America’s Opioid Epidemic: How it Impacts Work Comp

CompEx MSA is proud to provide this primer series on America's opioid epidemic to help its colleagues and fellow community members be more aware of the problem and mindful of what they can do to avoid contributing to it in the future.


Part One: What it is and how it got started

The 'opioid epidemic' is at the top of every day's news cycle it seems, but many people are baffled about what it is and what it might mean for them and their community. In the workers’ compensation (WC) industry, the concern has more significant ramifications as people who have been injured on the job  continue to receive prescriptions for opioids as pain relief medication. The short- and long-term impact of those prescriptions can be extreme, from premature death to lingering addiction and trauma years after the injury fades into memory.


To avoid unnecessary grief due to the consequences of opioid addiction flowing from a WC claim, industry participants who are involved in MSA account establishment and management should understand how the epidemic got started, how it's being managed today, and what they can do to curtail its future growth.


What is an Opioid?

'Opioids' are medications prescribed to relieve pain. The word refers to any substance that has an impact on those parts of the brain that control pain, reward, and addictive behaviors. Opioids provide short-term relief for the cravings that originate in those brain sectors.


The word 'opioid' is a derivation of 'opium,' the addictive milk produced by the opium poppy. Drugs derived from an opium base are called 'opiates.' For centuries, people have harvested opiate milk for both medicinal and recreational use, and its source poppies are currently legally grown in India, Australia, and Turkey. Well-known street and prescription opiates include morphine (also sold as MS Contin and Kadian), heroin, and codeine.


Pharmaceutical science has replicated the impact of opiates on the brain using foundational sources that are not opium or opium-derived. However, these substances mimic an opiate's effect on the brain and cause the same response in the body as the opium-based substances. As a group, they are known as 'opioids,' and individually, they are known as hydrocodone (also sold as Vicodin and Hycondan); oxycodone (Oxycontin and Percoset), hydromorphone (Dilaudid), and fentanyl (Duragesic).


Note that while all opiates are also opioids, not all opioids are also opiates.


Why are Opioids so Popular?

Opioids generate a euphoric sense of well-being that supersedes any pain or anxiety the sufferer may be feeling. When used correctly, they provide temporary relief from many of life's struggles, including pain caused by on-the-job injuries. However, opioids also pose risks even if they are not abused. High doses of opioids can trigger a heart attack or respiratory arrest.


Challenges to opioids arise when people stay on them longer than is advised, become increasingly tolerant of them (thus requiring a higher dosage to achieve the same effect), or develop a full-blown addiction to the sensation generated by taking the drug. In many cases that result in overdoses and premature deaths, the patients have been taking some form of opioid (natural or synthetic) in too high of a dose for too long of a time.


How did the epidemic start?

Tragically, the epidemic is the consequence of a convergence of well-intended but misguided assertionsthat opioid-based pain medications were a reasonable response to undertreated pain and could be safely used to relieve pain throughout the course of treatment for disease or injury.


Throughout most of the 20th Century, treatment for pain from any source was non-existent or underutilized. In response, in the 1990's, many scientific experts queried why opioids were not used more for that purpose. At the time, opioids were limited to use in cancer cases where they provided successful relief for malignant cancer pain. Without sufficient research on whether non-malignant pain was appropriate for opioid treatment, many in the medical community presumed that the drug's success in the oncology field would be replicated in the general pain-management field as well.


Subsequently, as more healthcare agencies encouraged reducing pain as a standard aspect of medical care, more physicians were encouraged to adopt opioids as a preferred medication for pain management. Drug companies began developing long-lasting or delayed-release versions (OxyContin) to add 'value' to the opioid pain management protocol. Between 1997 and 2002, the number of OxyContin prescriptions rose from 670,000 to over six million. Since 2003, both the number of opioid prescriptions and the number of related premature deaths have quadrupled. More than 33,000 people died of an opioid overdose in 2015; more than two million more were diagnosed as addicted to the drugs, and the cost to address the epidemic was estimated to be over $78 billion per year.


Adding to the tragedy: as doctors reduced their opioid prescriptions and/or patients completed their pain treatment protocols, those who remained addicted to the opioid sought its effect from street drugs or illegally sourced prescription drugs. Often heroin was both cheaper and easier to access so those people who had become dependent on the prescription medication were able to transition onto a street version without too much difficulty. Now, the incidence of addiction among users of both prescription and non-prescription opioids is high and growing.


Workers’ Compensation Cases and Opioids

Next time, we'll look at how the opioid epidemic has impacted the worker compensation industry. Recent research indicates that, even in the face of these challenging statistics, more than two-thirds of currently approved MSAs that include medications also include opioids, and one in five of those include two different forms of the drug. When the costs to maintain that coverage (both human and economic) span years or even decades, the long-term impact on both the worker and the funders of those MSA accounts can be devastating.


Check in for that post in September.


Two Bills Favor MSA Appeals Restructure

If Congress passes one or both of two bills presently sitting in congressional committees, then parties to a workers’ compensation (WC) case may finally have a solution to a problem that has plagued that system since its inception. Each of the two proposed bills originates in the separate chambers, and both appear to share a common goal: to articulate for the first time a WC Medicare Set-Aside (MSA) appeal process that can be applied consistently in all jurisdictions to further the pursuit of justice in WC cases. For many in the MSA industry, just getting them into committee is a significant accomplishment.


