Establishing the MSA in the WC Case

In today's post, we are completing our series on the how's and why's of the Medicare Set Aside (MSA) account. Last year, we wrote about the evolution of worker protection laws, the role of third-party liability workplace injuries, and why America's Medicare system gets involved in injured worker cases.

 

Next, we will explore how to engage the Centers for Medicare and Medicaid Services (CMS) in an evolving workers’ compensation (WC) claim, including some of the processes to follow before, during, and after that engagement is made.

CMS in WC Cases

CMS doesn't become interested in WC claims unless the injured worker is also a Medicare recipient (or soon to be eligible), is considering settling the case for $25,000 or more, or is considering settling for $250,000 or more and is eligible/likely to become a Medicare recipient within 30 months.

 

Once the status of the claimant is established, then CMS will get involved in the case for two reasons:

  • To ensure that Medicare funds aren't spent for injury care when there is another, more appropriate funding source (usually primarily insurance) available. According to the Medicare Secondary Payer law, Medicare funds are available for workplace injury care only after all other funds have been exhausted; its funding source is 'secondary' to all other funding sources.
  • To track the activities of the parties to the claim to ensure the proper use of any funding provided for injury care. This oversight activity assures that spending additional Medicare funds for injury reasons doesn't become necessary in the future. Recovery from workplace injuries can sometimes take months or even years, during which time the injured party is also aging and eligible for Medicare services for other purposes. The CMS wants to make sure that support and care stemming from the workplace injury are paid for by the appropriate third party so that Medicare dollars are preserved for their intended purpose: caring for the concerns that develop in aging Americans.

 

Engaging CMS

Even in cases where the status of the claimant is appropriate, there is no rule that requires them to submit an MSA proposal to CMS or even to report to CMS that a Medicare-eligible claimant exists. In fact, the law requires those beneficiaries to apply for all available WC and other benefits and resources before looking for support from CMS.

The law does strongly encourage, however, that any WC injury involving an existing or eligible Medicare beneficiary 'should' be reported to CMS's Benefits Coordination and Recovery Center (BCRC). Once alerted, the agency will open a file and prepare to monitor the case.

 

In most cases, the WC insurance is appropriate and sufficient to cover all the costs related to the injury, and CMS will close its file accordingly. However, there are circumstances when CMS attention is required at the beginning of the case to ensure that public dollars (Medicare funds) are protected, as well as the future interests of the injured Medicare beneficiary:

  • In some cases, CMS will pay for medical services on the condition that the responsible party will provide reimbursement for those after that responsibility has been established. Conditional payments often occur when the injury is severe and significant services are delivered before determining the appropriate funding source for those invoices. When the injured party is also a senior and appears eligible for Medicare, many health care providers will provide and bill for care and ask questions about appropriate funding sources later.
  • In other cases, several entities may share liability for a particular injury, and none will be making payments until those liability estimates are determined. In these cases, CMS will compensate medical providers under the conditional payment clause, ensuring that the injured person gets needed and timely care.

The circumstances of every case will determine if or when CMS should be involved and to what extent.

 

In every case, however, when the injuries are significant and medical services will be necessary over a longer term, then CMS should definitely be approached to assist in establishing a dedicated funding account to cover the cost of those services. The mechanism used to monitor and manage those funds is the Medicare Set Aside (MSA) account.

 

Setting Up the MSA Account

Many people recover quickly from on-the-job injuries, and the immediately available WC insurance resources cover the costs of care and rehabilitation. Some injuries, though, are more severe, cause more extensive damage, or are temporarily or permanently disabling. In these cases, funding to cover long-term medical costs must be established from the funding streams that flow from the injury itself: the WC insurance and other insurance or similar financial pools.

Pursuing these funds ensures that the entities responsible for the damage cover the entirety of care needed to achieve recovery. Setting up these funding streams also makes certain that, in the case of the Medicare recipient, Medicare dollars are reserved for their intended purpose.

 

The mechanism used to aggregate injury-related healthcare costs is the 'Medicare Set Aside' account (MSA). This account holds the 'set aside,' injury-related funding so that Medicare dollars are not needed or sought for that purpose. Additionally, the funds allocated to the MSA do not include the funding required for reimbursement of past payments; those transactions are outside the MSA structure.  Instead, the MSA funds are for covering current and future medical and healthcare costs that are directly related to the on-the-job injury.

