The MSA – A Nexus of Legal and Medical Interests

Just as no two car crashes are the same, neither are two Workers’ Compensation cases (WC), especially when the need for a Medicare Set Aside (MSA) account is a possibility. To ensure the protection of the interests of both the injured worker and the Centers for Medicare and Medicaid Services (CMS) throughout the WC claim process, CMS uses both medical and legal principles to confirm the values submitted in every MSA proposal. Companies submitting MSA proposals should be familiar with those principles to avoid unnecessary delays or other complications when working to resolve the case.

 

No Two Injured Workers are the Same

Lawyers will tell you that every legal case is unique. Even incidents with almost identical fact patterns will differ based on the individual circumstances of those specific occurrences. Doctors will tell you the same thing; patients with identical diagnoses will have different treatment plans and prognoses based on their biological circumstances. Consequently, when the Workers’ Compensation Review Contractor (WCRC) reviews an MSA proposal, they look at the individual and unique circumstances of both the legal and medical situations when deciding to accept, modify or reject it. Not surprisingly, those reviews are comprehensive and complex. WC claimants and parties to the WC case who understand and follow the WCRC's procedural review guidelines stand a better chance of obtaining a swift response and acceptance of their proposal so they can resolve the case and move on.

 

New Guide - Clearer Guidelines

CMS recently updated its Workers’ Compensation Medicare Set Aside Reference Guide (now version 3.2) to clarify the steps its WCRCs take when reviewing submitted MSA proposals. Any party seeking an MSA should follow these guidelines and use the same tools used by the WCRC to determine the values they include in their documents.

 

Legal Principles and Factors

The WC case incorporates both legal and medical factors. To resolve the issues in the legal proceeding, the parties work together to determine the exact cause of the injury, who (or what) was responsible for causing it, the nature and extent of the damage, and who will pay for the medical costs needed to help the injured worker recover from it.

 

The WCRC begins its review by ensuring all the legal requirements are met and appropriate:

  • CMS requires that all claimant information be included and accurate, including their status as a Medicare beneficiary or their eligibility for Medicare services within the appropriate timeframe. A signed consent document must also be submitted with the proposal.
  • It then looks for documentation asserting that the case's facts are clearly established and that there are no discrepancies or outstanding issues that might negatively impact their findings. Documentation included here would be the court filings and agreed-upon settlement documents that state how the injury occurred, who or what caused it, and an agreement by the appropriate party that they are responsible for the costs.
  • In addition to the legal documents indicating liability factors are the medical documents showing diagnosis and prognosis and records of payments made for care received to manage the injury. In most MSA cases, CMS covered initial costs of care services until the finalization of the legal determination. CMS is reimbursed for these payments, so the MSA proposal must include a complete payment history of all costs incurred related to that injury. Further, the costs summary must clarify whether payments made were for expenses, medical care, or indemnity.
  • Once the claimant's identity and eligibility are clear, and the documentation is complete, the WCRC then looks at the WC rules that exist within the jurisdiction where the injury occurred. Each of the fifty states uses its individual interpretation of WC laws, so the WCRC will structure its response to the proposal based on the rules that govern within the specific jurisdiction.

 

Medical Principles and Factors

The medical evaluation is more complicated than the legal review. Every claimant presents with individual characteristics, each of which can influence how they experience their injury, the choice of treatment they receive, and the nature and extent of their recovery period. To properly evaluate every claimant, the WCRC team uses a series of tools to ensure their review is as comprehensive to that individual as possible.

  • The team itself is populated by healthcare professionals, including doctors, nurses, and counselors. Many carry a variety of credentials and certifications that indicate their expertise in rehabilitation, life care strategies, and medical coding, as examples. Some are also lawyers and bring that dual perspective to the review.
  • Their medical evaluation tools are extensive and include the International Classification of Diseases (ICD)-9 and -10, and the practice guides for Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding Systems (HCPCS).
  • They also look to current research and industry best practice standards to understand the nature of the injury, the claimant's characteristics, and the medical intervention options that offer the best opportunity for a full recovery. These tools are comprehensive in their oversight of healthcare practices:
    • Milliman - This resource connects diagnoses with procedural codes and helps to identify the proper code for the particular medical procedure. It is also used as a resource to determine evidence-based medicine guidelines.
    • MediRegs - This resource provides pricing and payment guidelines while connecting the actual services to their corresponding CPT codes.
    • PubMed - This source is a portal to over 22 million biomedical and scientific citations and offers the opportunity to find researched evidence needed to prove the appropriateness of medical protocols.
    • MicroMedex/DrugDEX - Pharmaceuticals are usually included in the MSA treatment plan. This resource provides informative guidance on the Federal Drug Administration (FDA) indications for prescription drugs, including for their off-label use.
    • Stat!Ref - This tool is a secondary resource to the DrugDex, and also includes a medical dictionary, evidence-based medicine references, and information on clinical conditions.
    • Red Book - This resource indexes and compiles the Average Wholesale Prices for prescription drugs to use in MSA proposal calculations.
  • They are also well-versed in physiology, anatomy, pharmacology, clinical standards and practices, healthcare privacy regulations, and WC guidelines and pricing practices.

 

The MSA Proposal Review

After the relevant medical and legal elements are clarified, the WCRC then reviews them to determine whether the MSA values suggested are appropriate in this circumstance. This review also looks for other factors that might influence their final valuation estimate. Questions they might ask include:

  •  Whether the injured party suffered from pre-existing injuries that might affect the resolution of this injury. Recovering from a job-related knee injury might take longer if the knee was already compromised when the damage occurred.
  • Whether the claimant has other conditions (not caused by the injury) that might slow the recovery period or hamper the efficacy of the recommended medication or treatment protocols.
  • Clarification of the identities of the treating physicians. In many cases, the injuries require treatment by a series of professionals; CMS looks to ensure that the treatment plan was prepared and overseen by the treating provider.
  • Whether the pricing standards used in the proposal are appropriate for that region.

The WCRC team also reviews the details of treatment and therapy already received as an indicator of the level of treatment that may be needed in the future. This review includes not just doctor visits and lab tests but also pharmaceutical recommendations and allocations, specialist inputs, and any other factors that might influence the claimant's recovery period and the cost of future medical care. At any time in the review process, the team can send the proposal back, requesting more information or corrections for information previously submitted.

 

Getting to Approval

The WCRC team looks at all this documentation to determine whether the proposed future treatment costs - medical, pharmaceutical, and therapeutic - are acceptable, given the parameters and protocols required by CMS and MSA rules. When they conclude the review, they submit a recommendation to CMS about accepting the proposal and whether it protects Medicare's interests:

  •  If the team recommends a lump-sum MSA amount within 5% of the claimant's proposal, then that recommendation acts as an approval of the proposal.
  • In a structured resolution, if the recommended initial 'seed' money is within 5% of the proposer's initial deposit, then the recommendation acts as an approval of the proposal.
  • In those cases where the WCRC's recommended value differs by more than 5% from the proposal, then the team can reply with a counter-offer of a higher or lesser amount, with a detailed rationale as to why their number is more appropriate. This counter-offer allows all the parties, including CMS, to negotiate towards a case resolution that protects both the injured person and their future medical coverage and CMS.

 

Developing an MSA proposal requires attention to detail and extensive legal and medical knowledge. The revised Reference Guide provides a roadmap for MSA professionals to craft a comprehensive document that should move quickly through the CMS approval process.

 

 

 

Last month, we discussed how the lack of CMS guidance in liability cases leaves Medicare and Medicare-eligible people ('Beneficiaries') in the dark about paying for injuries and illnesses they've developed due to exposure to the coronavirus. Many companies count on those populations to make their living. Potential coronavirus exposures that occur in their place of business are now creating liability exposures if/when their clients and customers can tie those exposures to their time within those walls. Those company owners who want to both open their enterprise and reduce their risk of liability for inadvertent COVID-19 exposures should review their reopening processes carefully and build in as many "virus-avoidant best practices" as possible.

 

It's No Longer Business as Usual

It's hard to know where to start reopening a business that has been shuttered since the onset of the COVID-19 pandemic. Every company that routinely welcomes paying customers onto their premises must make accommodations to keep them safe from a potential coronavirus exposure. Employers are doubly taxed: they must provide as safe an environment as possible for their workers and their customers. Not only could an outbreak at their site create resonating workers’ compensation issues, but it also poses a risk of liability issues when it's a customer who falls seriously ill with the disease.

 

And those concerns layer over the challenges arising when trying to resume 'normal' operations:

  • Previous vendors and suppliers may not be available, requiring finding new ones or changing out products that are no longer feasible.
  • In many shops, 'social distancing' requires the reorganization of shelving units, dining tables, services bars, and even cash registers.
  • That reorganization often results in fewer 'productive square feet,' which will reduce revenues by a comparable amount.
  • In many jurisdictions, mask-wearing is the order of the day, so customers (should) know to do that. In those jurisdictions where no such mandate exists, business owners must also determine to what extent they want to impose the restriction and how they plan to enforce that new rule.