The Right to Appeal

Although not a Constitutional mandate, both federal and state laws provide avenues for review of legal decisions to ensure their compliance with the law and the facts. Specifically, these "appeals" are defined as "a timely resort by an unsuccessful party in a lawsuit or administrative proceeding to an appropriate superior court empowered to review a final decision on the ground that it was based upon an erroneous application of law." Parties who file appeals are unsatisfied with the result of their case because it usually has a direct and negative impact on their property or person.


In some bodies of law, an appeal is automatic, and both federal and state laws grant the aggrieved party an absolute right to seek a second opinion about the outcome of their case. In criminal cases, the Constitution provides the appeal directive through both the Due Process and Equal Protection clauses. In civil cases, each state enacts laws that govern when a person or entity has a 'right' to appeal a legal decision, including a decision stemming from a WC case. While each state enacts its own set of WC laws, when Medicare is involved in the case, federal law supersedes state laws.


Addressing a Long-term Aggravation

Since the 1980's, when Congress passed the Medicare Secondary Payor Act(MSP), the Centers for Medicare and Medicaid Services (CMS) have been obligated to ensure that no public funding (Medicare or Medicaid funds) is used for health care costs that are rightfully the obligation of a primary payor or insurer. In workers’ compensation cases, the rule requires the primary payor (the insurer, employer or another entity) to cover all health care costs - both past and future - arising from a work-related injury. When settling those cases, plaintiffs can (but aren't required to) seek a review of their long-term healthcare cost proposal by submitting an MSA proposal to the CMS Workers' Compensation Review Contractor (WCRC). If the WCRC determines that the proposal doesn't adequately protect Medicare from future healthcare payment obligations, then it can reject the proposal. However, parties who wish to contest the rejection have no automatic right to appeal it.


Currently, there is no language within the MSA statutes that clarifies either the processes or bases required for filing or otherwise addressing an appeal of an MSA proposal denial. Without this language or guidance, both plaintiffs and insurers must pursue the case according to the minimal guidance contained in federal regulations or the law of their state. States do not have consistent laws regarding WCMSAs, so the result of an 'appeal-type' process in one state can be decidedly different than the result in another state, even when the facts and law of the two cases are markedly similar or almost identical. Parties to WC cases in all states have consistently vented their frustration caused by the lack of consistent management of a standard federal appeals process in the differing jurisdictions.


CMS-MSA  Procedures in Absence of a Right to Appeal

Currently, the federal rules governing resolution of WC cases that involve Medicare set-asides do not establish an automatic right to an appeal of a CMS decision, nor is there an established procedure to follow when an appeal is desired. Consequently, the responses to an appeal request by parties seeking a second opinion in a WCMSA case will differ based on the location of the case and the subjective opinion of the agency issuing the decision.


CMS does, however, offer avenues for review or re-reviewof the disputed decision that may or may not result in having the request for review granted, and which may or may not result in a better outcome of the case for the appellant:

  1. The disgruntled party can submit additional documentation demonstrating why their initial proposed value is more appropriate than that set by the agency. If the new evidence is accepted, then the case can safely settle with that value established. Sometimes, parties may settle the case using the original value even if CMS doesn’t accept it. In these cases, Medicare will withhold its contributions to the settlement until the primary payor’s contribution is exhausted and then deny the subsequent claim. The claimant can then follow the appeal process set out for denials.
  2. Other reasons for requesting a re-review include:
    1. Mathematical errors or other obvious mistakes contained within the CMS response; or
    2. Missing documentation that was left out of the original submission inadvertently.


Otherwise, CMS will accept requests for an ‘amended review’ when the following conditions are met:

When approved, re-reviewed amounts take effect on the date of the settlement.


Not surprisingly, many participants in the MSA sector are frustrated by the current CMS 'appeal procedures' because of their unwieldy nature and inconsistent application. Consequently, the industry as a whole has been pressuring Congress to change the current processes to make them fairer and more predictable for workers, their employers, and their insurers.


Two Bills May Fix the Problem

This summer, both the U.S. Senate and the U.S. House introduced separate but similar bills to fix the WCMSA appeals gap:


Senate Bill 3079

In mid-June, the Senate introduced Senate Bill 3079, designed after an earlier bill proposed in 2014 to accomplish the same goal. In addition to establishing a formal appeal process for MSA reviews, SB 3079 also seeks to "establish the adequacy and application" of the disparate state provisions and fee schedules for MSAs that now confound those proceedings across the country.


Among other provisions (see HB 619, below), the bill proposes a three-tiered approach to contest a disputed Determination for prospective appellants:


On its face, the Bill would establish a guaranteed option to request a reconsideration, whereas currently, that opportunity is only granted at the discretion of the agency. And the three tiers of review offer more opportunities for appellants to argue their case for reversal of perceived injustices.