 

Estimating the Value of the MSA

Before submitting a draft MSA proposal to the CMS, parties to the case must determine what services and supports are most likely to accomplish the best possible recovery of the Claimant, and then to put an economic value on those services. The process can be fraught with challenges.

 

Determining the Extent of the Injuries

Every MSA is different and is based on the medical needs of the specific injured person.

  • In some cases, the injuries will require life-long supports, such as when a person is partly or wholly disabled.
  • In other cases, injuries may require extensive periods of rehabilitation and retraining, with the expectation being that the injured person will have a full recovery after completing those services.

Many of the cases that are best served by an MSA fall somewhere between these two extremes, with neither total disability nor full recovery possible. Consequently, the parties seeking to establish the MSA must review and elect the optimal types of services that will lead to the best possible outcome: some form of stability for the Claimant with as much independence and function as possible. Further, regardless of the actual or hoped-for outcome, the funding established within the MSA is expected to address all future medical requirements related to the injury.

 

Determining the Recovery and Rehabilitation Options

The type of injury determines the kind of care.

Acute Care

Most injured workers require some form of 'acute' medical services, short-term treatment in the immediate aftermath of the incident. These include surgeries, splinting, pain medications, etc., and are usually covered before any assignment of liability. When CMS pays these costs, it is generally reimbursed for them by the primary payor.

Chronic Care

Sometimes workplace injuries cause lingering effects that will take longer to recover from than just a few days or weeks. Injuries to systems are examples, such as when bodily organs are injured, or joints are affected. These patients often require extensive rehabilitation services, including those offered by rehabilitation specialists, physical therapists, and occupational therapists, and even psychologists. It is often impossible to know the cost of these services until the acute stage has passed, and the medical professionals are in a position to structure a prognosis. Accordingly, it can be particularly tricky to estimate these costs and the impact the services will have on the patient's ultimate recovery.

Long-term Care

In the most severe injury cases, the injured worker becomes so frail or disabled that long-term care is required, perhaps even until death. Head injuries and spinal cord injuries are often the cause of the need for long-term care. Sometimes these costs can also include the price of a care home or in-home services.

 

Estimating the Value of Future Healthcare Costs

Determining the value of injury-related medical costs includes not just the dollar amount but also the duration of time they are needed. After the patient stabilizes, then the medical professionals can usually estimate when, based on research and observation of similar injuries, that person will probably be as completely 'recovered' as possible. The claim management team must then ensure that the MSA includes funding to cover these requirements through to the patient's recovery.

 

In many cases, they use Medical Disability Guidelines to establish reasonable recovery costs and funding values. The guidelines are just that: guides. They do not state with certainty what the cost of any medical service might be. Instead, they provide a range of medical expenses and recovery time values based on extensive data collected about the same or similar injuries or conditions. The claim team can compare the specifics of the instant injury to those of similar injuries and, from those numbers, form an estimate as to what it will probably cost to bring this Claimant back to full functionality.

 

Once the estimated value of the recovery period is established, including all related medical, healthcare, and therapy costs, then the team can determine the value of the MSA. After creating that value, then they can develop and submit the claim to CMS for approval.

 

Gaining CMS Approval

There are several reasons to seek CMS approval for a proposed MSA. The most significant reason from the agency's perspective is because the submission allows CMS to review the recommended values as they potentially affect Medicare's interests. The agency reviews each submission for a variety of concerns:

  •  to ensure that every relevant medical concern has been considered;
  • that the injury requires ongoing care;
  • that the Claimant is still receiving services related to the workplace injury;
  • that the proposed treatments, including medications, therapies and other interventions, are appropriate for the injury at hand;
  • that the primary payors are actively involved in making these decisions, and
  • that the settlement amount (the dollar value that will be 'set aside' is sufficient to cover the anticipated costs.

 

Other reasons for creating and submitting the proposal are to bring all parties to the case current regarding the costs of the Claimant's recovery and to provide assurance to the Claimant that there will be sufficient funds available for the duration of the recovery period.

