nature and extent of future medical care and whether Medicare had been adequately protected. The omission of any guidance regarding how merits orders would be utilized in the review process may have suggested that those orders would not be subject to scrutiny. This notion was further bolstered by CMS’ recent discussions with many stakeholders regarding their newly expressed desire to consider state statutory requirements as critical to the future medical component of a claim despite a finding that could be contrary to Medicare’s interests.

Taken directly from the CMS website, the entire WCMSA Reference Guide can be found here, including the added sections.

4.1.4      Hearing on the Merits of a Case

When a state WC judge approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the dollar amount of the entire WC settlement. Medicare will also assert a recovery claim if appropriate.

  • If a court or other adjudicator of the merits (e.g., a state WC board or  commission) specifically designates funds to a portion of a settlement that is not related to medical services (e.g., lost wages), then Medicare will accept that designation.

On its face, the amended language allows the reviewing entity the exclusive power to determine whether Medicare’s interests were adequately protected despite an evidentiary finding to the contrary. Accordingly, even where state adjudicators determine that a Medicare Set Aside is appropriate and its rationale sound, the review contractor will be the final voice with respect to Medicare’s protection. An order on the merits, then, is not truly dispositive of a WC case until Medicare has agreed and accepted it.

The bulleted portion of the added language does clarify, however, that where a portion of a WC settlement is designated for non-medical damages, Medicare will accept the reasoning of the court. As a practical matter, if the majority of a settlement includes a large non-medical award, Medicare would be restricted from requiring that funds be placed in a Medicare Set Aside account exceeding the amount that the court determined as appropriate for the case.

For interested stakeholders, carriers, third party administrators, and litigants, the amendment raises some practical concerns. First, what will CMS consider a hearing on the merits? Presumably, the added language would exclude WC settlements that are not preceded by a true evidentiary hearing including presentation of witnesses, documents, and legal argument. Second, will the determination as to whether Medicare’s interests were adequately protected require review of the evidentiary proceedings leading to added time and expense for the submitting party?  Further, what does the language “Medicare will also assert a recovery claim if appropriate” mean? Does it signal a readiness for Medicare to actually proceed against parties that fail to consider its interests by setting funds aside for Medicare-covered expenses related to the accident? These questions will hopefully be addressed as parties utilize the new procedures and guidelines provided by the new Reference Guide.

Section 9.4.4, “Medical Review” establishes that, where multiple dates of injury are being settled, all body parts must be supported by medical records. Consistent with current policy, medical records for the previous two (2) years must be included in an MSA submissions package.

Section , “Pharmacy Guidelines and Conditions” was added to clarify the CMS position on drug weaning and tapering and also removed any reference to Drug Tables for physician dispensed medication. As to weaning and tapering, all evidence supporting a reduction in medication will be considered as well as any position taken by treating doctors as to medication usage. However, the added section requires that a statement by a treating physician regarding the reduction must be supported by actual evidence that a certain drug’s  usage has been, or will be, reduced. A statement unsupported by pharmacy records showing decreased frequency of use may be unacceptable to CMS.

Section 10.7, Section 35 also addresses medical records. Where a settlement addresses compensable (related) body parts and no treatment has been provided or received within two (2) years, all treating doctors must complete a statement that no treatment was received and that no treatment for the body part is necessary. It must also include the last date of treatment.

Finally, Section 10.8, Section 40 clarifies the need for Payment Histories. Submissions packages must contain an entire payment record for all conditions, including those that were denied. Explanations as to why a pay history does not exist may be acceptable in certain instances such as where no printable history exists because no payments were made and a reserve was never established on the claim.

Other additions were made to the guide, but those listed above are certain to impact the review and approval process. In all, it appears that CMS will begin to accept reasonable explanations for excluding unrelated body parts from an MSA and may be softening somewhat on the necessity of collecting medical records and pay histories where they do not exist or are outside the reach of the submitting party. However, evidence of weaning and tapering must be clear and current documentation must show that drug regimens have been altered in a meaningful way.

Gould & Lamb will work within the amended guidelines for review and submission and will incorporate the recent changes into its processes to ensure timely and accurate CMS and WCRC review and approval. Some of the additions may require changes to evidence gathering and presentation, including the physician certification provision where no treatment has been received. However, with the newly published amendments to the Reference Guide, we hope that the process itself will be more transparent resulting in more seamless solutions to Medicare compliance in workers’ compensation cases.