House Bill 6619

In Mid-July, the House introduced House Bill 6619, which appears to echo much of the Senate version in terms of proposed solutions to current MSA problems:


Both bills are only beginning their trek through the legislative process and are now in front of committees, the Senate Finance Committee for SB 3079, and both the Energy and Commerce and Ways and Means committees for HB 6619. When or if they'll move forward is up to the Chairs of those respective committees. Consequently, when the MSA industry might gain critical structure around its settlement and appeals processes is also up to those Chairs, as well as the subsequent actions of both houses of the U.S. Congress. Despite potentially lengthy delays in getting either or both bills pushed through the process and into law, participants throughout the MSA industry are gratified that at least that process has begun and hope that, this time, it is successful.

Evolving CMS Controls on Opioid Prescriptions

Despite notable guidance available in other arenas, more than two thirds (69.4%) of California's submitted WCMSA proposals include extended funding for opioid medications. The statistic is startling considering that Medicare itself does not recommend using opioids for long-term use or chronic pain. The National Alliance of Medicare Set-Aside Professionals (NAMSAP) and the National Council of Self-Insurers (NCSI) have joined to review the situation and identify how the MSA industry can collectively address the nation's opioid crisis, and new opioid prescribing guidelines recently issued by CMS are designed to address the challenge, too.


Managing America's Opioid Crisis

Since 1999, the Centers for Medicare and Medicaid Services (CMS) have been tracking the growing opioid addiction crisis. Deaths caused by opioid overdoses have risen alarmingly in number, accounting for over 500,000 premature deaths between 2000 and 2014. Further, the number of prescription overdoses quadrupledin that timeframe, indicating that those using and abusing the drugs are frequently getting them from a legitimate healthcare professional and not a black-market street dealer.


From the CMS perspective, gaining control over the epidemic within the CMS beneficiary population has been challenging. CMS oversees the funding of healthcare servicesfor millions of Americans, including paying for the services of hundreds of thousands of healthcare professionals and their clinics, labs, and supporting facilities. CMS patients, including both Medicare and Medicaid beneficiaries, access CMS services through many portals, depending on their status and/or health condition. These various CMS systems have each grown independently of the others over time, so the rules governing one do not necessarily comport with the regulations of another. The resulting complicated matrix of directives, rules, and guidances makes it difficult to structure comprehensive regulations to govern any one issue (such as opioid management) that encompass and apply to all CMS departments. The opioid epidemic is now shining a light on how significant a challenge that complicated matrix poses to both CMS and its constituents.


NAMSAP and NCSI Highlight a Conflict

At its June 2018 annual conference, leadership for both entities presented data reflecting the apparent conflict in CMS documentation regarding opioid management. According to NAMSAP president Rita Wilson, the review policy for WCMSAs requires future, MSA-funded opioid prescriptions to match the dosage and frequency of orders posted within six to 12 months of the MSA submission date. However, Medicare Part D guidelines set out different directives, as do the evidence-based guidelines issued by the CDC. As the WCMSA guidelines stand now, the prescribers treating WCMSA beneficiaries are required to maintain opioid dosages and frequencies at unnecessarily high levels if they want their patient's WCMSA submission to pass the review process.


Opioid Management in Medicare Part D

In 2013, CMS issued a directive that shifted attention to the opioid concernto Part D sponsors. From that point in time, Part D sponsors were expected to identify and address opioid medication overutilization by implementing claims controls, signifying high-risk patient populations, and modifying case management practices to stem the flow of opioids into their patient base. The CMS then launched the "Overutilization Monitoring System" (OMS) so it could oversee compliance by those sponsors with the new directives. Although progress is slow, data reveals that opioid "overutilization" numbers are decreasing in the Medicare Part D population.


Notably, CMS is revising its Part D guidelines again in 2019 to continue improvements in that department. In April, CMS released its proposal for new guidelines(specifically directed at high-dose opioid prescriptions) to be included in its 2019 Medicare Advantage and Part D Rate Announcement and Call Letter. Those revisions include the expectation that all Part D sponsors will limit to seven days an opioid prescription for acute pain, and the expansion of the OMS to integrate it with the standards established by the 2016 Comprehensive Addiction and Recovery Act(CARA).


Opioid Management per the CDC

Also converse to the WCMSA policy is the CDC's guidance on opioid management, which balances the need for controlling chronic pain with the concurrent need to prevent opioid misuse disorder. Prescribers following the CDC recommendations will access opioid therapy only after other, less addictive therapies have been proven ineffective, and will start with a low dose, immediate-release opioid medication for a specified duration after discussing the challenge presented by opioid use to the patient. Further, physicians are encouraged to pursue regular reassessments over time to determine the continuing validity of the opioid as the preferred medication and to test for evidence of excessive opioid use. If or when they suspect an addiction has occurred despite their cautious use of the drug, the CDC also supports a referral for treatment of an opioid use disorder as early as possible. A subsequent survey indicated that almost 90 percent of surveyed doctors welcomed and would use the guidance.


