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 9.4.6.2 , “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.

Workers Compensation Review Center (WCRC) Changes Position on Development Letters

As a result of Gould & Lamb’s continued advocacy with CMS Central Office, WCRC, and Regional Offices, Workers’ Compensation Medicare Set Aside submitters will see a light at the end of the tunnel.  Based on direct conversations, we anticipate a turn-around in what has been an arduous approval process with repeated development requests that were neither germane nor reasonable.  The WCRC is starting to address the back log that has accumulated since November 2013, has restated their commitment to abide by state specific statutes, and to refrain from seeking unnecessary, and unrelated medical records as part of its review process.   The WCRC has expressed its commitment to expedite review of the backlog for all affected submitters.

Since the publication of CMS’ WCMSA Reference Guide in November 2013, there has been a marked increase in the number of development requests from the WCRC for medical records purportedly to enable the reviewers to accurately price future Medicare costs over a claimant’s life expectancy.  To submitters and other stakeholders, the WCMSA Reference Guide, originally intended to herald a new era of transparency and accountability, , resulted in the WCRC increasing the issuance of development letters seeking medical records dated within six months of the submission or the reopen date — whichever is was later.

No Federal Preemption

The WCRC justification for its expanded request for medical records and the authority on which it relied is the November 2013 WCMSA Reference Guide and its subsequent update.  The assumptions made by the WCRC were:

  • The MSP preempts the state WC law.
  • Even if the claimant treats outside the WC system and the carrier has no obligation to pay for the treatment Medicare is not primary.
  • Even if the claimant is no longer entitled to medical benefits by operation of law, Medicare is still not the primary payer and the employer/carrier should bear the associated costs.

Moreover, the WCRC has asserted that it is doing “an investigation” and is not limited only to the records for treatment of the WC injury but to the claimant’s family doctor medical records, if there are no current records from the WC provider.  This was a firm position until recently and accounted for countless delays in the determination process.  Through Gould & Lamb’s advocacy, we successfully established that CMS and the WCRC must give deference to state specific statutes because there is no federal preemption.   The MSP is a secondary payer law and where there is not otherwise a primary payer, Medicare is absolutely the primary payer.   We continue to advocate with CMS to adopt clear and unambiguous polices so that there is no confusion on the part of the WCRC –the Agency charged with following CMS policies and reviewing submitters Life Care/Future Treatment Plans.  We urge CMS and the WCRC to adopt policies that comport with the public policy of the MSP and the opinions of various U.S. Federal Courts that Medicare stands in the same shoes of the beneficiary and where the state does not require the carrier to pay, then Medicare has no right of recovery or subrogation under any theory of law.

We are pleased to see that the pace of approvals has picked up dramatically and the number of development requests has abated.   We are committed to continuing to work with the CMS, the WCRC, and the Regional Offices to ensure a fair and transparent review/approval process.

For more information or if you have questions, please contact your Gould & Lamb Regional Claims Consultant at 1.866.MSA.FILE (672.3453).

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 mirservice.support@gouldandlamb.com or 866-672-3453 ext. 1122.

Additional details on the bill can be found here.

After FDA Authorization, Lots of Pressure to Rescind Zohydro ER Approval

Nahla RizkallahIn October 2013, the U.S. Food and Drug Administration (FDA) went against the recommendation of its own advisory committee and approved Zohydro® ER. The FDA’s Anesthetic and Analgesic Drug Advisory Committee of independent experts voted 11 to 2 to recommend against approval of Zohydro® ER due to concern of the potential for abuse because the product does not include acetaminophen.

What is Zohydro® ER? It is a Schedule II controlled substance under the Controlled Substances Act. It is the first FDA-approved single-entity extended-release hydrocodone without acetaminophen. Zohydro® ER is FDA indicated for the management of pain severe enough to require around-the-clock opioid, long-term treatment and for which alternative options are inadequate. Zohydro® ER has black box warnings all of which can cause fatal overdose: addiction potential, life-threatening respiratory depression, accidental exposure, neonatal opioid withdrawal syndrome, and interaction with alcohol.