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About the Author: Russell S. Whittle, Esq., is the Vice President of MSP Compliance for Gould & Lamb, LLC. In his twenty plus years of practice prior to joining Gould & Lamb, LLC, Mr. Whittle practiced primarily in the area of insurance defense, representing the interests of large insurers and employers in both workers’ compensation and general automobile liability matters.

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.

House Passes Measure to Delay ICD-10 Transition

STOP THE PRESSES… Possible Delay in ICD-10 Transition

By voice vote on Thursday, March 27, the House approved another temporary (one-year) fix to prevent steep cuts in Medicare’s physician reimbursement scheduled to take effect March 31. It now moves to the Senate which is expected to take action within the next few days. The draft legislation does not address the problems with the Workers’ Compensation Medicare Set-Aside approval process. However, there is language that speaks to a possible delay in the ICD-9 to ICD-10 transition, which could impact the MMSEA Section 111 mandate for reporting ICD-10s.  Other key inclusions include a two year delay in the provision overturning two U.S. Supreme Court decisions that prevented state Medicaid agencies from recovering 100 percent of their medical payments from the proceeds of liability settlements involving Medicaid beneficiaries and at least a one-year delay Medicaid mandated that providers move from ICD-9 coding to much more complex ICD-10 coding which will have a significant impact on insurers data reporting and bill payment functions.

CMS Issued Alert

It was only on this past Tuesday, March 25, 2014, that the Centers for Medicare and Medicaid Services (CMS) published an Alert regarding ICD-10 Diagnosis Codes, which further tightens the list of acceptable codes for Mandatory Insurer Reporting (MIR) purposes.

ICD-10 codes beginning with the letter “Z” are related to factors influencing health status and contact with health services, and are considered invalid for MIR.  This includes all 19 Diagnosis Code fields as well as the Alleged Cause of Injury, Incident or Illness field.

MIR ICD-9 Codes for Free

The Alert also clarifies the use of ICD-10 codes beginning with the letters V, W, X and Y.  These codes are related to external causes of morbidity and mortality, and may only be populated in the Alleged Cause of Injury, Incident or Illness field, as long as they are not on the list of excluded codes in the NGHP User Guide.  Additionally, these V, W, X and Y codes are invalid for use in the 19 ICD-10 Diagnosis Code fields.

Gould and Lamb has applied the appropriate quality audits, alerts, and metrics to ensure our customers are compliant with the transition.  Should you have any questions regarding this or any other topic related to MIR, please contact your MMSEA Compliance Manager or our Reporting Services Department at or 866-672-3453 ext. 1122.

Additional details on the bill can be found here.

CMS Proposes Expansion of Workers Compensation MSA Re-Review Process

Russell S whittle, Esq VP MSP ComplianceOn February 11, 2014, the Centers for Medicare and Medicaid Services (CMS) published a proposed methodology for the re-review of Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs). The proposal can be viewed here:

Comments on the proposal, including those as to timeframe, thresholds and re-review criteria must be sent by March 31, 2014 to CMS will then publish implementation dates and instructions on the use of the new process on its website.

At present, re-reviews of WCMSAs have been limited. There existed no method by which to have CMS reconsider an MSA in a case that had not settled. Once the MSA had been reviewed, CMS would not consider revisiting the case even in instances where the parties had not effectuated a settlement. According to the proposal, CMS will now allow a “broader array” of instances where a re-review will be allowed. Additionally, CMS proposes that a re-review will be completed by the Workers’ Compensation Review Contractor (WCRC) within 30 business days of the re-review request. In order to avoid any suggestion that the WCRC would simply “rubber stamp” its initial determination, CMS proposes that the re-review will be completed by individuals not previously involved in the initial determination.

Re-review Criteria for WMSAs

The Proposal divides re-review criteria into two distinct categories. MSAs will be Re-Reviewed at any time where errors have been made by the WCRC and the submitter and in other situations depending on the contingencies of the case or the calculation of the Set-Aside itself. Those criteria as listed in the Proposal are:

  • Re-review requests can be submitted at any time to the WCRC for the following reasons:
  • A mathematical error was identified in the approved set-aside amount.
  • Original submission included case records for another beneficiary.
  • Re-review can be submitted to the WCRC when the original WCMSA was   approved within the last 180 days; the case has not settled; no prior re-review request has been submitted for this WCMSA; and, the re-review requests a change to the approved amount of 10% or $10,000 (whichever is more) for any of the following reasons:
  • Submitter disagrees with how the medical records were interpreted.
  • Medical records dated prior to the submission date were mistakenly omitted.
  • Items or services priced in the approved set-aside amount are no longer needed or there is a change in the beneficiary’s treatment plan.
  • A recommended drug should not be used as it may be harmful to the beneficiary.
  • Dispute of items priced for an unrelated body part.
  • Dispute of rated age used to calculate life expectancy.