With so much to think about, it seems apparent that moving forward requires a well-thought-out strategy that balances every contingency, identifies and manages each risk, and maximizes as much as possible the profitability of each transaction.

Managing the Risks Inherent in Reopening During the COVID-19 Pandemic

Perhaps the biggest threat to the reopened company is the risk of inadvertently causing a COVID-19 outbreak. Company owners must manage two separate but similar concerns to ensure their enterprise isn't the next COVID-19 hot spot:

 

Protecting Workers

Some businesses have a higher risk of triggering an outbreak simply by their nature. Restaurants, hotels, gyms, and spas, to name just a few, must welcome the general public to stay in business. Their workers, therefore, are exposed to whatever contagions their customers carry. The close physical proximity and being indoors contribute to the spread of the virus among patrons and staff alike.

 

From a workers’ compensation point of view, the answer to one specific question arising from the situation has the potential to impact every employer in the country:

 

Is COVID-19 an 'Occupational Disease'?

Traditionally, the employer's workers' compensation (WC) insurance policy covers both injuries and 'occupational diseases,' when those arise within the 'course and scope' of the job. The coronavirus and its consequent disease, COVID-19, present a new wrinkle in the discussion about what constitutes 'course' and 'scope' of employment.

 

'Occupational diseases' typically develop when workers are exposed to toxic substances or materials inherently contained within production processes or employment practices. Firefighters and coal miners frequently develop occupationally-caused lung diseases related to the inhalation of toxic fumes and dust. Healthcare workers often contract the highly infectious conditions they find in their patients, such as tuberculosis or hepatitis.

The coronavirus is not an 'occupational disease' in the traditional sense because its contraction isn't limited to a specific occupation or job. Instead, because it spreads via airborne particles exhaled wherever an infected person might go, it can infect anyone in any position when there are insufficient protections in place to prevent that infection.

 

The hospitality industry is particularly vulnerable to triggering coronavirus outbreaks because of the frequency of customer turn-over. The more people there are entering the business, the higher the risk that one of them is an asymptomatic person carrying the virus, who, thereafter, unknowingly infects a staff person. Because hospitality workers must - by the nature of their work - interact with potentially infected customers, they can argue that their subsequent infection was, indeed, contracted within the 'course and scope' of their job. Their healthcare costs should be born by their employers WC insurer. The argument tries to move the job-related COVID-19 infection into that class of employment-related 'occupational diseases' that enjoy a "presumption of compensability:" if you contract the virus from a presumed work-based source, then your related healthcare costs are expected to be covered by the WC insurer.

 

Not surprisingly, there is a lot of push back against the 'presumption of compensability' that limits the employer's opportunity to point out the worker's other possible transmission points (family members, i.e.) and thereby deflect the burden of added COVID-19-related WC premiums.

  • Data retrieved from its 38 states by the National Council on Compensation Insurance (NCCI) notes that the cost of increased WC premiums driven by COVID-19 infections could rise to as much as $81 billion a year. New York states' estimate (not included in the NCCI study) sets that cost at $31 billion just within its borders, which represents an increase of over 350% over its 'typical' annual WC bill.
  • Others argue that coverage for COVID-19 isn't contemplated in the 'Grand Bargain' that established the concept of 'workers’ compensation' in the first place. Because a COVID-19 infection doesn't arise from any specific job but instead floats into the workplace arbitrarily on the breath of a customer, client, or some other party, it shouldn't be considered eligible for coverage by WC insurance.

Also, not surprisingly: those arguments and more are now the focus of discussion for more than one state government and WC insurer.

 

Protecting Customers

We noted last month our belief that COVID-19 cases will trigger thousands of liability lawsuits, as infected sufferers look for ways to obtain and cover the cost of the healthcare services they need. For sufferers who are also 'Beneficiaries,' those lawsuits will take on added significance. This population is at risk for worse infections with more severe symptoms and often take longer to recover. Further, because they often also have underlying health conditions that complicate their COVID-19 case, they are also more likely to suffer permanent damage and injury. In those cases, they will need COVID-19-related healthcare services for the rest of their lives. Lawsuits filed by members of this population will provide the necessary evidence to ensure that CMS doesn't bear the brunt of those added COVID-19-related expenses in its future healthcare payments. By bringing the suit, Beneficiaries will have access to a separate healthcare fund without imperiling their future Medicare healthcare coverage.

 

Sensible Precautions for All Populations

Fortunately, implementing safeguards and precautions to prevent business-based coronavirus infections protect all populations as much as is possible, considering what is currently known about how the virus spreads. Today's best business practice is implementing a virus-protection plan to avoid getting hit with unnecessary WC or liability claims for COVID-19 infections.

 

There are two fundamentals to consider when developing your plan: how to make the physical plant safe, and how to modify business practices to keep workers and customers safe.

 

Steps to Safeguard Your Workplace

A walk through the place of business and a review of current practices will each reveal vulnerabilities that might cause a virus exposure. Manage whatever threats exist, then change your policies to prevent those risks from emerging again.

  • Studies indicate that social distancing prevents transmissions, so move tables, desks, chairs, seating areas, etc., to sit at least six feet apart.
  • Studies also indicate that masks work by providing a barrier between an infected person and their uninfected neighbor. If you don't have a mask policy in place, develop one that includes both staff and customers, and enforce it rigorously. One or two lost customers aren't worth the costs incurred by triggering a virus outbreak.
  • Sanitation matters more now than ever.
    • Ensure that cleaning supplies kill viruses; not all do, despite their claims to the contrary.
    • Develop company-wide protocols for sanitation management throughout the business day and then monitor those activities every day.
  • Implement a tracking system for both employees and customers, so you know who's been inside your company doors. Tracking slows the spread of the virus by notifying those who may have been exposed and allowing them to isolate themselves so they don't pass it on.
  • Develop a Virus Response Plan that details how your enterprise will react when it discovers a possible virus exposure. It will guide your workers as they work to reduce the likelihood of further infection. At the least, it should detail:
    • How to determine when and where the exposure occurred so practices can be changed to avoid the circumstance in the future;
    • A listing of who might have been exposed, including the identification of both staff and clientele. All should be notified as quickly as possible.
    • Which agencies should receive the report of the outbreak, which might be some or all of your local, regional, and nationally based entities.
    • Most importantly, the plan should lay out how to return to operations with new systems in place to prevent a similar exposure.

 

It's abundantly clear that covering the healthcare and related costs of just one COVID-19 case are high, and that they become exponentially greater when staff and customers are the sufferers. Establishing appropriate safety precautions throughout the enterprise to protect both staff and customers is imperative for every business struggling to keep afloat in the wake of the COVID-19 pandemic. It's always better to prevent a disaster than recover from one, and all too often, a COVID-19 outbreak has caused the demise of many excellent companies. Don't let yours be one of them.

 

Incoming Changes to WCMSA Activities

Even in the face of the health and civic challenges the country is enduring, the Centers for Medicare and Medicaid Services (CMS) maintains its pursuit its institutional goal of keeping its constituents current with evolving standards. Recently, the CMS issued two new directives, one for MSA calculations and one for improved MSPRP portal functionality, which became or will become operable on April 25 and July 13 of this year, respectively. Readers are encouraged to update their practices and policies to reflect the changes.

 

New 'Life Table' for MSA Life Expectancy Estimates

On April 25, the Agency switched over to using the 2017 version of the United States Life Tables for calculating life expectancies, as the National Vital Statistics Report publishes those. The 2017 table replaces the 2016 schedule, which has been in official use just since October 12, 2019. The newer version, reflected in Manual Version 3.1 released May 11, 2020, reflects the differences in life expectancies revealed by 2017's final mortality data.

 

The CMS uses life expectancy tables for many reasons, only one of which is to calculate an estimated term for the duration of a Medicare Set-Aside Account (MSA). The life expectancies' statistical values provide guidance for MSA participants to determine the number of years and the projected value of costs to include in the overall calculation of the MSA financial reserve.

 

Many Uses for Life expectancy Data

The availability of an MSA is an enticing option for anyone who suffers a debilitating injury that will impede their earning capacity for their foreseeable future. The account will ensure that the costs incurred because of those injuries will be paid for by the entity legally responsible for making those payments. Only a small percentage of Medicare-eligible or recipient people will suffer injuries that will require the establishment of a life-long MSA. At this time, only those injured on the job and who have Workers’ Compensation claims are specifically identified as appropriate candidates for an MSA. However, CMS has recently been considering also adding cases involving injuries legally caused by neglect or intention (claims arising from 'liability' cases) to their roster of 'encouraged' MSA candidates.