 

Lump-Sum or Payments Over Time?

After CMS accepts the MSA proposal, there are still some issues to be determined, including whether funding the account should be managed in one lump sum - or in parts over time.

 

There are two perspectives as to which payment method is optimal in any given case. Claimants favor lump sums because then they have the full amount they believe they'll need to get back on their feet. However, a lump-sum payment doesn't reflect future inflation of the cost of services and may not be sufficient to get the Claimant all the way to optimal recovery.

 

A structured settlement, where the funds are distributed into the account on an annual basis, is the preferred method, for several reasons.

  • It allows annual vs. lifetime spending oversight, which makes it easier to ensure that MSA dollars are spent appropriately on injury-related services within any given year.
  • It gives Medicare direction for when it's appropriate to cover medical costs that aren't related to the injury.
  • It allows for inflation adjustments so the payors into the fund can adjust their annual amount based on current costs and not projected costs.

 

Studies reveal that structured settlements can save the payors as much as 34% over the all-in cost of a lump sum payment.

 

Moving on With Life

The establishment of the MSA as a dedicated account launches a new phase in the Claimant's case: with the WC claim settled, they can now move to recovery and rehabilitation. It does not mean, however, that CMS is no longer involved. Over the term of the recovery period, CMS and the payors will be tracking a variety of factors to ensure that the funds are well spent and that the injured party is recovering as completely as possible.

 

But that's a discussion for another post ....

 

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

 

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

 

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

 

AZ Senate Bill 1100 Resets Terms for WC Cases

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

 

  • It empowers claimants to stipulate to terms
    • SB 1100 now adds a third action to establish the termination of the temporary disability period, which opens the door to final settlement discussions. Moving forward, that termination can be set by 1. an award of the Industrial Commission of Arizona (ICA), 2. issuance by the insurer of a final notice of the period, or 3. (newly added) by stipulation of the parties. This provision gives workers more authority over the terms of their WC case.

 

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

 

  • Claimants must attest:
    • That they recognize that they are waiving their opportunity to receive future medical supports for their WC injuries;
    • That any settlement money offered to cover future costs should be held in reserve for those expenses, and
    • That no coercion, duress or fraud compelled them into agreeing to the settlement.

 

  • The employer, carrier or special fund must attest that they have provided the claimant with specific information including:
    • Medically related documentation detailing the possible benefits of any reasonable future healthcare claim (such as medical, surgical and hospital benefits), including the potential cost of those benefits and how that cost was determined. As well, the claimant will receive information about how the value of the current settlement offer represents those future healthcare values.
    • The total amount of indemnity benefits including in the settlement and how those were determined based on several factors including the claimant's age and life expectancy (and how that was established). The documentation must also detail how much of the settlement represents those future indemnity benefits.

 

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

 

  • Federal support services

 

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

 

  • Medical services providers

 

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

 

Maintaining Health After the WC Injury

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

 

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

  • All medical conditions related to the injury must be disclosed to the claimant and included in the final settlement documentation;
  • Carriers/employers must provide for the claimant a summary of all reasonably anticipated future supportive medical maintenance expenses including the anticipated costs of those benefits, and
  • The future settlement provisions are applicable only to those benefits specifically described as a WC injury-related condition.

 

Ancillary Oversights

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

 

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

 

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

 

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

 

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

 

Protecting CMS's Interests

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

  • When the injured is a Medicare beneficiary AND the settlement value is or is greater than $25,000, or
  • The injured person will become Medicare eligible within 30 months of the settlement, and the value of the settlement is $250,000 or more.