California's Stats are Troubling - and Revealing

Despite the national awareness of the opioid problem and the various strategies in place to combat it, the California Workers Compensation Institute (CWCI) surveyreveals that it remains almost intractable, at least in that state's workers’ compensation cases. Released in October 2017 by the CWCI, the study paints a dismal picture of the future for more than two-thirds of the state's WCMSA beneficiaries. The group compared the statistics of WCMSA submissions in 2015 and 2016 with those of a closed control group consisting of similar cases with similar injuries. The data is disturbing:


Not surprisingly, two popular opioid brands, Norco and Vicodin, were prescribed in almost half the WCMSA cases (44 percent), and medication funding itself (for all medications) totaled almost half (47.6 percent) of all the included WCMSA submissions.


CMS is working hard to curb the opioid crisis within its Part D population, but the California survey indicates that its Workers’ Compensation sector is equally in need of that attention, if not more so. With the assistance of the CDC’s nuanced approach to the concern, CMS would do well to overhaul the WCMSA review rules to reduce or eliminate the egregious levels of opioids that continue to plague the WCMSA industry.

AZ SB 1100 – Speeding the Process of Settlement

Arizona has taken a step toward fully resolving the medical coverage uncertainties that linger when its workers suffer injuries on the job. While many workers’ compensation (WC) injuries resolve relatively quickly, others take longer to respond to treatment in both the acute and post-acute phases, resulting in an extended recovery period and higher healthcare costs over that term. However, the focus of those entities that cover the costs of care is usually on wrapping up both the healthcare payments and the WC case itself as quickly as possible to keep their costs down. Only by fully resolving both the WC and the medical cases can the insurer or employer close their books on the case with certainty.


In Arizona, however, before Fall 2017, WC insurers or self-paying employers were rarely able to fully close a WC claim because the law allowed injured workers to reopen their claim if they required additional medical care after the closure of the WC case. The rule applied even if there had been an otherwise full resolution to the other issues of the case (cause, liability, etc.). Consequently, many AZ insurers and employers were left on the hook for additional payments for WC medical services for months or years after the rest of the case resolved.


In April of this year, Arizona's governor signed into law Senate Bill 1100(SB 1100) which (finally) gives some relief to the state's beleaguered employers and WC insurers. The new law gives parties to an accepted WC case more authority to reach and agree to a final and full settlement of the case by permitting claimants to knowingly waive their rights to future claims and their rights to future changes to their claim. The new law does not apply to WC claims that have been denied.


AZ Senate Bill 1100 Resets Terms for WC Cases

In many ways, the reset of AZs WC laws simply allows the parties to settle all issues more quickly by ensuring that they all have a full understanding of the terms of the settlement and its consequences:



SB 1100 also allows the parties to attest to certain conditions which pertain to full disclosure and due process:




The new law also addresses the interests of other interested parties to the case:



All parties are required to attest to the fact that they made a diligent search to protect the interests of Medicare and Medicaid, as well as the Indian Health Service and the U.S. Department of Veterans Affairs (pursuant to AZ regulations).



The parties must attest that they took reasonable steps to identify and compensate any liens or outstanding bills for healthcare services related to the WC injury.


Maintaining Health After the WC Injury

The second aspect of the new law specifically addresses "Supportive Medical Maintenance Benefits," those supports necessary to maintain health after the claimant achieves "maximum medical improvement" (MMI). This is the section that carriers and employers are most excited about: it allows claimants to waive their right to future maintenance benefits by accepting a current financial award that represents that value. With this agreement in place, Arizona employers and WC carriers can resolve every aspect of the case and close it completely with no threat that it may be opened in the future.


However, the new opportunity also comes with documentary and due process requirements:


Ancillary Oversights

SB 1100 also recognizes the presence or absence of legal counsel in some WC cases and offers unrepresented claimants the opportunity to have their case heard by an administrative law judge (ALJ). The ALJ will review the settlement agreement to ensure the facts are accurate and that all parties have properly executed the appropriate attestations. The ALJ will also inquire into the claimant's understanding of their rights, their obligations under the agreement including using the settlement funds to make future payments for injury-related healthcare costs.


Resolving a workers’ compensation case requires a balancing of the interests of all parties. The new Arizona law gives Arizona WC claimants more control over the decisions made within their case while also respecting the need for employers and insurers to resolve and close cases as quickly and expeditiously as possible.


Nebraska Revises WCMSA Approval Process

The Mandatory Second Payer Act (MSP) prohibits the Centers for Medicare and Medicaid Services (CMS or Medicare) from making injury-related payments for Medicare beneficiaries if there's another carrier or provider with a primary obligation to do so. When working to settle an injury claim by a Medicare beneficiary, the parties to the case must take CMS's 'interests' in the case into account and establish a Medicare set-aside account (MSA) that covers current and future medical costs so CMS doesn't have to step in in the future on behalf of its insured.


Until recently, parties were strongly recommended to have their MSA proposals reviewed by CMS prior to settlement to ensure that the agreement does, indeed, protect CMS. A newly revised Nebraska statute, however, now gives parties the right to declare upon submission of the proposed deal to CMS that, by its included terms, it protects CMS. By doing so, these parties will avoid the scrutiny previously required by the preceding rule, as well as speed up the resolution process.


The question that arises from NE's action: how do parties to the case demonstrate conclusively that their agreement conforms to the MSP? While the new statute suggests that simply wording the document correctly should suffice, review of the CMS criteria for determining its ‘interests’ indicates that there is much to consider when asserting that an NE agreement meets the requirements of the federal statute.