 

But, as an agency, CMS also has an interest in establishing an MSA for any person who may need long-term funding for injuries AND who is also Medicare-eligible or will be eligible for Medicare within two years. By law, CMS is responsible for funding healthcare costs for millions of current and future Medicare beneficiaries. The Agency must manage the funding received for that purpose to allow for comprehensive coverage as its recipients need it, and that pool of beneficiaries is growing as the general population ages. Also, by law, however, CMS is NOT responsible for covering healthcare costs for injuries or damages caused by a third-party, such as injuries that occur in a job-related accident or car crash. Any healthcare costs attributable to those injuries must be paid for by the legally responsible entity. To establish an MSA for any reason, the claimants must clarify which entities are responsible for covering costs of specific injuries or damages, to ensure that Medicare doesn't inadvertently pay for something that is rightly the responsibility of another person or company.

 

Data Reveals Significant Changes

CMS's capacity to properly manage Medicare payments is becoming more complex, too. In just the last ten years, the number of Medicare recipients has more than doubled, rising from 11.1 million in 2010 to over 24 million today. By 2060, the number of Americans aged 65 and over will grow by 23% (up from 16% in 2018). CMS will be responsible for funding the healthcare services for most, if not all, of them. During that same decade, as well, improved living standards and evolving healthcare capacities are also helping Americans live longer lives, and the healthcare funding supplied by CMS will have to cover those extended lifespans as well. Accordingly, when Medicare-eligible people or recipients are injured, their potential lifespan - the number of years they expect to live - becomes an integral factor in the calculation of their long-term healthcare costs.

 

According to the Vital Statistics Report, between 2016 and 2017, overall life expectancies declined by .1, from 78.7 years to 78.6 years, for whites in general (primarily white males) and non-Hispanic whites. It did not change for blacks, non-Hispanic blacks or Hispanic populations, however. MSA applications submitted on or after April 25, 2020, are required to be calculated per the new statistical measurement. Considering the size of the Medicare-eligible population, even small drops in lifespan can make a difference in long-term CMS funding decisions.

 

 

 

Making CMS Recovery Cases Easier to Manage

 

As readers know, CMS works hard to recover payments made on behalf of Medicare beneficiaries that should have been made by other parties or entities. The recovery of unnecessary fees is critical to the mission of CMS, which must limit its healthcare coverage payments only to legitimate Medicare and Medicaid beneficiaries, including those who have established a Workers’ Compensation Medicare Set-Aside Account (WCMSA). The CMS Benefits Coordination and Recovery Center (BCRC) will open a recovery case to retrieve funds when the Agency makes provider payments erroneously or as a conditional payment made before the establishment of legal liabilities.

 

To facilitate the recovery action, the BCRC provides an online portal - the Medicare Secondary Payer Recovery Portal (MSPRP) - through which third-parties and MSA case participants can communicate about recovery case data and details. Cases that originate through the BCRC and through the Commercial Repayment Center (CRC) can be managed through the portal. Users of the portal include claimants, their representatives, attorneys, insurers, beneficiaries, and recovery agents. The portal allows users to interact digitally with the Agency about the case, whether they're requesting updates, contesting claims, or signaling that a resolution has been reached, among many other actions.

 

In recovery cases, the Agency has begun proceedings to retrieve reimbursement of previously made payments from the claimant or party that is ultimately responsible for paying an obligation. To maintain current recovery-related communications among the parties and with CMS, users can access the portal to retrieve files needed to support their claims or record their activities. The recovery case file is organized around the various actions taken by both the Agency and case parties and includes tabs related to:

  • payment information,
  • electronic payment histories,
  • refund information,
  • letter activities (mail),
  • waivers, redemptions, and
  • compromise information, and
  • final conditional payment processes.

The portal helps users find the information they need to respond to, defend, and resolve the recovery case.

 

Currently, however, the portal isn’t particularly user-friendly. Users haven't been able to view or print documents contained in the Letter Activity tab, which has hindered their capacity to maintain a complete file of documents issued by the Agency, or track case developments. CMS has recently remedied that situation, however, and, as of July 13, 2020, users who access the site through double authentication procedures will be able to both view and print the documents they seek through the portal's Letter Activity tab.

 

The Letter Activity tab is rife with crucial case data because it contains all the documents generated by the Agency concerning the claim. Maintained chronologically, each record sets out information about the status of issues arising within the materials, including the opening date of the document, its closing date, and a sent date if the Agency moved the matter onto another agent or office.

 

Accessing the portal to view and print documents gives users better control over the information they need, so there is no longer any confusion about the opinion or standing of the CMS at any point within the recovery case. The CMS issued version 4.8 of the MSPRP User Guide on March 30, 2020.

 

 

 

 

 

 

 

 

 

 

 

In 2017, when the Center for Medicare and Medicaid Services (CMS) updated its Medicare Set Aside (MSA) Reference Guide, it added a provision that allowed a one-time opportunity to request an ‘amended review' of a conditionally preapproved MSA account. When a case met the required elements of the new rule, claimants and carriers could re-submit their MSA proposal based on evidence of circumstances that came to light after the initial submission was approved. Over the following three years, experience with the amended review process has provided insights into CMS decision-making, as well as illustrated when making such a request is advantageous to each side of an MSA case.

 

Clarifying "Re-review" vs. "Amended Review"

CMS is offering the new amended review opportunity in addition to the already standard 're-review' of an approved MSA agreement.

 

Re-review

The opportunity to request a re-review of an approved MSA has always been part of the MSA process. WCMSA Reference Guide v3.0 §16.1. It applies when there is an 'obvious error' in the calculation of the value or documentation of the MSA case that changes the value of the MSA account, and that the parties discovered the error only after approval of the MSA application. The reviewed submission will correct the mistake(s). In a re-review case, the underlying facts of the case don't change and the corrected file assures CMS of the protection of its interests as a secondary payer within the case.

 

Amended Review

The opportunity for an amended review arises when the facts of the case have changed, and those changes now alter the value of the MSA allocation by at least 10% or $10,000. WCMSA Reference Guide v3.0 §16.2.Parties can only request the review when their Workers’ Compensation case (WC) has not settled but continues in litigation for more than 12 months (one year) and less than 72 months (six years) after approval of the original MSA. (In October 2019, CMS extended the time window for submitting a request from four years (48 months) to the new six-year standard.)

 

The amended approval opportunity aligns the CMS with several state laws that allow for re-opening the WC case in the event relevant health and healthcare care conditions change after that case has closed. While that opportunity provides for changes to the WC case itself, there was no such opportunity available to make consequent changes to the attendant MSA, when such an account was open. With this new CMS provision, plaintiffs and defendants can modify their MSA agreement to reflect the altered facts of the WC case.

 

Possible Outcomes of an Amended Review

The amended review process facilitates two equal goals: to protect CMS from paying for services that are rightly assignable to the primary payer, and to assist in the resolution and closure of long-term legal cases. It reflects the reality that circumstances change over time, and that 'final resolutions' must also often be fluid. The amended review process allows CMS to take into account those relevant MSA case factors that emerged after the MSA proposal was initially approved and that now might materially change its outcome.

 

Protecting CMS

Per the Mandatory Secondary Payer Act (MSP), CMS is liable for the healthcare costs of injured beneficiaries (or soon-to-be beneficiaries) only after all other 'primary' resources are exhausted. In the case of most MSAs, the MSA document itself clearly defines the obligations of a primary health care resource to an injured worker, and settled medical practices provide the guides needed to establish those medical cost parameters. CMS can sign off on the MSA proposal because it is assured that the primary payers are accepting and will follow through with their obligation to cover the short-, mid-, and long-term costs of the specific injury.

 

In those cases that suggest an amendment is in order, the circumstances of the case will have changed, and CMS is no longer confident that it will not be asked in the future to cover costs arising from the work-place injury. In these cases, the total value of the MSA may need adjustment for one of two reasons if or when the claimant's health care needs change:

    • If medical coverage for the job-based injury needs extending beyond the established timeframe, then the MSA should be amended to reflect that reality. Here, it would be appropriate to change the MSA to reflect the primary payer's obligation to increase the account funds to accommodate the extended extra care costs.
    • If the claimant recovers faster than expected, or medical treatments have come available that reduce the time or cost of medical coverage, then the MSA value should be adjusted to reduce the primary payer's obligation. In this case, CMS must have full notification of changes in the claimant's condition. Without a complete file reflecting the actual conclusion of the WC case, CMS can't know how or when the WC case actually resolved, both physically and financially. Consequently, the claimant could face coverage challenges or denials when filing for future Medicare benefits if their new injury or condition resembles their previous injury status.