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

 

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

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

 

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

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

 

  • The date of Medicare entitlement - when the injured worker became or will become eligible for benefits.
  • The basis for the Medicare entitlement - is the injured person eligible by age or did the injury or illness cause disability or end-stage renal disease?
  • The type and severity of the injury or illness - This criterion requires an overall evaluation of how the injury or illness has impacted the worker. Diagnosis codes are expected, as they connect the injury to the corresponding Medicare healthcare code. CMS is also interested in whether a full or partial recovery is expected; whether the injuries resulted in permanent or temporary conditions such as paralysis, and whether the illness or injuries might cause further health deterioration.
  • Whether the injury is expected to shorten the claimant's lifespan.
  • The claimant's WC classification regarding full or partial disability, and the percentage of that disability.
  • Any previous conditional Medicare payments made that should be recovered, including those that were not covered by the WC carrier.
  • The amount of the proposed gross payment and how it addresses income replacement, loss of function, and/or medical benefits.
  • Whether the settlement value addresses the rest of the claimant's life or just a specific period of recovery. If the proposed settlement does not contemplate lifetime coverage, CMS wants to know its anticipated term and the basis for that determination.
  • The circumstances of the claimant's current living situation and whether that requires extra coverage expenses. CMS is looking for the identity of the payor if the Claimant is receiving or will receive skilled nursing care at home or in a facility as a result of the injury.
  • Whether the expected costs for Medicare-covered services are appropriate considering the claimant's existing and future condition. For this criterion, CMS wants to know if the proposal contemplates all possible consequences of each type of injury. Some injuries often cause related bodily failures that may or may not be foreseeable based on the nature of the injury itself; when foreseeable, the care for those injuries should be covered by the proposed settlement. Additionally, CMS encourages claimants and other parties to consider the cost schedules set out in Medicare Parts A and B for disabled people as a parameter for estimated the anticipated costs of these injuries or illnesses.

 

One Statute Does Not Preclude the Other

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

 

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

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

 

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

 

The MSP Private Cause of Action

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

 

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

 

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

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

 

Still Not Settled

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

  • MAPs payments are drawn from their insurer's accounts and not from the Medicare Trust Fund. Therefore, the government shouldn't reimburse those costs.
  • MAPs have contracts that should (or do) contain clauses allowing for recovery from PPs of conditional payments, and, even when those clauses are absent from the insurance contract most jurisdictions imply that right anyway. MAPs can pursue damages under those clauses.
  • Because MAPs have no relationship to the tortfeasor (the entity or person responsible for the injury), they have no cause of action against them. Instead, their obligation is to the insured alone.

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

 

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

  • The 5th Circuit Court (Texas) has ruled in Humana, Inc. v. Schrader & Associates, 3:16-cv-00354 Southern District of Texas, that the attorney defendants were obligated to reimburse from asbestos case settlement funds the three plaintiff insurers who made payments for asbestos-related injuries. The Court determined that because the asbestos trusts were established via settlements for those injuries, and that the defendant was self-insured as manager of those funds, then the defendant Schrader was a 'primary payor' for purposes of MSP reimbursement.
  • However, in the 6th Circuit case, Gucwa v, Lawley, et al, No. 17-1823, 2018 U.S. App. LEXIS 9428. (April 16, 2018), the Court held that the MSP did not provide a private right of action in an injured individual's lawsuit against the PP because that individual did not, himself, suffer financial damages. The inference is that, had the plaintiff pled those damages, the court may have heard the case based on the MSP standard.

 

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

 

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

  • Clarify all potential Medicare and MAP payors as early as possible and
  • Ensure appropriate management of those interests throughout the case, especially in the MSA settlement process. Failure to provide timely reimbursement of legitimate costs could, in the long run, end up causing double the expense and excess litigation costs besides.

For the first time, parties involved in a Workers' Compensation Medicare Set-Aside (WCMSA) can request a re-review of the MSA value when they dispute the CMS determination or when the financial circumstances of medical care vary from the approved MSA amount by ten percent or $10,000. In the past, insurers, corporations, and injured persons had only one opportunity to seek a re-review of the CMS MSA value determination by submitting a re-review request to the CMS Regional Office (RO) at the time of the settlement. If they remained unsatisfied with the CMS decision after that process, there was no other opportunity to seek an adjustment of what CMS determined to be the appropriate value of their MSA amount. For insurers and self-insured corporations, no further review meant they remained on the hook for the additional costs of care for work-related injuries, even when those costs were appropriately assignable to the MSA.

The newly released “re-review” opportunity, now titled an “Amended Review” allows all MSA constituents a new opportunity in which to argue that the costs of care for these injuries should shift to the MSA. The revised WCMSA Portal User Guide, version 5.1, released July 10, 2017, includes an "Amended Review” section at §12.4.3 that sets out the procedure and grounds for making an Amended Review request.

