Just about every workers’ compensation (WC) payer has them — claims that remain unsettled due to high Medicare set-aside (MSA) allocation projections or an MSA counter-higher determination by the Centers for Medicare and Medicaid Services (CMS). In either instance, the result is the same: the workers’ comp payer is left holding the bag for continuing medical, indemnity, and administrative costs. It is no secret that the longer workers’ comp claims stay open, the greater the likelihood that they will increase in complexity and cost.
While MSA issues can certainly complicate settlement, workers’ comp payers have more opportunity than they may realize to reduce MSA allocation amounts and obtain CMS approval — opening new doors for settlement.
To help get those “old dog” claims back on track, follow these top MSA strategies:
Identify the main cost drivers and issues
The first step involves identifying the main cost drivers or issues at play in your stalled claims. Common examples include high prescription costs or recommendations for surgeries or other expensive treatments such as a Spinal Cord Stimulator (SCS). There may also be issues that need clarification regarding causation or relatedness of alleged injuries or conditions. Once these are identified, you can develop targeted strategies to help reduce costs and optimize your position in dealing with CMS.
Get prescriptions under control
Prescription drug costs are often the major MSA cost driver, and they can derail obtaining a reasonable MSA allocation if steps are not taken to rein in costs. Cost containment strategies to consider include having the treating physician prescribe (and dispense) the generic version of a drug, if available. There also may be an opportunity for weaning and tapering – and, if so, documenting that this is taking place (or has been accomplished).
Creating a “package of evidence” that validates the changed drug regimen is the best approach to obtain approval, because CMS does not accept general references to potential drug changes or weaning/tapering. Proof must be provided that the change has occurred. Further, this should be done before the MSA is submitted to CMS to avoid potential complications given CMS’s limited dispute process post-submission.
This process involves several steps:
1. Evaluate the current drug regimen via evidence-based guidelines and standard of care for appropriateness. Note that this is not based on cost but based on clinical appropriateness, both now and into the future.
2. If the current drug regimen is inappropriate in whole or in part, then every effort should be made to implement change with the prescriber(s). Based on jurisdictional options, this may include, but may not necessarily be limited to: pharmacy benefit manager (PBM) outreach; case manager outreach; telephonic peer-to-peer review’ dispute resolution (e.g. utilization review); and litigation.
3. If agreement is reached with the prescriber(s) that a change should be made, written agreement should be secured with specific terms as to what is not appropriate, what would be more appropriate, and how the change should be enacted. This documentation should not only include the agreement but the applicable references to the evidence-based medicine that establishes the clinical rationale.
4. In many cases of inappropriate polypharmacy regimens, a tapering process will be required to methodically and safely reduce/remove the inappropriate medications. This might require a referral to a functional restoration, substance use disorder or detoxification program that could take weeks to months to complete. The goal is to reduce/remove drugs while increasing resiliency and coping skills for the individual.
Importantly, CMS looks to see that the changes are actively occurring and generally requires at least six months experience with the different treatment regimen. This is where the “package of evidence” comes into play as proof that the inappropriate medications have been removed from the regimen and have remained discontinued.
Clean up the medical records
What is (and is not) referenced in the claimant’s treatment records can impact CMS’s evaluation and lead to increased MSA allocations. If the records reference outdated recommendations, efforts should be made to have the treating physician update the records in writing. Otherwise, CMS is likely to require that the MSA include these services. Classic examples include references to potential surgery or a spinal cord stimulator even though the treating physician no longer believes these are necessary. An outdated prescription listing could also result in CMS requiring allocations for medications that are no longer recommended or have been discontinued.
Use CMS’s Amended Review to reduce prior MSA approvals
In 2017, CMS introduced an Amended Review process that allows parties in certain unsettled cases to request approval of a lower MSA allocation based, in part, on new medical evidence or a change in the claimant’s treatment regimen occurring after the original MSA. Amended Review could breathe new life into efforts to settle claims that did not settle following a CMS counter-higher approval. Identifying cases ripe for Amended Review could help close out some claims that were torpedoed by a previously high CMS approval amount.
Ensure MSAs are limited to the employer’s responsibility under the workers’ comp claim
When evaluating your claims, keep in mind that the MSA should only include treatment for injuries and conditions for which the employer is responsible under the governing workers’ compensation law. CMS has indicated that it will recognize non-compensable medical services, provided that a copy of the applicable state law/statute is provided. Additionally, CMS’s WCMSA Reference Guide provides that CMS will honor state statutes addressing limits on the length or nature of future treatment. However, a court order must be provided demonstrating that the claim does not meet any exemptions under the state’s legislative mandate. See WCMSA Reference Guide (Version 3.2, Section 9.4.5).
Regarding court orders, CMS indicates that if a workers’ compensation judge approves a settlement after a hearing on the merits, then Medicare will generally accept the terms of the settlement, unless the settlement does not adequately protect Medicare’s interests. See WCMSA Reference Guide (Version 3.2, Section 4.1.4). Importantly, CMS requires the court order be issued “after a hearing on the merits.” On this point, for example, CMS will not accept a mere stipulation between the parties that liability is disputed or that a certain body part is not related to the claim. If a court order issued after a hearing on the merits of the case would be impactful to the MSA amount, parties should consider obtaining one and including it as part of the MSA submission.
While a complete examination into the degree to which CMS may (or may not) accept court orders or the applicable workers’ compensation law in a particular case is outside the scope of this article, the bigger point raised is that judicial orders or governing workers’ compensation law may potentially provide an opportunity to limit or reduce MSA allocations.
Consider alternatives to MSA submission
The above strategies and approaches all contemplated situations where the parties have elected to participate in CMS’s MSA review and approval process. Bear in mind that CMS’s review process is voluntary. There is a growing trend toward what is commonly referred to as “MSA non-submission.” In this situation, an MSA is included as part of the settlement but not submitted to CMS for review and approval. These allocations are typically based more strictly on evidence-based medicine principles that tend to yield lower MSA allocations. In certain situations, MSA non-submission may provide an alternative to get a stalled claim settled.
Consider these factors when deciding on MSA non-submission: the parties’ risk tolerance in not obtaining CMS approval; whether an evidence-based allocation would be a more accurate assessment of future medicals; and whether non-submission may potentially provide the parties a basis to dispute any CMS challenge through the formal administrative appeals process, as opposed to the more limited informal MSA dispute process CMS utilizes as part of its review program.
Take back control!
It is important for workers’ compensation payers to understand that they may have more power than they think to reduce MSA costs and revive settlement prospects. The key is developing targeted MSA strategies based on an understanding of CMS’s process, obtaining the supporting medical evidence and legal support that establishes the employer’s responsibility under the workers’ comp claim. Given the continuing expense and exposure of keeping older claims open, take another look at claims to potentially revive settlement. By obtaining reduced MSA allocations, payers can move claims out and reduce file counts. This could be done on a file by file basis, or part of a larger settlement initiative – with the above serving a starter blueprint to help reduce MSAs and optimize settlement.