 

Protecting Case Participants

A qualifying factor for filing an amended review request is that the case hasn't settled. In many, and perhaps most of these cases, that failure is caused by disputes related to the type and value of future medical care and costs.

  • Plaintiffs are looking for the highest settlement value possible to ensure they have the resources necessary to achieve a complete recovery from their injuries. Their body may not be responding as quickly as expected to their treatment plan, or perhaps the original treatment plan hasn't been effective. They may have other health concerns that exacerbate their injured status, making it harder for them to recover within a 'standard-for-the-injury' time frame. In these cases, it's imperative for their health that they can access the treatments they need to recover from an injury they suffered at work.
  • Defendants (employers, insurers, etc.), on the other hand, are looking to keep long-term costs down to protect their corporate resources as much as possible. An MSA can account for hundreds of thousands of dollars, and these parties are looking to limit that value in the final settlement agreement. These companies have an obligation to their workers and shareholders to seek an MSA modification when changes in healthcare or the insured's health can redirect some of those dollars back to corporate use.

 

Proving an Amended Review Claim

Not surprisingly, convincing the CMS to change an already approved MSA requires substantial and credible evidence that the change is warranted. The Agency looks for 'best evidence' - those documents and records that come from an original source and that are clearly and directly related to injury care. Further, those records must prove that the initial MSA value is now off by 10% or $10,000, whichever is greater. The injured worker must prove that current circumstances justify an increased MSA value by at least 10% or $10,000; the employer/insurer must prove that current medical interventions can reduce the actual cost of care (as opposed to the approved funds set aside) for the injury by at least 10% or $10,000.

 

The Agency is also specific about what types of evidence can prove the adjusted claim and how to document that evidence properly:

  • The amended proposal must include line items that were also included in the first proposal and that identify the care services already provided to the injured worker. Documents that reference those services must accompany the amended proposal.
  • The amended proposal must also demonstrate where services and supports were authorized but were not required.
  • If/when those un-used services were replaced with other comparable services, then there must also be documentation of that fact, including the records of the healthcare professionals who provided or will provide the replacement services.
  • When seeking funding for new or different services or supports, then the proposal must include both a line item detailing that/those new values, as well as documentation that supports the premise that the revised healthcare support is appropriately tied to the injury.

 

A Prescription Drug Caution

Every requested modification of the original MSA must justify how any proposed change relates to the injury and the care and recovery of the injured worker. For prescription drugs, a difference in price in and of itself is not sufficient to justify changing the MSA, although that may be significant when a generic drug becomes available. Instead, the party seeking the change must establish that the revised pharmaceutical request addresses the medication recommendations for the specific injury, and that it meets the standards otherwise set for MSA inclusion:

  • The injured party must have been taking the original medication for two years before filing the amending request;
  • the drug must have been prescribed specifically to treat the work-place injury, and
  • the medication is being used for a medically accepted indication.
  • The revised pricing structure for the medication is presented using Average Wholesale Pricing standards. The Agency uses AWP for setting MSA values for pharmaceuticals, with generic drugs being priced lowest and brand name drugs priced highest. The AWP for most drugs sold in the U.S. is published in drug compendiums (indexes), as is the Wholesale Acquisition Cost (AWC) - the price paid by the wholesaler to the drug manufacturer. It is this cost, plus or minus discounts or further markups by the wholesaler, that establishes the amount estimated for use when determining the allocation in the proposal MSA.

 

Documents supporting these claims include drug prescription and medical treatment payment records dated within six months of the request, the insurer's prescription claim records, and the pharmacy benefits manager records.

 

For amended review requests that seek to reduce or increase the projected value of prescription drugs, parties filing the claim should detail the injured person's experience with the drugs correctly and make a direct connection between the use of the drug and the work-related injury.

 

The amended review opportunity provides an avenue for re-assessment for injured workers and their insurers when the case resolution details of the underlying WC case change. When handled correctly, the amended review action can ensure that injured workers retain the long-term healthcare services they need, or that insurers can recoup the MSA funds that are no longer necessary for future injury care. Considering the speed by which new medical capacities and capabilities are advancing, it’s probable that the amended review process will be pursued more frequently in the years to come.

In the Workers’ Compensation (WC) world, evaluating the appropriateness of a Medicare Set Aside account (MSA) is (or should be) a standard case management practice for any person with a work-related injury who is nearing or over the age of Medicare or Medicaid eligibility. However, because setting up the MSA in a WC case remains optional per Centers for Medicare and Medicare Services (CMS) regulations, many injured workers and their work- or insurer-based case managers elect not to submit an MSA proposal to CMS. Instead, after filing the requisite notice to CMS that a Medicare-eligible person suffered an injury at work, they then resolve the case without further consideration of the interests of that federal agency. Their failure to include CMS in those deliberations, however, may lay the foundation for significant barriers for the injured person in the future.

 

The MSA as a Case Marker

The primary reason for the Mandatory Secondary Payor Act is to prohibit the use of Medicare funds for medical expenses when another legally obligated person or party should bear those costs. For this reason, CMS requires WC insurers to notify it when an injured worker is also a current or soon-to-be Medicare recipient. On its end, the CMS creates a file for every injured Medicare recipient (or soon-to-be) who is or will receive payments from a group health insurer, including WC insurers. Using the resulting database, CMS can determine the primary versus secondary payer responsibilities of its beneficiaries and ensure that it is not making payments that are the obligations of those primary carriers. Once it receives the notification of this particular injury, the CMS file can reflect that their current or future beneficiary has/had an injury that is/was being managed by an appropriate third-party obligor.

 

Unfortunately, after the notification, there's no requirement to do more regarding the CMS, and many WC claimants don't follow up their CMS notification by also submitting an MSA proposal or otherwise reporting the circumstances of the conclusion of the case. This oversight leaves a significant gap in the CMS file since that agency now has only half a record of the injury in its archives, but no history of the resolution of that claim. And it's in that gap that so many problems can fester.

 

From Half a Claim to Legal Morass

From a legal perspective, that incomplete CMS file can trigger numerous challenges:

  • One element of the notification report is the submission of the ICD-9 codes that describe the injury. The notification is made (usually) toward the beginning of the case as the injury and its related IDC codes are determined.

 

However, as the case evolves, the evidence may reveal that some of the injuries noted are not actually attributable to the work-based incident but instead may be pre-existing or due to some other cause. The WC carrier may appropriately decline to cover those costs, so they are not included in the final settlement negotiations, nor are they covered by the MSA. The CMS file, however, retains that code as attributable to the WC injury, which can lead to CMS declining to cover its care, thereby leaving the claimant/beneficiary with no coverage by either the CMS or its WC insurer.

 

Other challenges can also arise when the CMS file is left incomplete.

  • Conflicting data from different sources - the plaintiff's lawyer and the healthcare providers, as examples - can cause duplicate demands by CMS for reimbursement of conditional payments, a circumstance that can trigger its own lawsuit.
  • Future injuries can also cause problems for the insured if any future CMS injury/claim reports include the same or similar codes as those submitted in the WC case. With no record of how the WC case parties managed those prior injuries, CMS can justifiably require proof that the second injury is separate from the first, WC injury, and that request will cause unnecessary delays. Alternatively, CMS can deny that second claim, believing it to be related to the previous case, which leaves the injured Medicare beneficiary with no medical coverage for their new injury.

 

Submitting an MSA proposal and including CMS in the WC case can alleviate these challenges.

 

More Than a Bank Account

 

Establishing an MSA is much more than just the negotiation of a settlement figure and the opening of a trust account. The process of creating an MSA provides a host of benefits for the claimant and parties to the case, both immediate and future:

 

In the Near-term:

The process of creating an MSA proposal generates a wealth of data for everyone involved in the case. The analysis of the injury, its physical manifestation, its medical intervention requirements, and the cost for long-term recovery all provide information that will inform the legal management of the case. With this data, the parties to the case gain the knowledge they need to come to a reasonable resolution:

  • For the WC insurer-payor, the analysis forms the basis for its resolution negotiations so it can set appropriate funding levels and manage its resources properly.
  • For CMS, the analysis included in the proposal clarifies the extent of the injury, provides a defined scope for its care and recovery, and offers assurance that its beneficiary will not require Medicare funds for treatment of this particular concern.
  • For the claimant, the MSA analysis clarifies the treatment plan for their particular injury and the cost estimate for the care and recovery period. With this information, they can settle their case and move on with their life.

 

 

In the Long-term:

After the case closes, the parties can move on to other projects, knowing that the WC case is behind them:

  • Insurers can fund the account and then close the case with a reasonable assurance that it will not require additional funding or attention.
  • For CMS, submission of the resolved case and its accompanying MSA will bring its files current with those of the case participants. The agency will know what the evidence revealed in terms of contingent liability, who is paying for what, the extent of the injuries, the prognosis for future care, and the estimated costs of that care. It also has a record of the beneficiary's health situation at the conclusion of the case and can refer back to that point in time when evaluating future claims.
  • For claimants, they can plan their future, knowing that they have the funding necessary to recover from their injury as completely as possible.

