This MSPN Corporate Partner featured article is authored by
Monica Williams, RN, CCM, CRRN, LNC, MSCC, CMSP with Innovative Claims Strategies

Submit vs. Non-Submit

CMS recommends the submission of Workers Compensation Medicare Set Aside (WCMSA). The recommended requirement is to protect Medicare’s interest for future medical expenses related to injuries, illness, or disease. There are no statutory or regulatory provisions that require submission, thus it is a voluntary process. CMS has established WCMSA review thresholds policies and procedures that must be meet prior to submission. MSA providers are tasked with assisting the parties involved with the WCMSA Guidelines for legal submission. There are some states where submission is not necessary because ongoing responsibility for medicals remain open. On the other hand, there are states that require the state worker’s compensation board approval and submission to Medicare for approval.  Otherwise, the submission of a file is driven by the self-insured employer, carrier, or legal team. Some employer/carrier TPAs choose not to submit cases and instead will prepare the MSA to protect Medicare’s interest and move forward with the settlement.  The requirements for additional documents to support medical expenses on submitted files may slow and/or eliminate the settlement proceedings.  Especially in the older files where documents are no longer available and settlement is pending further development or involvement with legal team to address retrieval of medical records.

Amy Bilton, JD, MSCC, CMSP-F, a member of the MSPN Board of Directors, Past President and Worker’s Compensation and Trial attorney with Nylan Bambrick Kinzie & Lowry, provided the following legal analysis:

“From a legal perspective, CMS’ stated policy that non-submit MSAs are not acknowledged and will not serve as a cap for future medicals or “future conditional payments”, can be scary to clients. The Claimant/Medicare beneficiary in a workers’ compensation claim, for example, raises concerns about Medicare denying post-settlement medical bills up to the total amount of the settlement.  The employer self-insured employer or insurance carrier raises concerns about Medicare refusing to acknowledge the settlement and attempting to collect conditional payments, or worse, after the settlement. Settling parties generally want complete closure. Contingent liabilities and unknowns are difficult for clients to accept. 

With that noted, Medicare’s WCMSA policies often over-allocate for future medical expenses, meaning employers and carriers often overpay. Claimants may not be comfortable administering their WCMSA accounts.  Large WCMSAs often make it impossible to settle cases. 

From a legal perspective, a voluntary WCMSA submission program is preferred to one requiring submission. Voluntary submission programs allow parties act in ways that suit their individual clients’ risk tolerances, reflect true case facts, and eliminate unknowns and risk associated with trial. Court cases would grind to a halt if CMS submission became required and universal.  If CMS began to track and acknowledge good non-submission allocations and programs, however, the program could demonstrate a larger cost savings and track and punish “bad actors.”  I think this would be the best future for the MSP and for the economic viability of the Medicare program in general.”

Melissa Wright, Director of Marketing with Ametros, an industry leader in professional funds administration, provided an opinion from a settlement perspective:

“The industry is seeing more settling parties consider non-submission of MSAs that reach the review thresholds. While the practice has been in existence for some time, this trend is becoming increasingly popular.

Many organizations are building programs to implement non-submission MSAs with the strong recommendation or requirement that the injured party have their MSA funds professionally administered after settlement.

A professional administration company helps maximize the MSA through discounts achieved through medical networks for pharmacy, DME, and providers.  These savings lessen the chance of the non-submitted MSA ever running out of money and there being any potential for Medicare to get involved.  The administrator also handles all the required reporting to CMS for the MSA so that Medicare is informed of the use of the settlement funds; perhaps most importantly, the administrator provides an ongoing resource after the case has settled to assist the injured party with any issues that may arise in a complicated healthcare maze that also involves CMS.

Professional administration is an important component of settlement strategy because it provides an extra layer of protection for all parties to the settlement, especially if a non-submit strategy is pursued.”

In conclusion, CMS prefers professional administration of all MSA. Protecting all parties from future liabilities related to the exhaustion of medical benefits is vital. Working with allocators, attorneys, and settlement brokers helps to secure that Medicare’s interest will be protected regardless of submission or non-submission program.

If you would like to unsubscribe: @@unsubscribe_url@@

This MSPN Corporate Partner Article featured article is authored by
Shawn Deane, Esq., General Counsel, Ametros

Medicare Addresses Opioids in Professional Administration

In version 3.0 of the Workers’ Compensation Medicare Set Aside (WCMSA) Reference Guide, the Centers for Medicare & Medicaid Services (CMS) announced, for the first time, a specific use case where it highly recommended professional administration: “CMS highly recommends professional administration where an individual is taking controlled substances that CMS determines are ‘frequently abused drugs’ according to CMS’ Part D Drug Utilization Review (DUR) policy.” Sec. 17.1.