Significantly, CMS has now recognized that the review process is, at times, contrary to state workers’ compensation laws particularly where a statutory provision exists limiting compensable medical care. Instances abound where the WCRC has not considered evidentiary orders or has failed to adhere to its own review policies. In those situations, the Proposal allows a re-review request to be elevated to the CMS Regional Office. No time frame was proposed for Regional Office review, however. Additionally, the placement and language in the Proposal appears to signal that disagreements based on these issues may be discretionary and will not be evaluated via the independent review process.  Court rulings and state statutes are vitally important in the WCMSA process and represent a significant opportunity for stakeholders to legitimately minimize the impact of a set-aside on a claim settlement.  As such, a discretionary review standard seems inconsistent with the desire to abide by state law dictates.

While the core issues cited by CMS are appropriate for triggering a re-review, the 180 day requirement and the 10% or $10,000 threshold may make the intended benefits to stakeholders impractical in Workers’ Compensation cases. The Workers’ Compensation system, by its very nature, is often fraught with delays.  While a 10% or $10,000 difference in a counter-higher determination may be insignificant in a large settlement, it may be meaningful in a relatively small settlement. On its face, the $10,000 threshold can be likened to the CMS practice of forgoing conditional payment recovery in case settling under $300 in the aggregate, which has limited impact on the resolution of claims. If it is assumed that the 10%- $10,000 threshold is a starting point for CMS, it is expected that comments to the proposal would challenge those numbers as meaningless, for the most part. Expanding the criteria for review to cases where a discrepancy in the approved amount exceeds the allocated amount by more than 10% or $10,000 could prove more reasonable.

The re-review process is the first step in a long awaited appeals-type process for workers’ compensation MSAs. While the review of cases that fall under the first category (mathematical errors or unrelated records submission) has been routinely allowed, the second category represents a departure and, perhaps, a philosophical change regarding future care allocation re-reviews and their relationship to workers’ compensation cases and laws. As noted, it is unclear based upon the Proposal itself what type of evidence and argument will be allowed in the re-review process or what kinds of medical documentation will be persuasive regarding issues such as ”harmful” prescription medications or unrelated body parts. It is also unclear whether re-review will be required as opposed to discretionary. Accordingly, the responses to the Proposal will be critical in shaping the parameters of the re-review process and in setting the appropriate thresholds for re-review. Depending on its final iteration, the Proposal can only be seen as a potential welcome change by practitioners, insurers and litigants seeking to satisfy their obligations to the Medicare Trust Fund and their clients. Gould & Lamb encourages comments and suggestions using the link above.

CMS Issues Updated Workers Compensation Medicare Set-Aside Arrangement Reference Guide

On November 6, 2013 CMS released version 2.0 of its previously published Workers Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide.

The changes consist primarily of additions discussed at the 4/11/2013 WCRC Town Hall presentation and its previously published redacted Operating Rules of 4/22/2010.  This attempt to be more transparent about the review methodology of WCMSAs is presented in summary here as Version 2.0 of the Guide which includes the following changes:

Clarified title and wording of situation in which a WCMSA is not necessary because Medicare’s interests are manifestly protected

  • Added § – Most Frequent Reasons for Development Requests
  • Added § 9.4.2 – WCRC Team Background and Resources Used
  • Added § 9.4.3 – WCRC Review Considerations
  • Added § 9.4.4 -  Medical Review
  • Added § 9.4.5 – Medical Review Guidelines
  • Added § 9.4.6 – Pharmacy
  • Added material from the Operating Rules, primarily in section 9.4, WCRC Review

The following procedures utilized by the WCRC appear to have the most significant impact on pricing protocols and adequately protecting Medicare’s interests.

