Two Bills Favor MSA Appeals Restructure

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


The Right to Appeal

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


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


Addressing a Long-term Aggravation

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


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


CMS-MSA  Procedures in Absence of a Right to Appeal

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


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

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


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

  • CMS issued an approved (or conditionally approved) amount between 12 and 48 months prior to the disputed determination;
  • The case is still open, and
  • Changes in future needs for care require additional funds of 10 percent or $10,000 over the approved amount (whichever is greater).

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


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


Two Bills May Fix the Problem

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


Senate Bill 3079

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


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

  • Seek Reconsideration of the Determination from the CMS;
  • If not satisfied, then consider requesting a hearing before an Administrative Law Judge, and finally,
  • Seek a formal Judicial review.


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


House Bill 6619

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

  • It, too, provides a formal process for appealing an unsatisfactory Determination.
  • It creates the criteria to establish the amount to be set aside for future care. This provision preempts CMS's opportunity to reject a settlement because it disagrees with the proposed MSA amount.
  • HB 6619 mandates that all Medicare contractors recognize the provisions of their state's workers’ compensation laws. Each state manages its workers’ compensation cases differently and not all Medicare contractors recognize all of those disparate state rules.
  • Finally but not inconsequentially, the Bill adds an option for workers to make a direct payment to CMS for the value of their future care.


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