 

But Claimants now also have the added benefit of a clear record with CMS, which may prove essential for their future well-being. Why? Because, as Medicare recipients, they are aging, and that circumstance escalates the value of CMS to their future.

 

Medicare and the Aging Population

By definition, Medicare recipients are at or over the age of 65, and that population is growing. According to the US Census Bureau, the population of people 65 and over  grew by 15.1 percent in the ten years between 2000 and 2010, outpacing the growth of the population in general. This year, the number of 65+ citizens should hit 55 million and, by 2030, is estimated to grow to 70 million. It will stress the funding for Medicare to service that further growth, so it is expected that the CMS will be more stringent than ever that primary payments be exhausted before an injured person seeks financial support from it as the secondary payer.

 

And that growing population also grows bigger concerns. With every passing year, the risk of developing a disease or incurring another injury rises for each senior. Declining eyesight, hearing loss, and slower reflexes can all contribute to declining health or reduced capacities. High blood pressure, diabetes, compromised pulmonary systems and similar conditions can cause a variety of symptoms, and many medications can cause physiological challenges even if the underlying condition for which they were prescribed doesn't.

 

Further, while many diseases and conditions related to aging can also increase the risk of injuries, many otherwise healthy seniors will suffer a serious injury simply by falling in their home or community. According to reports by the Centers for Disease Control (CDC), falls are the number one reason for fatal injuries in people over 65 years and they are the most common reason for nonfatal traumatic hospital admissions. Additionally, 25% of all Americans over 65 fall each year, resulting in more than 2.5 million trips to the emergency room, over 800,000 hospital stays, and 27,000 deaths.

 

Often when a fall occurs in this population, in many cases, Medicare is the only available option for health care services for these seniors. An insufficient case file at CMS that fails to provide information on the resolution of previous injuries could delay receiving care for an instant concern, which can also cause complications in getting help in a timely way. That confusion can also cause the denial of the new claim, which could trigger a drawn-out battle to clarify actual eligibility for new resources. Considering that 10% of all falls in seniors cause major injuries, even a slight delay in getting care could be disastrous for the aging patient.

 

 

How Does a Current MSA Alleviate Future Concerns?

The MSA clarifies for the CMS file what those previous injuries were and how they occurred, the details of the managed treatment plan, and who paid for those services. It also encapsulates the circumstances of that injury to that resolved case and reduces the likelihood that CMS will require information about that case before authorizing resources for the current concern. Not least significant, by submitting and gaining acceptance of an MSA in a WC case, the claimant's future file with the CMS is transparent as to prior injuries so that they are eligible to receive timely and appropriate care when future injuries occur.

 

To date, there is no requirement to submit an MSA proposal to CMS prior to resolving a WC case. However, considering the future challenges posed by failing to do so, it seems prudent and a best practice to develop and file one in every WC case with an injured Medicare (or soon-to-be) recipient.  Not only will the process clarify the specifics of that injury, but the MSA itself will protect the worker's opportunity to receive Medicare benefits for future injuries.

Everyone updates, including the Centers for Medicare and Medicaid Services (CMS). In October, the CMS released its updated Medicare Set Aside (MSA) reference guide, version 3.0, which replaces version 2.9 released just in January of this year. As participants in the MSA system make changes to reflect the new guidelines, they should be careful to note and follow the new standards.

 

Not All Changes are Equal

Not surprisingly, because the CMS is an immense bureaucratic organization, some of the changes are relatively small and more administrative in nature. These, while interesting, won't affect the processing of MSAs to any great extent. Other changes offer insights into interesting trends that may not have an impact in the near future but suggest more changes may be coming in the next year or so. Still other changes, however, carry critical legal ramifications, so understanding and implementing those new requirements will be necessary to remain in compliance with MSA administration standards.

 

Notable Changes - Need to Know

There are two notable changes to the Guide that will have an impact on every future MSA: the revised "Consent to Release" rules, and the extension of the "Amended Review" opportunity from four to six years.

 

"Consent to Release" Form rules

Date of compliance: April 1, 2020

What it Says

The new rule requires all MSA applications to attach an updated "Consent to Release" form that includes language indicating that the beneficiary understands the details of the MSA process. It must also reflect their comprehension that their medical and other records will be shared with CMS and its agents (in particular, the WC Review Contractor - WCRC). The critical language will indicate that the injured party understands:

  • the intent of the MSA;
  • how the MSA submission process works, and
  • how the administration of the established MSA will work.

Additionally, at the very least, the claimant's initials should appear on the consent form to establish its validity, but full signatures are the optimal choice.

 

Why it's Important

'Informed consent' is a significant legal principle that ensures that when people give up their rights in exchange for something, they are doing so knowing the full ramifications of the transaction. "Informed" means that the person has been given all the information needed to understand and make decisions about the circumstances at hand.

  • In the legal sphere, informed consent is needed when criminals negotiate plea deals, for example, or people undertaking a contract agree to perform certain functions in exchange for contract benefits.
  • In the healthcare sphere, informed consent means that patients are given all the information available about their condition, its treatment options, alternative options, and the benefits and risks involved in each.

The premise behind 'informed consent' is that a person can only truly commit to an action when they understand all the potential impacts it may have on their life.

 

In the MSA sphere, and in the MSA application process in particular, 'informed consent' means four things:

  •  that the injured person intentionally agrees to share all their relevant information with not just their medical team, but also with the insurers, the legal people and the CMS MSA administrators;
  • that the injured person understands the intent of the MSA (to cover future, injury-related medical costs) and agrees that they will comply with that agreement once it is established;
  • that they understand the process of establishing the MSA, including the requirement of sharing all the details of their case with the other parties to the WC claim, and
  • that the CMS will maintain continued vigilance over the established MSA (via regular reports, etc.) after it's approved and the underlying legal case has closed.

 

Failure to obtain and submit proof of informed consent often renders moot whatever decisions were made without it. Failure to provide evidence of informed consent by an injured worker in a WC case may result in the setting aside of either or both the negotiations and final 'agreements' of the parties to the 'final' MSA contract.

 

The CMS includes a template for an appropriate Informed Consent document in the new Guide. Those forms are required in MSA application submissions after April 1, 2020.

 

Extension of the "Amended Review" Period

What it says

The new Guide states that requests to review the details of a submitted MSA application can now be submitted up to 72 months after that initial MSA application was sent in. The previous rule limited such submissions to 48 months after the initial documents were transmitted.

 

Why it's Important

This change is significant because it reflects CMS's awareness that medical conditions, treatment options, and outcomes change and that MSAs can be rendered obsolete or insufficient as a result. While the 24 months between four years and six years may not seem like a significant length of time, in the healthcare field, it could mean the difference between a lifetime of pain or a complete recovery due to advanced interventions. For employers, it could mean the avoidance of significant medical expenditures for workers who, because of new healthcare developments, are able to achieve improved outcomes at less cost.

 

There are, of course, caveats to the new rule:

  • It applies when a potential MSA case hasn't settled but already has a conditional CMS approval for an MSA when it does.
  • It is only available when the new information suggests a change (increase or decrease) of 10% or $10,000 (whichever is greater) in the cost of injury-related care over the cost indicated in the initial application.

The change in care costs must be justified by noting in line items to the proposal:

    • Details regarding the costs of benefits already received by the beneficiary, including references to supporting records. References to those records must also be included in the new plan;
    • Details reflecting where initially proposed care is no longer needed. If replacement care is substituted for that which was noted in the initial proposal, the amended proposal must include references to the replacement care, and
    • Additional line items detailing the new types of care not included in the initial plan.
  • All requests for changes to treatment plans must include medical records supporting the claim.

 

When approved by CMS, the approved amount becomes effective on the date of settlement of the case. Also, note that substituting generic drugs for non-generic drugs is not a justification for an amended review unless it is included among the justifications listed above.

CMS has provided additional information for electronic filing for those considering how to manage a newly available Request for Re-Review opportunity.

 

Interesting Changes - Good to Know

CMS has also enhanced its requirements on individual elements of the MSA process:

  • CMS "highly recommends" using a professional WCMSA administrator - rather than self-administration - to manage the MSA account when the claimant is prescribed controlled substances that are (by CMS definition) "frequently abused drugs." This clarification takes note of the Opioid crisis and the relationship between WC cases an opioid addiction and abuse, and CMS recommends establishing a Drug Management Program when such drugs are prescribed.
  • When considering the terms of the MSA, CMS now requires using the updated 2016 Life Table to determine lifetime expectancies. Just in January, the agency recommended the 2015 table. Comparison of those tables indicates that, while most of the predictions remain stable (the average life expectancy for every child born today is 78.7 years), life expectancy for blacks have declined by .2 years: for males, from 72.2 years in 2015 to 72 years in 2016; and for females, from 78.5 years in 2015 to 78.3 years in 2016. The life expectancy for Hispanic males has also declined by .2 years (from 79.3 to 79.1 years), while Hispanic females experienced no such decline.