Evidence Based Medicine

CMS has signaled that its reviewers use evidence-based rationale for their determinations, taking into account both published guidelines and current peer-reviewed medical literature. However, CMS states that these are guidelines, not rules. However, this declaration is often inconsistent with actual practice.  Appendix 4 is included in the Guide with a list of resources that the WCRC utilizes.
State Specific Guidelines

The updated guide states that the WCRC strives to comply with the laws of the state determined to be the appropriate state of venue.

Fee Schedule and Inpatient Admissions

CMS has now clarified its pricing for inpatient admissions. The Guide indicates that Hospital fee schedules are currently determined using the Diagnosis-Related Groups (DRG) payment for a Major Medical Center within the state, and that this fee is applied to all locations within the state.  However, CMS failed to provide information as to the specific Major Medical Center utilized for each state. CMS has also clarified that it uses the correct region of state fee schedule rather than its previous practice of using the highest fee schedule within the state.

Multiple Dates of Injury for Same Claimant or Different Body Parts

CMS has now clarified that although a single recognized MSA is preferred, individual body parts may be settled which may result in more than one WCMSA for an individual claimant.

Development Requests

The guide indicates that all medical records from all treating physicians for the last two years of treatment for the work-related injury are reviewed, even if the WC carrier has not paid for the treatment and even if the treatment was provided years ago and no current records exist.  The records may or may not be within the last two calendar years but are, nevertheless, needed to price a WCMSA.

Drug Tapering & Drug Weaning

CMS policy is to price drugs over a claimant’s life expectancy even though this may be contraindicated by evidence based medicine.  The Guide acknowledges that drug weaning commonly occurs with pain medications such as opioids, especially when claimants’ work injuries improve, the Guide also indicates that the WCRC takes all evidence of drug weaning into account.  However, CMS maintains, in most circumstances, that the WCRC cannot assume that the weaning process will be successful and holds that the latest weaned dosage is extrapolated over the life expectancy.

The WCRC’s methodology for the allocation of Part D prescription drugs is the most frequent contributor of counter-higher Medicare Set Aside determinations, as a life care planning approach to the allocation of prescriptions is not utilized.  Consideration for the appropriate use of long term medications, the pharmaceutical research- based prescribing recommendations with advancing age and pharmaceutical manufacturers guidelines are absent from the review methodology.

Medically Accepted Indications and Off-Label Use

The Guide makes it clear that the WCRC may include Part D pricing for drugs even when the use prescribed is different from the FDA approved labeling (off label). For a drug to be covered under the Part D Benefit, and thus included in a WCMSA, it must be used for a medically accepted indication. A medically accepted indication is any use for a covered outpatient drug which is approved by the FDA, or a use which is supported by one or more citations included or approved for inclusion in the recognized compendia.

Although stakeholders had no actual input into the CMS policies prior to the agency’s publication of the Guide, the publication has provided more transparency regarding CMS’ actual practices in the WCMSA process than ever before.  This guidance can serve to both explain the actual methodology supported by the WCRC and can be used to measure the WCMSA determination where CMS acceptance of the MSA submitted seems illusive.

While the protection of Medicare’s interests under the Medicare  Secondary Payer statute is clear, payers who, in good faith, “adequately consider” Medicare’s interests by utilizing  third party experts whom apply the principles of evidenced based medicine, life care planning and fee schedule price points based on state jurisdictional laws, many allocators still find themselves at odds with CMS determinations by virtue of the practice of  lifetime allocation of the  current prescription drug regimen for Medicare Part D prescription drugs and the excessive medical treatment frequencies and higher CPT codes for Medicare Part A and B that are inconsistent with evidence based guidelines and published data mining results.

While CMS has improved its transparency and turnaround time for the review of WCMSAs (which is commendable), additional steps to align the review methodology with the actual payment structures and utilization behaviors used to contain Medicare costs, inclusive of an appeals process, may restore the industry’s confidence in the review process and self correct the high degree of non-compliance and decline in CMS Submissions of WCMSAs that exists in the marketplace today.

11th Circuit Appellate Court Rules Government’s Lawsuit Untimely

Recently, the United States Court of Appeals for the Eleventh Circuit rendered its decision on United States v. Stricker et al., finding that under the applicable statutory provisions and federal regulations, the government’s action under the MSP Act accrued on October 29, 2003, when $275 million was transferred by the defendants to the plaintiffs’ lawyers. Since the government filed its lawsuit on December 1, 2009, even if the longer six-year limitations period applied, the government’s action was untimely.