Since the FDA approval of Zohydro® ER, several members of congress protested by sending an open letter to Health and Human Services Secretary, Kathleen Sebelius. In addition, in November, attorneys general of 29 states and territories have sent a letter to the FDA asking that the agency consider reversal of Zohydro® ER. Most recently, a petition from more than 40 consumer organizations, health care agencies, addiction treatment providers, and community-based drug and alcohol prevention programs called upon the FDA to revoke its approval of Zohydro® ER. However, despite all the sharp criticism that the FDA has received, Zohydro® ER was launched on March 3rd, 2014.

So, why all the hype? Why so much attention and objection? This decision was surprising to many because as the country is in the midst of a prescription drug abuse crisis, the FDA failed to apply its current standard and goal of requiring abuse-deterrent technology for all opioids. Zohydro® ER does not have abuse-resistant technology. It can be dissolved or injected, and the opioid will get into a person’s system all at once.

Because of this and the greater risks with a new extended release opioid, Zohydro ER® is not recommended as a first line drug in the Official Disability Guidelines (ODG). It is classified as an ‘N’ by ODG which means it requires pre-authorization. It is likely that Zohydro ER® will be paid for by Medicare through a prior authorization process where documentation is provided to support that the patient has tried and failed several other alternative narcotics. Post-marketing studies on Zohydro® ER are being required by the FDA to evaluate the risk of misuse, abuse, addiction, overdose and death.

The average wholesale price (AWP) per capsule is as follows: 10mg is $6.59, 15mg is $7.03, 20mg is $7.24, 30mg is $7.46, 40mg is $7.67, and 50mg is $8.00. The FDA approved frequency for Zohydro® ER is every twelve hours.

Generally, Zohydro® ER is expected to drive up the cost of MSAs. However, as with all other forms of treatment and prescriptions, Gould & Lamb uses varied clinical tools, such as drug management reviews, to assist with mitigation of such costs.

CMS Issues Alert Regarding Threshold Amount

Russell S Whittle, VP Medicare Secondary Payer ComplianceOn February 18, 2014, CMS issued two Alerts regarding the threshold amount under which the Medicare Secondary Payer Recovery Contractor (MSPRC) would not pursue its right to recover unpaid conditional payments. In addition, CMS modified the Mandatory Insurer Reporting obligations for cases settling under $1000.

Section 202 of the Strengthening Medicare and Repaying Taxpayers (SMART) Act charged CMS with the duty to calculate and publish a single threshold amount for settlements, judgments and awards arising from liability insurance (including self-insurance) for physical based trauma incidents (excluding ingestion, implantation and exposure) no later than November 15 of each year. Cases meeting the threshold would not be subject to conditional payment recovery efforts by Medicare. The calculation was to be reviewed by the Comptroller of the United States before it was published.

Previously, CMS had established a $300 settlement threshold for reimbursement of conditional payments. The $300 reporting threshold and conditional payment reimbursement process began in August 2011.

For 2012, CMS determined that its average cost of collection per Non Group Health Plan case was approximately $335.  This figure was expected to be similar in 2013 and 2014. CMS then analyzed the settlement amount range closest to its $335 cost of collection, which was found to be cases more than $750 and equal to or less than $1000.

Accordingly, trauma-based settlements, judgments or awards totaling $1,000 or less are exempt from conditional payment reimbursement.

The second Alert of the same date clarified the first Alert regarding reporting under Section 111 of the Medicare, Medicaid and SCHIP Extension Act. Effective immediately, settlements, judgments and awards arising from liability insurance (including self-insurance) for physical based trauma incidents (excluding ingestion, implantation and exposure) are not reportable under the Mandatory Insurer Reporting scheme. The MSP User Guide will be amended to reflect the reporting threshold change when it is updated.

There are several questions raised by the Alert. Perhaps most important is whether CMS has altered its Mandatory Insurer Reporting system to incorporate the change in the requirements. At present, Mandatory Insurer Reporting requirements obligate Responsible Reporting Entities to report all settlements, judgments and awards arising from liability insurance (including self-insurance) for physical based trauma incidents in cases whose value exceeds $2000. As of January, 2015, the threshold was scheduled to drop from $2000 to $300.

Gould & Lamb expects that CMS will publish clarification of its Alerts along with technical guidance regarding the changes. Gould & Lamb will continue to monitor developments on these important issues and will apprise you of their practical implications on your Medicare compliance program.