To submit or not to submit
Question by an attorney looking to do the right thing for her client:
This is a workers’ compensation claim involving full and final settlement for future medicals. The MSA was prepared March 25, 2009. Settlement documents were completed and approved by the judge in October 2009. Because the MSA was done prior to CMS’ June 2009 revamping of prescription costs, donut hole, co-pays, etc., the MSA proposal would need to be increased to bring it in line with the changes.
The recommendation by my clients’ third-party vendor is to not submit the Settlement Agreement with MSA proposal to CMS for formal approval. Their recommendation seems to be to make no changes to the MSA we already have. The theory is that the purpose of the Medicare Secondary Payer Act is to ensure that Medicare’s interests are considered and adequately protected when there is a settlement closing future medicals. There is no specific requirement stating that CMS approval is mandatory.
I appreciate there has never been a formal statutory requirement that parties to a workers’ compensation claim with MSAs for future medicals submit the proposals to CMS and gain formal approval. However, my personal belief has been that the submission to CMS with the resulting letter from CMS approving the proposed MSA has provided at least some extra level of protection to my clients in case there is ever a question (or assertion) as to whether the MSA was properly funded.
I think regardless as to whether we ultimately submit the settlement with proposed MSA to CMS, at a minimum we would need to have the MSA revised and funded to account for the changes that became effective this past summer. I am not sure how comfortable I am with the “let sleeping dogs lie” approach being recommended by the vendor.
For the record, we are not the vendor in question but would probably agree with their recommendations depending on the specifics of the case.
This attorney is correct that there is no formal statutory requirement to submit an MSA to CMS for approval (nor a requirement to do an MSA at all for that matter). She is also correct in her analysis that seeking CMS approval provides a benefit to her client, presumably the insurer. Namely, CMS has indicated that if the parties go through the formal WCMSA review process, CMS will probably not come knocking on anyone’s door in the future looking for reimbursement in the event the claimant eventually taps Medicare for treatment of a work related injury.
But it also has an associated cost. Sometimes a MASSIVE cost.
For example, we recently had a case where an MSA was prepared 18 months ago and the Insurer settled based on the amount at the time (around $130,000). When updating the MSA to new CMS protocols, the cost ballooned to over $500,000. Not because the treatment changed, not because we used some sort of loophole to artificially reduce the MSA (more on that subject later) but solely because of AWP and the idea the CMS will look to the claimant’s current medication regimen as a reliable predictor of future utilization.
No one involved in the claim has any doubt that $130,000 is more than adequate to make sure this claimant never seeks Medicare coverage for her work related injury. Her exact drug regimen can be purchased for 60% less than the AWP pricing used by CMS. So the question becomes, is the CMS approval worth $370,000 extra dollars? Are the real and imagined risks of CMS “coming after” the insurer worth paying $370,000 today for an injury that will likely never consume the $130,000 originally set-aside?
I don’t know. That is a risk management decision for the client to make. If you want my opinion, as long as the MSA was based on a rational, logical and reasonable course of future treatment, then CMS has an almost insurmountable burden of trying to prove that the insurer did not meet their obligations under the MSP. If the claim is worth $130,000 for future medicals than that is what should be set-aside. No more and no less.
I think it would be appropriate to look at what the new review protocols would cost relative to the actual value of the case and the amount that would reasonably protect Medicare’s interests. If it is in an acceptable dollar range and the client feels the review process provides a benefit, then by all means submit the case. If the MSA was calculated using some dubious method (like deducting the donut hole or using Medicare co-pays which in my opinion was a massive fraud perpetrated upon the insurance industry and genuinely injured workers to increase market share and profits by a few MSA vendors) then it should be recalculated to reflect the correct amount to be set-aside. Not because CMS or WCRC protocols demand it, but because it is your client’s obligation under the MSP.
Medicare Set-Aside Allocation/Arrangement Recommendations
Submissions to Centers for Medicare and Medicaid Services
Pharmacy Benefit Management