For decades, from its chemical plant in Anniston, Alabama, the Monsanto Company and its predecessors—including Pharmacia Corporation and Solutia, Incorporated—allegedly produced polychlorinated biphenyls (“PCBs”), which are toxic pollutants linked to cancer and birth defects. In 1996, thousands of individuals sued Monsanto, Pharmacia, and Solutia (collectively “the PCB producers”) in state and federal courts in Alabama for injuries caused by PCBs.

Eventually, the parties reached a settlement whereby the PCB producers paid $300 million to the plaintiffs in return for their release of liability. More than six years after the PCB producers transferred $275 million to the PCB plaintiffs’ lawyers pursuant to the settlement, but before that money was distributed to the PCB plaintiffs, the government filed suit under the MSPA against the PCB producers, the PCB plaintiffs’ lawyers, and the insurance companies which furnished liability insurance to the PCB producers, seeking to recoup Medicare payments that it had made on behalf of 907 PCB plaintiffs.

The Federal Claims Collection Act provides that when an action is “founded upon a contract,” the government must sue within six years of the accrual of the cause of action. 28 U.S.C. § 2415(a). For actions “founded upon a tort,” the government must file suit within three years of accrual. 28 U.S.C. § 2415(b). As a result, the defendants moved to dismiss the government’s MSPA complaint, arguing that because the underlying cause of action related to a toxic tort claim, the three-

year statute of limitations under § 2415(b) applied to bar the government’s action as untimely. The defendants alternatively argued that, even if the six-year statute of limitations under § 2415(a) applied based upon the contract between the plaintiffs and their attorneys, the government’s action was still barred because the complaint was filed more than six years after the cause of action accrued. The district court agreed with both arguments and granted the motions to dismiss.

The events contemplated by the settlement agreement were as follows:

  • August 20, 2003: The parties agreed to a settlement.
  • August 26, 2003: The PCB producers transferred $75 million to the interest-bearing account.
  • September 9, 2003: The parties signed a written settlement agreement.
  • September 10, 2003: The state court approved the settlement agreement.
  • September 17, 2003: The PCB producers wired the additional $200 million to the interest-bearing account.
  • October 28, 2003: The PCB lawyers certified that 75% of the adult PCB plaintiffs had signed releases.
  • October 29, 2003: The PCB producers paid $275 million to the PCB plaintiffs’ lawyers.
  • December 2, 2003: The PCB plaintiffs’ lawyers certified that 97% of the PCB plaintiffs had signed releases.

On December 1, 2009, the government filed the lawsuit seeking reimbursement of conditional payments it had made.

The had government six years “after the right of action accrues” to bring an action “founded upon any contract express or implied in law or fact.” See § 2415(a). It had three years after the action accrued to bring an action “founded upon a tort.” See § 2415(b). The court found that it need not decide whether the government’s attempt to recoup Medicare payments under the MSPA after a toxic-tort settlement constituted an action founded upon a contract or an action founded upon a tort. Assuming that § 2415(a)’s six-year limitations period applies, the government’s action under the MSPA against the PCB producers, their insurers, and the PCB plaintiffs’ lawyers accrued on October 29, 2003, when the PCB producers transferred the $275 million from an interest-bearing account to the PCB plaintiffs’ lawyers. Because the government filed this lawsuit on December 1, 2009—six years, one month, and two days from when its action accrued—its lawsuit was untimely.

Interestingly, the court briefly mentioned that the recently signed legislation, (although not applicable in this case), clarifies the uncertainty concerning statute of limitations issues for MSPA reimbursement claims. The Strengthening Medicare and Repaying Taxpayers Act establishes a three-year statute of limitations for Medicare to file suit for recovery under the MSPA. See Pub. L. No. 112-242, § 205(a) (2013).

The case seems to answer many questions about the viability of conditional payment recovery actions by the federal government under the Medicare Secondary Payer Act. Medicare’s arguments are typically centered on the very broad language of the Act which, when considered alone, carries no limitations period on actions to recover funds paid by Medicare on behalf of injured Medicare beneficiaries. However, when coupled with The Federal Claims Collection Act, a cogent argument can be raised that the power of the federal government is not without limitations. As the court noted, actions accruing after the passage of the S.M.A.R.T. Act are subject to a three year limitations period. However, for all actions that ripened before the enactment of S.M.A.R.T., the arguments made by the defendants in the Stricker case have now been given deference by the Eleventh Circuit.