The change, however slight, would impact the overall value of an MSA in the event of

the need for lifelong care.

 

 

For all participants in the Medicare Set-Aside arena, the updated Guide offers important information for future MSA development and management. These new rules reflect the Agency's awareness and acknowledgment of today's realities:

  • People need to be fully apprised of the circumstances of their case before they can commit to the MSA terms;
  • Injury-related medical care evolves over time, and sometimes more time is required to identify the full scope of the injured worker's medical plan.
  • Drug addiction concerns continue to plague Medicare; MSAs should reflect sensitivity to that concern.
  • Technology will continue to improve the communications and management of MSAs into the future.

We can only assume that future updates will be as thoughtful and comprehensive as this one is.

 

Last month's post discussed the history of how and why the 'workers’ compensation' (WC) industry evolved out of medieval 'employment' practices:

  • Employers often demanded that their employees put in long hours under harsh conditions to justify paying them a minimal wage.
  • Workers were subjected to challenging conditions in unsafe factories that exposed them to innumerable health and safety risks; injuries often ended their working career, and none had sufficient economic resources to fall back on when their earning days were cut short.
  • The rise of skilled workers gave that population more power, which they used (through strikes and work stoppages) to leverage better pay and better conditions.

Eventually, in 1871, Prussia's (now Germany) Baron von Bismarck recognized that constant employment disruptions destabilized the nation's economy and growing industrial sectors and that the existing system wasn't adequately addressing the conflicts. Consequently, he instituted the world's first "Employers Liability Law" that provided an alternative to lawsuits to recover damages when workers were injured at work. The new policy was a balance between the needs of the employers (to have a profitable workforce and avoid costly legal bills) and the needs of the workers (to have a safe place to work and a way to recover physically and financially when on-the-job injuries occurred).

 

This notion of a 'balance' in the work arena set the stage for today's WC industry, which remains a balancing act between the interests of employers and employees. That balancing act has expanded, however, and now also includes third parties and other entities that may play a unique role in each WC case. The result is a network of standards and organizations that work together to ensure the nation's work gets done and that its injured workers can get back to work as quickly as possible.

 

The overarching premises of today's WC industry are:

  • to keep workers safe while at work, and help them recover from injuries that occur on the job;
  • to ensure that companies can avoid costly litigation and have the resources to respond to on-site, workforce injuries, and
  • to hold all contributors to the unsafe conditions liable for damages caused by those conditions, including the cost of medical services to the injured worker.

 

"Modern" Workers’ Compensation Practices

Look around any of today's workplaces and you're likely to see more than one 'accident' waiting to happen, even in the safest locations. Some industries involve inherently dangerous activities, and those businesses often experience more - and more serious - on-the-job injuries than their less hazardous counterparts. Further, you can multiply all those injury opportunities by the number of business machines, building configurations, and other industry incidentals that facilitate the work, so even in a quiet office setting, accidents do happen, and injuries do occur. It's not surprising, then, that more than four million non-fatal injuries happen in US businesses every year.

 

For almost all of those injuries (and with a few exceptions), hurt employees submit claims to their employer-funded WC insurance carrier, which both insures the employer against having to litigate a subsequent lawsuit and ensures that the injured party gets the medical and rehabilitation support they need to recover and get back to work.

 

In many cases, however, the WC case involves more than just providing services to the worker and funding their health care team. Filing that WC claim can also trigger a more extensive evaluation of the injury and its cause by the WC Insurer to determine if there is another element of fault involved and who, besides the employer, might have contributed to the cause of the incident.

 

The Insurer's contracted duty is to cover medical costs on behalf of the employer only, and not on behalf of others who contributed to the cause of the injury. Further, the Insurer must protect the interests of its insureds and not squander its financial assets by paying for damages for which its insureds aren't responsible. The point of the investigation, therefore, is to reduce the insurance company's exposure to unnecessary expenditures and to hold all liable parties accountable for their share of the damages.

 

The injured employee can also file a lawsuit against a third party that contributed to the cause of their injury.

 

There are as many ways parties other than employers can contribute to an injury as there are workplaces in the country:

  • Eroded or failing equipment may have a defect that contributed to the injury. The manufacturer or installer may be liable for those failures.
  • The physical plant may have failures, as well, that reduced the quality of the work environment. A leaking roof, for example, may cause slippery floors or machinery. A negligent maintenance contractor may be responsible for that condition.
  • Training or business practices may not have been sufficient for the task at hand. New employees may not be aware of or take appropriate precautions to protect against known risks, opening themselves to the risk of being injured. Other workers may be responsible for failing to train or manage workers properly.
  • Even the employee could be found to be at least partially responsible for the injury if their behavior or activities on the job site were negligent or inappropriate.

The investigation will reveal where, how, and why the injury occurred, as well as who was responsible for contributing to that situation. After making that determination, the employer, the Insurer, and/or the employee can decide whether it is appropriate to pursue a legal action to determine who contributed to the cause of the injury and should therefore also add financially to the cost of the injured worker's medical care.

 

Who Pays? How Much? Why?

Assigning liability in any WC case requires an evaluation of the actions of all the parties who might be involved. The investigation is looking for all the workplace elements involved in causing the injury; discover who had control over those elements and evaluate whether those elements could have been safer to avoid the injury or reduce its damage. After identifying all the factors associated with the cause of the injury, then the question becomes whether each individual factor also creates liability in its controlling entity. And this is where most cases get complicated; many potentially liable entities deny their involvement and fight to prevent being held responsible.

 

Their reluctance is understandable. 'Facts' can be relative based on who experiences them; what seems abundantly clear to one person can be the polar opposite experience compared to that of another witness. So, to resolve the issues that frequently arise in WC cases, a legal case is often also filed.

 

In the legal case, those entities that might hold liability are the defendants. The Judge will make several decisions, each of which will determine which defendant pays how much to cover the injured worker's medical costs. In workplace injury cases, there are often several defendants involved, and the Judge will assign each of those determined to be liable a percentage of 'fault' for causing the injury. Those percentages are then applied to the overall cost of the medical coverage, and each defendant will pay that percentage of the damages.

 

The optimal result is multi-layered:

  • The injured employee wants to get all the financial and medical support needed to make a full recovery (or come as close to that as possible).
  • The employer wants to avoid being held liable for causal factors that are out of their control.
  • The Insurer wants to protect its insured resources by containing costs as much as possible, and
  • The offending third parties will both make appropriate reparations to the injured worker, and also improve their safety or quality concerns to reduce the opportunity for a similar incident to occur in the future.

 

So, When Does Medicare Become Relevant?

Medicare and Medicare Set-Asides play an integral part in the cases of many injured workers. In our next post, we will explain where that third party - the Centers for Medicare and Medicaid Services (CMS) - enters the injured worker's story.

 

The Road to Worker Protections

For most injured workers, a complete recovery and the ability to return to work are only possible because of the medical and health care services provided by Workers’ Compensation insurance. However, the concept of healthcare support delivered through an employment setting and applied to on-the-job injuries is a recent one, and its premise and principles are designed to set aside centuries of unfair and often exploitive labor practices.

 

A Brief History of Labor Practices

To understand how and why America's worker protection systems came into being, you first need to know about the European foundations that define their history. Europe's culture around work habits and practices evolved significantly from the Middle Ages to modern times, and changes in economics, industries, and social norms caused equally significant changes in how, where, and why people worked.

 

Those changes in 'employment' thought patterns traveled with New World explorers to North America, where they, too, evolved to reflect the cultures in which they existed. Without a doubt, that evolution benefitted the workers, saving them from horrendous working conditions and poverty-level wages. But it also helped the companies that hired workers and the communities in which they worked. And each step of that evolution adds nuance to our understanding of the balance that now exists between workers, their employers, and the communities that benefit from a safe and productive industrial complex.

 

From Hell to Haven

The world's workers have never had it easier than they do today. National laws governing safety and health standards ensure that employees aren't required to risk their lives to make a living. Those standards, however, rest on the backs of the untold number of sick, injured, and dead workers that toiled without those protections in place.