Protecting CMS's Interests

Not all worker's compensation cases (WC) will require a submission; the federal agency has identified two instances (thresholds) of factsthat indicate that an submission is an appropriate element of case resolution:

Unless a case has one or the other of these circumstances, it will not trigger the need for submission of an MSA proposal for resolution. Those cases that do trigger the threshold, then, must provide information that the parties have taken the interest of CMS into account as they resolved the long-term funding issue. They must determine and assert that the long-term costs of treating the injury are covered so that CMS isn't required to provide additional healthcare funding for it in the future.


By its wording, the NE statute allows presumptive approval of MSA proposals that include:

When the proposal includes these terms, then the NE WC Court will ... "presume that the parties' agreement ... conforms to the compensation schedule and [is] for the best interests of the employee ... under all circumstances."


So, What, Exactly, ARE the Interests of CMS in the WCMSA Situation?

While the NE statute is silent, CMS itself outlines the criteria of the WC injury or illness that require consideration of its interests in an MSA proposal, and review of those elements both provides insights and raises concerns about future assertions of 'CMS consideration' in the MSA proposal:



One Statute Does Not Preclude the Other

A simple reading of the NE statute might suggest to some that parties to the WC case need no longer contemplate the full scope of CMS’s interests in a WCMSA case when crafting a proposal that will be presumptively approved. However, there is nothing in either state or federal law that asserts that complying with CMS’s ‘interest criteria’ is no longer necessary as a consequence of the passage of the Nebraska statute. Further, CMS and its recovery agencies are constantly on the lookout for cases where the federal carrier pays more than its share of an injured person’s healthcare costs and will pursue those costs as necessary. It is not known if NE’s revised law will invite more such CMS investigations in the future.


Consequently, as a suggested best practice in Nebraska, claimants and other WC case parties would be wise to generate a statement of facts that respond to the CMS Interests Criteria before submitting their proposal for approval. By doing so, they will have the evidence and documentation necessary to prove the appropriateness of their settlement valuation if and when CMS comes calling for that information.

Double Damages? Where's the Risk?

Federal law protects the funding used by Medicare to cover healthcare costs of injured beneficiaries. When another entity - a primary insurance or healthcare plan (the primary payor, or PP) - has a legal obligation to cover those costs, the Medicare Secondary Payor Act (MSP) authorizes Medicare to obtain reimbursement from that PP entity of any payments made by Medicare on behalf of Medicare members before that payor's involvement. Further, the MSP specifically allows Medicare to seek double its damages via a "private right of action" against a primary payor if it is compelled to sue for recovery of its conditional payments.


In recent years, several Medicare Advantage Plans (MAPs) have attempted to invoke the MSP private right of action to obtain double damages from primary plans that allegedly owe them reimbursement funds. Defendants, usually the PP entity and litigants in the underlying injury case, have pushed back, claiming that MAPs are not Medicare and that they don't have a comparable MSP right to a private right of action nor the right to double damages. The resulting confusion in the nation's Circuit Courts is causing heartburn for every MSP participant, as they try to sort out where their obligations and opportunities lie.


The MSP Private Cause of Action

The private cause of action and its double damages rule is vested in Medicare via the MSP statute, and it's used to discourage PPs from trying to avoid reimbursing the federal agency for payments it made on its member's behalf. Simply by making the reimbursement payment to the federal agency, the payor eliminates the risk of having to pay it twice (as well as the added costs of litigating the issue).


Confusion was wrought, however, when the MAPs organizations invoked the MSP private right of action and its companion double damages claim, while defendants declared them to be ineligible to do so because they are not Medicare. The challenges instigated a series of federal court fights to determine when, if ever, and under what circumstances a MAPs agency had the standing to invoke the MSP private right of action rule. So far, three federal circuit courts have weighed in on the issue, and other courts in both federal and state jurisdictions are watching to see how the concern ultimately rolls out.


The Big Challenge: Who Can Invoke the Private Cause of Action, the MAP? Only the MSP? Both?

At least in the 2nd, 3rd, and 11th Circuit Court districts, MAP entities can sue primary plans via the MSP rule for recovery of conditional payments and claim double damages in the process. In the most recent opinion, issued March 13, 2018, by the 2ndU.S. District Court of Connecticut in Aetna Life Ins. Co v. Guerrera, the Court concurred with the 3rd and 11th District Courts, each of which had previously held that a MAP has the same private right of action for recovery of conditional payments as Medicare proper, and therefore, it also can claim double damages under the law. The court rightfully distinguishes the main differencebetween Medicare, which is a representative of the United States, and MAPs, which are private companies. It then points to Title 42 of the Code of Federal Regulations § 422.108(f), which provides that a " ... [MAP] will exercise the same rights to recover from a primary plan, entity, or individual that the (Medicare) Secretary exercises under the MSP regulations . . . .” The Court also cited the findings of both the 3rd Circuit (Pennsylvania, In re Avandia Marketing, Sales Practices, &Products Liability Litigation (In re Avandia), 685 F.3d 353 (3d Cir. 2012)) and the 11th Circuit (Florida,Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229, 1238 (11th Cir. 2016), and affirmed that it, too, would follow their reasoning allowing the MAP to pursue the private cause of action and its double damages opportunity.