CMS has identified opioids and benzodiazepines as frequently abused drugs. These medications are common in Medicare Set Asides (MSAs) and it is critical that parties to a settlement take CMS’s guidance into consideration when deciding how the MSA will be administered. With these guidelines, CMS is placing a greater emphasis on an individual’s safety.

Moreover, “CMS expects that WCMSA funds be competently administered in accordance with all Medicare coverage guidelines, including but not limited to CMS’ Part D Drug Utilization Review (DUR) policy. All professional administration programs should institute Drug Management Programs (DMPs) for claimants at risk for abuse or misuse of frequently abused drugs.” Sec. 17.3.

The changes show CMS’s recognition of steps that need to be taken after settlement to ensure the safety of injured individuals and that professional administration is the way to accomplish this. These guidelines also highlight the health risks to the individual who may go against CMS’s recommendation and opt for self-administration. CMS is emphasizing with these new guidelines that individuals pursuing treatment with an MSA should benefit from the same levels of protection that a standard Medicare Part D recipient would receive. It’s important to note that none of these Part D safeguards prevent an individual from receiving the proper care they need, but they do add needed guardrails to ensure that they’re on a safe path.

Electronic Attestation Reporting Functionality Added

In October of 2019, CMS updated its Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) User Guide to allow for electronic submission of attestation information. Attestation reporting provides Medicare with critical information evidencing that the funds were properly expended on injury-related treatment otherwise covered by Medicare. It includes information such as:

Attestation reporting occurs annually and no later than 30 days after the anniversary of the settlement date. See Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements, Sec. 8. In addition to this, reporting must occur if the MSA temporarily depletes (in the case of an annuitized MSA) or permanently exhausts. Prior to electronic functionality, attestation information was either mailed or faxed to the Benefits Coordination & Recovery Center (BCRC). With electronic attestation:

…the WCMSAP now allows Self and Representative account users, and beneficiary self-administrators logging in via MyMedicare.gov to submit annual attestations online. In addition, there is a new account type of Professional Administrator. These users can submit account transactions via input file submissions and download response files online, allowing them to administer and keep detailed records for a WCMSA account…

There are many benefits to electronic attestation reporting. In sum, it allows for enhanced coordination of benefits, timely and accurate reporting, convenience, and better tracking and forecasting to CMS.

Professional Administration as a Settlement Tool

Consent to Release Language Changes

Beyond ensuring compliance and savings post-settlement, professional administration can also be utilized to overcome pre-settlement obstacles to claims resolution. CMS made changes to the Consent to Release (CTR) form, which is a required authorization form when submitting a WCMSA to CMS for review. “As of April 1, 2020, all consent-to-release notes must include language indicating that the beneficiary reviewed the submission package and understands the WCMSA intent, submission process, and associated administration. This section of the consent form must include at least the beneficiary’s initials to indicate their validation.”

Since there is inherent exposure in an individual attesting to understating “the associated administration” in the event they misspend or mismanage their MSA fund, professional administration can be implemented as a real solution to ensuring proper compliance with MSA funds. Individuals may be concerned attesting to understanding the complexities of MSA administration. Claimant’s attorneys may be fearful their clients do not clearly understand the requirements. Having professional administration alleviates these concerns and risks by taking the burden away from the individual.

Hold Harmless Language

In many settlements, insurance carriers / self-insureds include language requiring an individual to hold harmless and indemnify them in the event the individual mismanages or misspends MSA funds. However, there are certain jurisdictions, such as New York, which do not allow for this. Moreover, regardless of the jurisdiction, some judges will prohibit this type of language.

Professional administration ensures proper handling of the MSA and eliminates the potential that the claimant may mismanage the funds. Professional administration:

Professional administration is a more tangible, immediate solution (in addition to or in lieu of) hold-harmless and indemnification language.

Potential MSA Regulatory Changes

There is an current notice of a possible proposed rule which would amend existing Medicare Set Aside regulations. In particular, the abstract indicates that:

This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments.  Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments.  This proposed rule would also remove obsolete regulations.

Given that the onus may be placed upon an individual beneficiary, professional administration would provide security for the claimant and ensure post-settlement compliance obligations are taken. Regardless of what any potential regulations require, professional administration will ensure compliance, potential cost-savings, and peace of mind for settling parties.

The Future of Professional Administration

As seen by the compliance and regulatory updates that have been made over the past couple years, it is evident that professional administration is continuing to enhance and emphasize an injured individual’s safety after settlement, ensuring their best interest is always being protected. Best in class professional administrators continue to offer far beyond professional management of future medical funds, including care support services, benefit protection, and Durable Medical Equipment (DME) support after settlement.  Moving forward, professional administration should be recommended with settlements to ensure an injured individual has the resources they need to comply with Medicare guidelines and ease into life after settlement.

