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.

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: http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Re-review-Expansion.pdf.

Comments on the proposal, including those as to timeframe, thresholds and re-review criteria must be sent by March 31, 2014 to WCMSARereview@cms.hhs.gov. 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.

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.