Still Not Settled

Even with these concurring decisions, the dissent in the Western Heritage case still gives one pause before assuming that the MAP's private cause of action right is now firmly established. In that dissenting opinion, Judge Gerald Tjoflatargued that the distinctions between a government agency and a private insurer should preclude the use of federal rules to protect the interests of private entities. Among other concerns, he argues:

There may yet be other justices out there that find these arguments compelling.


Further, cases coming out of the 5th and 6th Circuits continue to add depth to the 'MSP private cause of action' discussion:


It appears likely that both individual and corporate plaintiffs will continue to bring federal cases to test the scope of the MSP private right of action rule. By doing so, they are giving the court system more opportunities to clarify just when, when and by and against whom those claims can be made.


Until the issue is settled on all elements, best practices remain:

Accounting for MSA Drug Price Hikes

In almost all Workers’ Compensation (WC) cases, the Medicare Set-Aside account (MSA) includes a certain percentage of funding to cover the pharmaceutical expenses that are involved in many recovery protocols. MSAs related to more significant injuries such as loss of limbs or temporary or permanent disabilities often reserve the highest financial value specifically for drugs prescribed due to the injury. Recent statistics and trends in CMS practices and the healthcare community indicate that those drug costs are going to rise even higher than they already are and that CMS is anticipating those escalating costs when reviewing MSA submissions for approval.


Drugs as a Percentage of the MSA

Medications assist in the recovery of injuries by preventing infections, reducing pain, and improving functioning. For more than one-third of all WC-related MSA submissions (37%), drugs are a relatively small aspect of the overall amount established to provide recovery care, comprising ten percent or less of the entire fund. In those cases, hospital and doctor visits costs, as well as other interventions such as surgeries and specialized therapies, make up the bulk of recovery healthcare services.


In the remaining 63 percent of WCMSA cases, however, the role of pharmaceuticals in the healing process becomes increasingly more significant. A recent report by the National Council on Compensation Insurance reveals the data that explains the critical role that pharmaceuticals play in the recovery process of workplace injuries.


CMS Responds to Rising Need

Another fact revealed by the report is a widening gap between submitted MSA proposals and approved CMS settlements for prescription drug coverage.  Over the course of the NCCI study (2009-2015), the gap between submitted and approved values is relatively stable when it comes to Medicare Parts A and B (hospital and insurance costs, respectively), which reflects that those costs have remain relatively unchanged over those years.


However, when it comes to Medicare Part D, which covers prescription drugs, the gap between the "submitted" amount and the eventual approved amount is growing, with CMS asking claimants to increase their anticipated Part D values before signing off on the final settlement. The reason for the growing concern is probably two-fold:


Accounting for the Rising Cost of Medications

Across the whole healthcare spectrum, pharmaceutical costs are rising and becoming an ever-increasing share of overall healthcare costs:


Drug costs rise for two primary reasons:

In response to the escalation of price for brand-name prescriptions, many drug makers are now developing generic versions, offering consumers and their doctors more reasonably priced options.


CMS is apparently aware of this trend in prescription drug costs and is seeking increases in MSA medication values to ensure that the appropriate party absorbs that expense over the life of the MSA account. Participants in the WCMSA process will be wise to consider the long-term cost of prescription medications when developing the values to be included in those accounts.

CMS Offers Narrow Exception for State Laws

The Centers for Medicare and Medicaid Services (CMS) may be allowing an exception to the federal rule that asserts no state law will supersede its jurisdiction under any circumstances. An updated Reference Guide for Worker's Compensation Medicare Set-Aside Arrangements (WCMSA) version 2.6, suggests that CMS may be more willing than before to let state law influence the results of WC cases that involve CMS beneficiaries. If that's the case, then the remedies and damages available to injured CMS-eligible workers may differ depending on their state of residence.


CMS Guides WC Rules That Pertain to Medicare/Medicaid Recipients and Eligibles

Traditionally, federal law supersedes state law, so federal rules that impose obligations on citizens preempt state rules that may cover the same duties. However, as we referenced in our March 2017, blog post, in 2013, the state of Georgia passed a law that limited to 400 weeks (seven years, eight months) an employer's obligation to provide long-term healthcare coverage for injured workers in certain WC cases. According to federal law, the rules promulgated by CMS govern in cases where injured workers are also Medicare beneficiaries or eligibles. In those cases, if a worker suffers injuries that will require lifetime care, then the liable employer must ensure that the resulting Medicare Set Aside (MSA) account provides those resources for that lifetime. The Federal goal is to shield CMS from having to assume future healthcare payments that, by law, should be covered by another entity. On their faces, the CMS "lifetime coverage" rule would supersede Georgia's 400-weeks rule for injured workers who are also Medicare beneficiaries or eligibles.


However, language entered into the newest edition of the Reference Guide suggests otherwise. Released in 2017, the new guide and its revised language indicate that, when submitted with the originating case documents, CMS will review documentation that supports a finding that a state statute that permits limitations on treatment for WC injuries is applicable and enforceable. In these cases, the MSA would be tailored to comply with both the federal and state law.


