CMS Issues Updated WCMSA Reference Guide with New Section on Non-Submitted MSAs: Sanderson Firm Response and Commentary
Yesterday, the Centers for Medicare & Medicaid Services (CMS) issued an updated WCMSA Reference Guide. The updated Guide includes a new section 4.3 which states the following:
4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care
A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.” 42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest.
Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.
As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.
Sanderson Firm Commentary:
This new section in the updated WCMSA Reference Guide is likely in response to the increasing number of workers’ compensation insurance carriers/payers that have been opting to utilize industry Evidence-Based Non-Submit MSAs instead of submitting MSAs to CMS.
An increasing number of workers’ compensation self-insured entities and insurance carriers have come to prefer Non-Submit MSAs given that CMS offers limited recourse for appeal/reconsideration if the submitter/carrier takes the position that CMS issued an incorrect determination.
Certainly, it is anticipated that the Workers’ Compensation Review Contractor (WCRC) has likely experienced fewer and fewer MSA submissions over the last 5-10 years due to the industry’s increasingly growing adoption of Non-Submit MSAs (this impacts the WCRC’s bottom line as the WCRC is paid on a case-by-case basis). Rumors have been speculating of possible lowering of the CMS review threshold for Medicare beneficiaries from a $25,000 settlement amount to a $10,000 settlement amount.
Our commentary/opinion in response is the following:
1. Unfortunately, CMS has mistakenly ignored an important part of the Code of Federal Regulations, specifically 42 CFR 411.46(d)(2) which allows settling parties to carve a portion of the settlement out for future medical care. This section specifically references that if a specific portion of the settlement is apportioned to future medical care, that CMS will only coordinate benefits up to the future medical care amount. 42 CFR 411.46(d)(2) states:
“If the settlement agreement allocates certain amounts for specific future medical services, Medicare does not pay for those services until medical expenses related to the injury or disease equal the amount of the lump-sum settlement allocated to future medical expenses.”
Thus, this new Section 4.3 in the WCMSA Reference Guide which states that CMS would deny care up to the settlement amount on Non-Submitted MSAs rather than coordinating benefits only up to the future medical amount runs afoul of what is legally established in 42 CFR 411.46(d)(2). Furthermore, CMS bears the burden of proving that a Non-Submitted MSA does not appropriately protect its interests. CMS may not automatically deny medical care on the sole basis that an allocation was not submitted for approval because CMS submission is voluntary. Therefore, in instances where a medically and/or legally defensible Non-Submitted MSA is prepared and funded, it is our position that CMS does not have a legal basis to deny future medical care.
2. Submission of an MSA to CMS is completely voluntary, and CMS states this several times throughout their WCMSA Reference Guide. For example, Section 1.0 states: “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.”
3. Section 8.1 of the WCMSA Reference Guide includes two examples where CMs has indicated that a non-submit allocation would be appropriate:
Example 1: A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim is offered settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00).
Example 2: A 47 year old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.
Notably, these examples specifically involve scenarios where CMS review thresholds are not met; however, non-submit allocations for above-threshold cases are equally capable of protecting Medicare’s future interests. CMS cannot mandate submission of MSAs that meet its administrative review threshold as the process is voluntary.
4. In certain scenarios, CMS routinely overinflates future medical care. For example, where a physician prescribes opioids to an individual six to twelve months prior to an MSA submission, CMS consistently allocates these dangerous and addictive drugs for the full life expectancy of the individual (and at the same dosage and frequency) even though a physician would later wean the individual off such opioids. CMS’ lack of consideration for weaning opioids is one of the most common contributors to over-inflated allocations. Given that evidence-based / non-submit allocations typically wean such medications over time, which is entirely consistent with national standards of medical care and provides improved standards of care for Medicare beneficiaries, these types of allocations result in a medically reasonable protection of Medicare’s future interests without resulting in an inappropriate windfall to the Medicare Trust Fund.
5. If CMS desires to make the MSA submission process mandatory where its review thresholds are met, it must do so through legislative rulemaking authority. As stated in the WCMSA Reference Guide, no statutory or regulatory provisions require submission of an MSA to CMS. Further, no statutory or regulatory provisions even require an MSA. Medicare Set-Asides have been created through administrative mechanism- at the outset in 2001, via CMS memoranda and now via the WCMSA Reference Guide.
6. No changes to the MSP or MSA requirements have been made. It is our opinion that CMS is overextending its reach in adding this statement to the WCMSA Reference Guide as it does not coincide with the Code of Federal Regulations, particularly 42 CFR 411.46(d)(2). Parties may choose their mechanism to protect Medicare’s interest as the CMS submission process is a voluntary administrative procedure.
7. Lastly, each workers’ compensation payer should carefully make their own choices on CMS submission versus non-CMS submission. Sure, submission of an MSA to CMS provides finality, but submission risks an overinflated MSA allocation and provides parties with limited avenues for re-review should medical circumstances change. For example, consider a scenario wherein the parties submitted an MSA to CMS 7 years ago and have not yet settled, and the parties are completely unable to obtain further review/Amended Review with CMS since the CMS determination is more than 6 years old. The parties are unfortunately stuck with their outdated CMS determination which does not accurately reflect the claimant’s current medical circumstances.
Please contact me with any questions or concerns on this WCMSA Reference Guide update.