 

Early Work Conditions

Before the Victorian era (1837 - 1901), working conditions were unregulated, and 'employers' were often more 'owners' than job providers. Lower class citizens traded labor for food or lodging and were expected to work seven days a week for as many as 18 hours a day. Safety standards on the job were also unheard of, regardless of the location or type of work. Domestic workers were exposed to the smoke and flames of wood-burning stoves; field hands got no reprieve from the weather, and miners toiled deep underground with no fresh air ventilation nor protection from the toxic and caustic air they were breathing. Premature deaths were common, as were deaths caused by accidents and disasters. Children were not saved from the situation either; because their small size made them ideal candidates for many tasks, children were forced into work as early as three years, and often died young from overwork and dangerous worksite conditions.

 

The Victorians improved the situation, but only slightly. While safety precautions were still nonexistent, workers during this period were finally given a day off per week, although they continued to work 14 to 16 hours a day during the other six.

 

The Industrial Revolution of the mid-19th Century, however, caused three major shifts in workplace cultures:

  • it automated many tasks that were previously jobs for people;
  • it provided new forms of work in factories, and
  • it required a new kind of compensation since factory workers couldn't live in the factory nor consume the products it produced.

 

All three shifts posed challenges that, eventually, provided the opportunity for more positive changes in the world’s work environments:

  • Despite the increased productivity, the factories weren't safe to work in as many newly invented machines didn't have safety features, nor were they well manufactured.
  • Workers were usually unskilled, and training was scarce if it happened at all. Debilitating and fatal injuries were common, and workers and their families were left destitute if/when the breadwinners were unable to return to their jobs.
  • Wages, too, caused problems. Profits were the focus of employers, not caring for their staff, and those profits rose when employment costs were low. Men were paid the most, while women were often paid only half that, and children were paid even less.

 

And working conditions remained terrible. There was rarely fresh air ventilation, so employees inhaled the smoke and ash put off by the machines. Short lunch and dinner breaks led to exhaustion, which, in turn, led to accidents. Children suffered the most, and many were sickened or deformed due to poor nutrition, inhaling toxic air, and the lack of exposure to sunlight. In fact, it was the challenging working conditions for children that contributed to the development of unions.

 

The Rise of Unions

The 'Union'- an organization of workers - first appeared in the early 1700s, as workers grew frustrated with low wages and poor working conditions. Over time, if uniting as a grouped 'workforce,' they may have increased leveraging power to improve their situation because the law offered an individual worker little or no protection from an overly oppressive boss. Although litigations were often pressed based on unhealthy work conditions, employers were equally often let off the liability hook because of one of three major defenses that were popular in those days:

1) The employee was negligent and caused their own injury;

2) Another employee was at fault and caused the injury, or

3) The injured worker knew it was a hazardous job and 'assumed that risk' by accepting the

work.

As a unified force, however, a union could overcome those defenses by bringing different tactics to the fray. From their perspective, without their combined effort, the factories couldn't produce, and employers would lose their customers.

 

Initially, these groups were a conglomerate of skilled workers, tradesmen, whose productivity couldn't be readily replicated by someone else. They fought for shorter hours, better pay and safer working conditions to balance the toll taken on their health by exhaustion and poverty-level nutrition. The circumstances of child workers were also a common complaint, and many unions stopped work to force factory owners to stop using children as laborers.

 

By the mid-1800s, Unions had become common on both sides of the Atlantic, and the movement grew significantly as the new 20thCentury approached. Strikes - work cessations - became a favored method of forcing change and were growing in size and frequency. While localized strikes often involved only local workers, the Union movement itself was attracting growing numbers of laborers across regions and even countries. In 1892, 261 strikes in France engaged only about 50,000 workers, but by 1914, just 22 years later, 1,309 strikes took 438,000 workers offline. In Britain between 1909 and 1913, more than 2,000,000 workers refused to work due to adverse work conditions.

 

The American colonies were not immune to the consequences of striking European workforces. Even before the Revolution, in 1768, a group of New York tailors went on strike to protest a wage reduction, and when the Federal Society of Journeyman Cordwainers, a union of shoemakers, formed in 1794, the American labor movement was launched. The trade unions fought back against British-based business practices by publishing their prices to demonstrate their value and prevent their replacement by cheaper, unskilled laborers. The Unions grew quickly because they were able to attract larger memberships as cities grew and national communications systems developed.

 

Compensation for Injuries

Although the modern rules around compensating an injured worker are new, the concept itself has been around since approximately 2050 B.C. That "Law of Ur" provided financial compensation for injuries to specific body parts, including bone fractures. Over the next four thousand years, other cultures adopted the practice, although each was unique in the value it set on the particular body part that was harmed (loss of a thumb was worth twice the compensation as the loss of a finger, according to the ancient Arabs).

 

It wasn't until 1871, however, when Prussian Chancellor Otto von Bismarck enacted the "Employers Liability Law," that selected classes of workers finally received a reliable option to pursue that related to their on-the-job injury. von Bismarck wasn't addressing workers’ demands out of personal concern for their well-being, however. Instead, he used the protections to secure the support of the general population which was, at the time, leaning towards the Marxist and socialist movements. By suppressing that leadership while adopting their most popular theories, von Bismarck maintained a steady hold over the Prussian nation.

 

The new law didn’t hold all employers liable for all work-related injuries, as its name might suggest. It mandated that employers pay into a fund that would, in turn, pay out to injured workers the funds they needed to get medical care for their injuries. And, the original 1871 law applied only to injured laborers in the quarries, mines, railroads, and certain factories, but didn’t cover other industries or other worker concerns. Eventually, this disparity drove von Bismarck to extend the protections by adding the publicly funded Workers’ Accident Insurance provisions in 1884, then later the Public Pension Insurance (for those rendered disabled by a job injury) and Public Aid funding, to ensure long-term support for disabled former workers.

 

Further, perhaps the most significant action taken by von Bismarck was to establish this state-administered 'injured worker protection system' as the 'exclusive remedy' when injuries occurred on the job. Although those injured workers could no longer sue their employers for compensation for their injuries, they weren't left unemployable or destitute in that situation, either.

 

Also, not insignificantly, von Bismarck's introduction of the state as a player in the realm of workers’ compensation management set the stage for the involvement in and oversight by America's modern CMS in today's workers’ compensation industries.

 

That discussion follows next month.... See you then!

It's mid-summer, and many of our readers are off on well-deserved vacations. For those who are still in the office (and are as fascinated as we are by all things ‘workers’ comp'), we are taking this opportunity to offer some updates to one of the major subjects we've been following and to provide a heads up about what we'll be highlighting later this year.

 

Updates on Opioids

For more than two years, we've been profiling the challenges posed to the nation's workers and employers by opioids. We've tried to explain:

 

We've looked into what employers can to do (and their struggle with those activities) to reduce the likelihood that their injured workers will suffer the additional pain of a subsequent opioid addiction. And we've reported how some of America's medical professionals have contributed to (and profited dramatically by) the problem by prescribing so many of the drugs in inappropriate quantities and dosages.

 

Clearly, opioids as pain relief for workplace injuries have wreaked havoc across the country for at least two decades, and America's employers and employees have borne the economic and emotional brunt of that disaster.

 

Seeing a Turnaround?

However, increased attention to the issue has also increased responses to it, and all parties involved - employers, employees, insurers, healthcare providers, and government agencies - are now working in conjunction with each other to reduce the problem.

 

Consequently, we're now happy to report three good news stories about how those added attentions and intentions have had a positive impact on the opioid concern:

 

1) The Dollar Amount of Spending on Opioids is Falling

Recently released data reveals that in 2018, all 27 respondents to the 16th annual "Survey of Prescription Drug Management in Workers’ Comp" reduced their spending on opioids for injured workers by an aggregate of 23.2 percent in 2018. The drop signals the third year in a row that opioid spending was down, by 16% in 2017 and 13% in 2016.

 

Those reductions are the result of several changes in how medications are managed in the workers’ comp system. Insurers are now more careful about the number and dosage of opioids that they're will to cover, and ethical healthcare providers are reducing the numbers of opioid prescriptions that they write. And injured persons are also assuming more responsibility for their healthcare, by becoming more aware of the dosage and duration of prescriptions and moving off the drugs earlier in their recovery period.

 

In many cases, the shift in opioid usage reflects the growing reality that workers who remain on the drugs beyond medically accepted terms take longer to recover, are more likely to not return to work, and more likely to not regain their previous level of function even after they've recovered from the injury itself.

 

2) Adding Acupuncture to the List?

On a related note, in mid-July, the CMS (Centers for Medicare & Medicaid Services) for the first time suggested a willingness toauthorize the use of acupuncture treatments for their Medicare patients who suffer from chronic low back pain (cLBP). It's not available for everyone just yet, however; the agency issued a 'proposed' decision, indicating that they'd make a final determination on the question based on the results received by study participants who are enrolled patients in CMS-approved research or clinical trials sponsored by the NIH (National Institutes of Health).