New Language Signals Two Significant Changes

The new language does change WC claims cases in two significant respects, each of which could have a profound impact on all cases based on injured Medicare/Medicaid recipients/eligibles:


·      Shifting Filing Timing May Signal Shifting Processes

The guide shifts the timing of the argument (that state law is relevant and appropriate) from the review stage to the case initiation stage, giving insurers only one opportunity to present the concern. The timing change may indicate that CMS is adopting a more systematic approach to evaluating how states manage the damages aspect for their injured, CMS-related workers. However, even though the agency has previously accepted such documentation at the review stage, in practice, it has rarely determined that the state law would prevail. It remains to be seen if receiving the documentation at the beginning of the case will alter that traditional outcome.


·      Allowing State Law Influence

The new guide also appears to open a door that would allow state rules to influence WC cases that previously have been decided solely by federal law. The specific language requires entities seeking to limit their long-term exposure for injured worker damages to provide "findings from [a competent state court] that the WCMSA proposal does not meet the state's list of exemptions to the legislative mandate."


In layman's terms: if the MSA proposal limits benefits AND the case itself does not fall under a state-based exception to a rule mandating those benefits, then the limited MSA value may be authorized. So, for example, if a state law limits long-term coverage except under certain circumstances, and the case with the relevant MSA proposal doesn't have those circumstances, then the insurer can limit the duration (and amount) of medical coverage for those WC injuries suffered by Medicare recipients.


The wording appears to be an accommodation for Georgia's 400-week rule. That rule permits the limiting of medical coverage for WC injuries to 400 weeks, unless - (here's the exception) - those injuries are deemed "catastrophic." When read in conjunction with the new Guide language, Georgia, insurers must obtain a court's determination that proves that the WC injuries at issue are NOT catastrophic before they are allowed to limit medical benefits associated with the injuries to 400 weeks. For those entities that are submitting MSA's to CMS for review, new filings will need to include a documented determination by a Georgia court that this claimant's injuries are not catastrophic before CMS would approve the reduced MSA proposal.


So, at least in Georgia, the new Guide adds an extra step to the creation of an MSA proposal that seeks to limit the duration of WC coverage - proving that the injuries are not catastrophic. By Georgia law, "catastrophic" injuries include the loss or paralyzation of limbs or appendages; severe brain injuries; 3rd- or 4th-degree burns over more than 25% of the body; blindness, or "other injury ...  prevents the employee from performing their prior work ...." Note, also, that the Georgia law also offers the opportunity to rebut an assumption that an injury is catastrophic, which suggests there will be more litigation over this issue in that state in the future.


What this means for other states is unknown. States that have WC-claim-limiting language on their books may want to review it to determine how the new CMS language affects their WC activities moving forward. States that currently have no limiting legislation similar to Georgia's may now consider passing something to reduce in-state insurer exposure to potentially expensive WC claims.


The new Guide language and two new CMS  contractors are already changing the always-fluid CMS/MSA landscape. For help understanding how CMS changes will affect your MSA activities, give us a call today.

Will the New CRC Contractor Impact Your Business?

Since October 2015, the recovery of Medicare health care payments from both Group (GHP) and Non-Group Health Providers (NGHP) has been managed by CGI Federal. CGI is the first contractor for the Centers for Medicare and Medicaid Services (CMS) Commercial Repayment Center (CRC), which collects back from third-party entities provisional payments made by Medicare on behalf of its injured members. However, on February 9th, 2018, management of those recovery services transitions to Performant Financial Group. Entities currently involved in GHP and NGHP/Medicare member cases may want to rethink their MSA opportunities as the new contractor takes up the Medicare "recovery of funds" challenge.

CRC Seeks Refunds of Mistakenly-Made Payments

The purpose of the CRC is to identify and recover primary health care payments made on behalf of injured Medicare members when another entity carries the legal responsibility for those fees. Until 2015, CMS's Benefits Coordination & Recovery Center (BCRC) was responsible for tracking down and collecting these funds. That process became unwieldy, however, because that agency was tasked with collecting from not just third-party entities, but also from the beneficiaries themselves. Wisely, CMS elected to bifurcate the burden and transitioned off the third-party collections responsibility into the newly created CRC.

Since its inception, the CRC has been collecting mistaken payments from both GHP's, the injured member's employer's health care insurance provider, and NGHP's, other entities with the legal responsibility to cover these healthcare costs, including no-fault insurers, liability insurers, and entities that are self-insured.

Effect on Insurers

For many companies, the collection notice came as an unwelcome surprise. Many no-fault and liability cases had been open for years, sometimes decades, and the CRC was now demanding a refund of all Medicare provisional payments made in those cases. Companies scrambled to review their files for Medicare members and to set up systems to identify, respond to, and proactively work to resolve any and all affected open cases. Some companies had to reimburse thousands of dollars to the agency for claims paid years earlier.