 

Two Reasons for an Amended Review

As of July 2017, WC case participants can seek an Amended Review if they disagree with the RO decision on the original settlement value, or if the projected cost of care has changed so significantly that the new proposed settlement amount totals more than ten percent or $10,000 from the original CMS approved amount. Only cases that have an approved status with the RO and have no other existing re-review requests pending can seek an Amended Review of the MSA value.

  • Disagreeing with the original MSA value determination

It is not unusual for the professionals involved in MSA cases to offer differing values for the claim. Both the insurance company or corporation and the CMS are obligated to keep their costs as low as possible, which means they must look for ways to reduce current and future costs of care for injured workers. Consequently, sometimes the net value of the MSA determination is insufficient to properly manage their injury or its long-term health consequences.

The new rules authorizing further review of a disputed MSA value allow MSA parties to submit additional information about the case and the projected costs of care to be considered within the original settlement discussions. Although how this actually affects MSA negotiations and agreements remains to be seen, the opportunity to seek another opinion about the future cost of care is most likely a boon to all involved.

  • Requesting a Revised (Amended) MSA Value

The option to review an existing MSA value is new to the CMS and arises from cases where the work-related injury worsens over time, requiring additional, unforeseen medical care costs. While many states permit reopening of WC cases if there is medical evidence that the injury has gotten significantly worse over time, those laws refer only to the original WC claim with the insurance company, and not to the resolution of the claim with CMS. Until this WCMSA Portal User Guide revision, MSA beneficiaries or their insurers had no opportunity to adjust the MSA value to reflect the long-term reality of the WC-related injuries.

 

Limitations on the Amended Review Process

Appropriately, the new WCMSA rules establish parameters that limit the timing and circumstances of Amended Review requests:

  • Submission of the original MSA settlement must have occurred between one and four years before the Amended Review request. For example, if the original MSA settlement date is July 1, 2015, then the period for requesting an Amended Review of its terms runs from July 1, 2016, through June 30, 2019.
  • An existing open Amended Review request prohibits a subsequent request.
  • The requested MSA value adjustment must be either (whichever is greater) ten percent more than the existing value or add at least $10,000 to the existing value. Medical and legal documents are required to prove the validity of the requested amount.

 

Workplace injuries impair both the life and future of injured workers and businesses and insurance companies work hard to be sure injured workers are well cared for through the term of the injury. MSA accounts are designed to cover the future medical costs of those injuries. The Amended Review process gives injured workers and those who support them the opportunity to seek an adjustment to the MSA account when its value doesn't meet the needs of the medical case.

For more information about establishing or maintaining a Worker's Compensation MSA, contact CompEx MSA today.

Last month, CompEx MSA National Division LLC (CompEx MSA) received notice that the State of Florida has certified it as a Minority-Owned Florida Certified Business Enterprise. The certification secures our position as a valued vendor of Medicare Set-Aside services within the state and the country and celebrates the fact that our Hispanic American heritage expands the State's rich history and culture.

 

Florida enjoys a reputation for being pro-business and its recognition of Woman-, Veteran-, and Minority-owned businesses underscores its commitment to the work of all its diverse populations. By encouraging and actively supporting businesses owned and operated by women, veterans, and citizens of minority heritage, the state provides a healthy and robust economy for all its citizens.

 

As a certified Florida Certified Business Enterprise, CompExMSA is now eligible to work directly with state government procurement professionals to ensure they and their people receive the best possible services if the need for a Medicare Set-Aside agreement arises. The Minority-owned designation opens doors to new business and economic opportunities that promise growth for our company, our community and the State of Florida. We appreciate the leadership and support provided by the state of Florida as it works to improve economic opportunities for all Floridians, regardless of their gender, ethnicity or other distinguishing factor. We look forward to many years of growing the State's economy by providing exceptional MSA plan establishment and management services, employment opportunities and the chance to share our Hispanic culture with our Floridian friends and neighbors.

 

We at CompEx MSA are proud to offer our Medicare Set-Aside services to people all over the country while enjoying the great benefits of living in and working with the great state of Florida.