 

Earlier in the year, CMS launched a  National Coverage Analysis (NCA) of scientific evidence that supports or negates the use of acupuncture as a pain-relieving alternative to medical interventions such as opioids. While there's no posted information as to why cLBP is the current focus, again, statistics may reveal why the CMS chose that particular ailment. A 2016 National Health Survey showed that at least 50 million American adults suffered from some form of cLBP and that 19.6 million of those experienced "high impact chronic pain." Both levels of pain are associated with increased anxiety, depression, and, in many cases, opioid dependence. Using the non-medical intervention of acupuncture instead of opioids would be a game-changer for many people if it curtailed their pain and improved their quality of life without the need for opioids.

 

The NCA is also part of a Strategic Plan developed by the National Institute of Drug Abuse (NIDA) to reduce the impact of opioids on Americans. The strategy includes four approaches to improved pain management that might assist with the alleviation of pain but not exacerbate the health situation with an unnecessary opioid addiction. The approaches include exploring for more non-opioid medical interventions; assessing the efficacy of non-pharmacological pain treatments such as acupuncture and biofeedback; finding adjunctive supports for cases where opioids remain the best pain controlling mechanism and developing strategies to improve opioid management practices so that opioid use disorders don't develop.

 

3) The National Safety Council (NSC) Agrees with CMS

In a show of national unity, the NSC agreed publicly with the CMS and asserted its support of the decision to consider alternative pain treatment methods like acupuncture instead of opioids. The NSC put the opioid crisis in context by noting that the odds of dying prematurely because of a fatal opioid overdose have surpassed the odds of being killed in a car accident for the first time ever. The agency went on to encourage all employers and their benefits providers to consider accepting alternative pain treatments as a way to not just reduce the threat of opioid dependency but to avoid it altogether.

 

A Brighter Future

Both the reduction in opioid spending and the possibility of acupuncture coverage for controlling pain are significant strides toward a definitive solution to the opioid crisis. We will continue to monitor how the country is managing this scourge and keep our readers informed about how they can be part of that solution, too.

 

 

So, What IS an MSA?

CompEx MSA also intends to explore its roots and will be providing an overview of the need for and development of Medicare Set-Aside accounts. Protections for worker safety and healthcare management have evolved over a long period that also saw the institution of mandatory work hours, minimum wages, and safe working condition standards. Through it all, employers have had to walk a fine line between profitability and maintaining attention to emerging government and industry regulations. The MSA is one tool they can use to make that process easier.

 

At CompEx MSA, we believe we can assist our clients better if we help them to better understand how the MSA process works and how it works within America's industries and communities. We will be launching that series next month.

The true cost to the nation's employers of America's opioid crisis is almost inestimable. From lost wages to lost productivity to the thousands of unnecessary deaths caused by the over-prescription of opioids and their subsequent addictions, the value of the losses suffered by individuals, families, communities, and businesses is beyond calculation. Gaining control over the issue is an immense challenge, so it was gratifying to see that the Office of the Inspector General (OIG) is taking significant steps to hold to account those who created much of the problem, at least in the Appalachia region.

 

Surprising Arrests in Appalachia

In April, the OIG arrested 60+ individuals and charged them with health care fraud and opioid 'pushing.' Included in the group are 31 doctors, eight nurse practitioners, seven pharmacists, and seven other health care professionals, all of whom are believed to be responsible for the prescribing and dispensing of more than 350,000 prescriptions - more than 32 million doses- of opioids in 2016. That volume of doses is the equivalent of one per every personin the five states covered by the OIG's investigation: Kentucky, Ohio, Tennessee, West Virginia, and Alabama.

 

These arrests follow an exhaustive 2017 investigation into the opioid situation in that region because data suggested the problem was more significant there than it was in other parts of the country. In 2016, of the 42,000+ opioid-related deaths in the U.S., more than 7,000 occurred within those five Appalachian states. The agency's primary question for the investigation was whether the number of opioid-related deaths or overdoses occurred specifically in Medicare Part D beneficiaries, the direct population over which they have authority. If data revealed that that was the case, was there also an element of fraud in how those drugs were prescribed or dispensed?

 

The investigation found that more than one in three (36%) Medicare Part D beneficiaries in those five states had received at least one opioid prescription, and almost 49,000 of those Part D beneficiaries received doses and prescriptions at levels that 'far exceeded' the levels of concern as iterated by the Centers for Disease Control (CDC). The evidence led to the belief that yes, certain health care professionals were definitely selling opioids as a money-making operation, and not as a legitimate health care practice. The evidence also revealed not just the dosages and prescriptions, but also the identities of the medical professionals who were responsible for moving the drugs into the population through otherwise legitimate healthcare settings.

 

Not Just in Appalachia

More arrests are expected, too. The OIG has taken a methodical approach in its investigation into the opioid concern, focusing on three main issues: improving the efficiency of the HHS systems that prescribe opioids; empowering system partners by sharing data and information, and holding accountable the people who are exploiting and defrauding those systems. This third tact - accountability - is now pursued by a series of 'Medicare Fraud Strike Forces' that are deployed in 17 locations around the country, including Los Angeles, the New York metropolitan area, Miami, Chicago, Detroit, Texas and Louisiana.  First established in 2007, the Strike Force teams have been investigating Medicare fraud in those areas where data suggests fraud may be occurring. They work in conjunction with the OIG and also with the Department of Justice, the F.B.I, the Offices of United States Attorneys, and local law enforcement agencies.

 

Regarding opioids, the Strike Forces look for instances where there is an excessive amount of opioids in a given community, then discovering if there is a legitimate reason for that reality. If they don't find that valid reason, then they look to see what other factors might indicate a crime is occurring. In the Appalachia cases, the health care professionals are accused of filling or writing prescriptions outside of their normal course of medical practices and dispensing the drugs with no legitimate medical reason for doing so. They are actually charged with illegally distributing Schedule 1 drugs, and their charges flow from standard drug enforcement laws. The Assistant Attorney General who filed the cases declared that    the defendants would be treated like drug dealers if their actions are proven to be those of drug dealers.

 

Employers Remain on the Front Line of the Crisis

Medicare Part D beneficiaries aren't the only workers who can be negatively impacted by opioids, however. Employers in every industry should welcome the investigations and arrests because they shoulder much of the financial burden of the medical costs resulting from on-the-job injuries through their workers’ compensation insurance premiums. Not only is it expensive to maintain treatment for injured workers, but the employer also endures a loss of productivity if the injured party is a critical employee; the cost of any substitute worker, and even the cost to find and onboard a new worker if the injured person develops an opioid addiction and can't return to work.

 

Further, some employers may be more adversely affected than others:

 

Rural Employers

Appalachian employers may face higher than average odds of suffering economically due to the opioid crisis, too.  A recent study  revealed that workers in remote communities who sustain an on-the-job injury are 25% more likely to receive an opioid prescription for pain than their more urban counterparts.  The Workers’ Compensation Research Institute (WCRI) reviewed more than one million post-injury pain medication prescriptions dated between October 2014 and September 2015 and found that two of every three injured folks in 'very rural' areas (<20,000 population) received at least one opioid prescription and one in three received two or more.

 

Small Business Employers

Other WCRI studies reveal additional challenges for owners of smaller companies, those with an annual payroll of less than $20 million. Injured workers in small businesses are also more likely to be prescribed an opioid for their injury-related pain. They're also more likely to receive more than one such prescription and to have those prescriptions last a longer term than do workers at companies with more employees.

 

Special Class Workers

Employers in the more labor-oriented industries are also more likely to experience opioid challenges in their injured workers' cases. People injured in mining, construction, and other heavy labor jobs are more likely to get an opioid prescription for the pain caused by that injury, as are those workers between the ages of 40 and 60 years.

 

Workers’ Compensation Burdens

Of course, all employers are at risk of economic losses caused by opioid-affected employees. The National Institute for Occupational Safety and Health (NIOSH) estimates that 95% of the people who died from a drug overdose in 2016 were people within the working age population - 15-64 years. That doesn't mean that all of those preceding injuries were on-the-job occurrences, but it does suggest that every employer should be alert to the possibility of an opioid challenge arising from any on-the-job injury and take precautions to reduce that likelihood. Those precautions would include maintaining a safe work environment to reduce the risk of injuries; maintaining a vigilant oversight of medical cases and drug prescriptions when injuries do occur and actively pursuing alternative treatments to opioids for ongoing pain management.

 

After 25 years of watching the opioid epidemic grow across the country, it is gratifying to see the federal government finally pursuing those people who are most likely the cause of much of the problem. The actions follow the CDC's 2016 restatement of its pain management protocols to reduce the volume of opioids as pain medications, so the actual number of opioid prescriptions is falling, too. Hopefully, the enhanced enforcement of drug laws as those relate to opioids will also reduce or eliminate the number of opioid deaths and workplace complications, so employers and their workers can avoid unnecessary losses even when on-the-job injuries do occur.

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