MSA Cases Had an Easier Time

For worker's compensation cases, the number of repayment notices was significantly less than those issued in other Medicare-related cases. Since 2001, CMS has been a party to injury cases involving injured members and Worker's Compensation carriers. For both pre- and post-settlement purposes, legal representatives of the insureds and the insurers must consider Medicare's interest regarding future healthcare payments and include a Medicare Set Aside (MSA) agreement in the settlement when future health care coverage is required.  Consequently, worker’s compensation entities managing healthcare services through MSA's had no backlog of unreimbursed Medicare payments because they had budgeted for those costs as the case closed. In these cases, the services of the BCRC (and now the CRC) are unnecessary; Medicare's interest had been resolved before the case fully resolved.

Learning from the WC Example

The incoming CRC agent offers a heads-up opportunity for any entity dealing with Medicare members in any sort of injury case, regardless of whether it is based on a liability, no-fault, or self-insured claim. In 2017, CMS announced new set-aside procedures for NGHP's (Liability Insurance injury claims and No-Fault injury claims) that recommend establishing an MSA in the originating case. The new procedures may be enforceable as early as July 2018. Although that announcement indicated that the Worker’s Compensation Recovery Center (WCRC) would be reviewing the cases, it may eventually turn out that the new CRC contractor will assume those obligations. No matter who the overseer turns out to be, a best business practice mindset would suggest that entities that may be held accountable for future repayment of relevant Medicare healthcare costs should begin developing their MSA contacts and procedures sooner rather than later.

Certainly, looking at Performant's history and intentions, the new CRC contractor intends to pursue any entity that may owe reimbursement funds to CMS; in its announcement about the new contract, Performant noted its intent to staff the project with more than 250 employees dedicated to the Medicare cause. And the company has significant experience collecting funds for the government; it is also a Private Collection Agent (PCA) for the U.S. Treasury Department and a Recovery Audit Contractor for Regions 1 and 5. While Performant will not be the recovery agent for WC cases (that contract went to Capital Bridge LLC), the anticipated increase in MSA review volume suggests that it may assume some of those obligations in the future.

Launching the New CRC Contract

Two webinars hosted by CMS informed the Medicare healthcare community of the process by which the transition will occur:

Medicare Commercial Repayment Center – NGHP, P.O. Box 269003

Oklahoma City, OK 73216

Fax: (844) 315-7627 (new number)

Phone: (855) 798-2627 (maintained as the current CRC Call Center phone number)

8:00 AM – 8:00 PM ET

Looking Forward

The events of 2017 (new LMSA and NFMSA rules and two new contractors) will certainly trigger ancillary changes to MSA and CMS procedures in 2018. At CompExMSA, we will continue to seek out answers to your MSA questions and look forward to assisting both existing and new clients with their MSA practices, processes and needs.

Looking Ahead to 2018

On October 1, 2017, the Centers for Medicare and Medicaid Services (CMS) was scheduled to stop paying for health care services that should, instead, be covered by parties deemed responsible for those damages pursuant to liability and no-fault insurance cases. In early 2017, the agency had announced that Medicare-beneficiary claimants in both liability and no-fault legal cases should consider adding a Medicare Set Aside account term to their settlement negotiations, to ensure adequate protection for Medicare if/when those injuries require long-term care services. At the same time, CMS asserted that it would establish two new processes for Liability Medicare Set-Asides (LMSA's) and No-Fault Medicare Set-Asides (NFMSA's), each of which would trigger use of a new code - N723 for LMSA cases, and N724 for NFMSA's - when the agency rejects requests for payment due to the existence of the alternative payor funding. Now that the October 1 date has passed, what has changed, if anything, in the MSA administration world, as it relates to LMSA's and NFMSA's? Let's just say it's been a bumpy Autumn.

New Contractor; New Challenges

The addition of LMSA's and NFMSA's to the already busy CMS reimbursement system has been made more challenging by the September 1, 2017, entry into that system of a new Workers’ Compensation Review Contractor (WCRC), Capital Bridges, LLC. The contract title notwithstanding, the new administrative entity will be responsible for managing all of the LMSA and NFMSA cases, as well as the Workers’ Compensation cases already on its agenda.

Under optimal circumstances, a new contractor in such a complex field will face many challenges with which it may have little or no experience. In this case, unexpected events have delayed the commencement of the contract, which has delayed any forward movement on the LMSA and NFMSA front as well:


Prognosticating the Future

So, as Winter 2017 begins, we still don't know what CMS is going to do about the management of LMSA's or NFMSA's. It appears likely that the agency will include both liability and no-fault carriers as alternative payors and reject claims for which those entities have the obligation to pay for healthcare services. It also appears likely that the new WCRC will be the entity that that reviews proposed LMSA's and NFMSA's, although the processes to get the case in front of it aren't yet known. Not surprisingly, our clients are understandably nervous about what the incoming changes at CMS and in the MSA system will mean for them moving forward.

So, here at CompEx MSA, we have determined that our best practices and next steps will be to ensure that our clients continue to receive the best possible service for all their MSA needs. In addition to keeping our clients and customers informed about the ongoing drama at the CMS, we will also continue to evolve our practices to conform to industry changes:

CompEx MSA is Here to Help

As one of Florida's certified minority-owned businesses, CompEx MSA is proud of its reputation for providing high-quality MSA services to both state- and nationally-based customers. We value all our clients equally and are looking forward to serving their MSA needs in future workers’ compensation, liability, or no-fault cases, regardless of how CMS elects to move forward with those processes.