Settling a Workers' Compensation (WC) claim can be a long and arduous journey that many resolve through the establishment of a Medicare Set-Aside (MSA). However, the terms of these legally binding agreements are expected to cover all contingencies over the course of the worker's lifetime. What happens when circumstances change and the conditions of the settlement no longer achieve the goals of the injured party? A recent California case indicates that trying to change the terms of an MSA may end up being another long and arduous journey.

Setting Up the MSA

The Medicare Set-Aside (MSA) agreement is designed to provide resources for the long-term best possible care for a lingering injury and its consequences. Through the process of the workers' compensation case, the parties to the case - the worker, the employer, the insurance company and Medicare - negotiate to ensure proper compensation for the injured worker while containing the long-term health care costs to those related solely to the workplace injury itself. The resolution of the case, via a settlement agreement providing an MSA, is intended to ensure the worker's long-term comfort (as much as possible) and offer reasonable assurance to the insurance company and Medicare that the case will remain forever closed.

The Best Laid Plans ...

Recently in California, however, an MSA agreement was tested for its capacity to address all contingencies after the WC closes. There, an injured worker sought to change the terms of his MSA so he could eliminate the third-party contractor from the MSA agreement and assume its administration personally. The injured worker, Applicant Fernando Villalpando, filed a claim before a Worker's Compensation Administrative Judge where he argued that he was not satisfied with the care he received through the services of the MSA administrator and that his experience justified the modification of the agreement. By filing and arguing the case, however, Mr. Villalpando inadvertently revealed several legal anomalies specific to MSAs that are not yet resolved but will, in all likelihood, continue to arise in future MSA cases.

The Underlying Case

Villalpando based his WC complaint on injuries suffered between 2002 and 2003; the Compromise and Release (C&R) agreement containing an MSA and a third-party administrator, was reached in 2011.  Although the agreement contained a clause whereby Villalpando released the third-party company from liability for "failure to ... correctly administer a Set-Aside account ...," it may not have included language that allowed for such a modification at any time, even though the agreement was set to run for 29 years. Villalpando argued that the medications he was on when he agreed to the settlement prevented him from fully comprehending the nature of the contract; that the third-party administrator moved forward with the MSA without his consent, and that the MSA failed to include two medications potentially because they were too expensive.

The WC judge (WCJ) denied the petition because the Applicant had not shown that the administration of the account was inappropriate. Villalpando appealed, and the WC Appeals Board (WCAB) remanded the case back to the WCJ. In its written opinion, the WCAB spoke to the many unanswered questions posed by the case starting back when the MSA was established in the first place.

The WCAB pointed out:

  • The WCJ hadn't evaluated the terms of the MSA agreement itself to determine if it DID have language permitting its modification;
  • Without that data available to the WCAB, the panel could not determine if such a modification was permissible;
  • If there was such language, and the Applicant was able to seek the change for self-administration of the MSA, then
  • Mr. Villapando must present evidence that he is competent to manage the MSA account appropriately.
  • If the agreement was silent on the issue, then the WCJ would have to address Villalpando’s issue within that context.

The WCAB sent the case back not just to the WCJ, but also to Villalpando's original attorney, so he could get the legal assistance he needed to understand the terms of the MSA agreement and his rights and obligations contained within it.

Questions, Questions ...

The case offers insights for any entity charged with the crafting of an MSA agreement. At the least, they should consider and account for all possible future contingencies, including the need for any party to the agreement to seek a change to its terms after the case closes. Depending on the facts of each WC case, it may be wise to include language allowing the injured individual to review and modify terms after sufficient time as passed for that person to gain clarity about the sufficiency of the agreement to meet long-term needs. And, to alleviate the need for unnecessary judicial review, perhaps the MSA should include language that lists the requirements necessary for an injured person to self-administer their MSA and the evidence required to prove competency for that purpose.

By addressing the concerns revealed by the Villapando case into each MSA going forward, claimants, attorney’s, and MSA administration agencies may prevent the need for another long, arduous legal journey through the WCAB process.

 

https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent-cases-news-trends-developments/archive/2017/04/16/california-medicare-settlement-agreements-the-perils-of-unanticipated-problems-after-settlement.aspx

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