If you would like to unsubscribe: @@unsubscribe_url@@

This MSPN Corporate Partner Article featured article is authored by
Rasa Fumagalli, JD, MSCC, CMSP-F, Director of MSP Compliance, Synergy Settlements

Conditional Payment Confusion Wreaks Havoc in Settlement

The practice of law requires lawyers to represent their clients zealously and competently. The American Bar Association’s Model Rules for Professional Conduct state that “competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” When representing a Medicare beneficiary in a personal injury case, competent representation also requires a good understanding of the impact of the Medicare Secondary Payer Act on the settlement. It is also important that Medicare Secondary Payer Compliance service providers provide competent advice to their clients. The Osterbye v United States, 2020 U.S. Dist LEXIS 116591 (June 30, 2020) case highlights the havoc that conditional payment confusion may cause in a case.

In Osterbye, the United States District Court for the District of New Jersey was presented a Motion to Dismiss the Osterbye complaint based on the parties’ settlement agreement and a statute of limitations defense. The Court denied the motion and declined to dismiss Plaintiffs’ claims.

By way of background, the underlying claim involved a Medicare beneficiary, Ms. Osterbye, who was injured in a fire at her home on April 25, 2009. She filed suit claiming the fire was allegedly due to the negligence of a plumbing contractor who was insured by Selective Insurance. Medicare paid for Ms. Osterbye’s injury-related medical treatment. The parties eventually reached a settlement agreement for $740,000.00 for known damages. This figure included the sum of $13,562.90 based on Medicare’s interim conditional payment information. On April 29, 2013, Plaintiffs signed a Release giving up “all claims and rights” against the plumbing contractor. Plaintiffs also agreed not to “seek anything further, including any other payments.”

Although Plaintiffs reimbursed Medicare for the $13,562.90 in conditional payments, Medicare subsequently issued a final demand on June 4, 2013. The demand sought the additional amount of $118,071.28.  This amount had not been considered or addressed in the parties’ settlement agreement. Plaintiffs disputed the conditional payment demand through Medicare’s administrative appeal process. The Medicare Appeals Council dismissed Plaintiffs’ request for review on June 26, 2019. Plaintiffs subsequently filed this action against the United States, the Secretary of Health and Human Services, the U.S. Department of Health and Selective Insurance. The federal Defendants were later dismissed from the action.

Plaintiffs sought relief from the District Court arguing that Selective should have reimbursed Medicare for Ms. Osterbye’s medical expenses under the Medicare Secondary Payer Act (MSP). Plaintiffs also argued that Selective “negligently initiated and failed to disclose a separate conditional payment claim with Medicare.” Selective moved to dismiss the counts based on a six-year MSP statute of limitations defense. Selective also argued that Plaintiffs’ claims should be dismissed based on the terms of the settlement Release. The Court was not persuaded by the statute of limitations defense noting that Plaintiffs were required to exhaust the administrative remedies under the Medicare Act prior to filing suit. Since Plaintiffs were only able to seek judicial review after June 26, 2019, their filing of this suit on August 28, 2019 was timely. The negligence claim was allowed to stand with the MSP claim.

In regard to Selective’s argument that the executed Release barred Plaintiffs from pursuing any additional claims against Selective, the court noted Plaintiffs position that the Release was invalid based on the doctrine of mutual mistake. In New Jersey, “a compromise which is the result of a mutual mistake is not binding and consent to a settlement agreement is not considered freely given when it is obtained as the result of a mistake.” Wallace v. Summerhill Nursing Home, 380 N.J. Super. 507, 883 A.2d 384 (N.J. Super. Ct. App. Div. 2005). The Court  further quoted the Restatement (Second) of Contracts, stating “Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performance, the contract is voidable by the adversely affected party.”The District Court declined to dismiss Plaintiffs’ claims based on the terms of the Release finding that a factual inquiry into the basic assumptions of the parties at time of release would be appropriate.

This case illustrates the complications that may arise in settlements involving Medicare beneficiaries. Parties should be aware of the differences between Medicare’s interim conditional payment and final conditional payment information in order to avoid unexpected reimbursement demands. Interim conditional payment figures are subject to change once Medicare performs a final conditional payment sweep after settlement. The final conditional payment sweep will be triggered by the Section 111 Mandatory Insurer Reporting of the Total Payment Obligation to Claimant (TPOC) by the liability plan. Compliance with Section 111 mandatory reporting would never be a “negligent initiation of a separate conditional payment claim.” Furthermore, parties can secure final conditional payment figures through the proper use of the final conditional payment process that is available through the Medicare Secondary Payer Recovery portal. If the area of MSP compliance is outside of your area of expertise, you should be sure to seek assistance from experts.

If you would like to unsubscribe: @@unsubscribe_url@@