Legislative Analysis on 2011 CMS WCMSA Submission Data
Over the past few days, I have been repeatedly asked to explain my opinion of H.R. 5284, primarily my criticism of the fixed percentage MSA option for claims under $250,000. While it is a great solution for carriers, the bill leaves Medicare exposed and, given that the goal of the MSP is to protect the Medicare trust fund, has little chance of becoming law. Forget for a moment the potential for abuse in settling claims within the safe harbors and look only at the impact of the legislation on real claim data. I randomly pulled settlement data from 400 claims that MEDVAL submitted to CMS in 2011 and looked for some trends. Here’s what I found:
Of the 400 claims, 82 of them settled for more than $250,000 and would not be eligible to use the fixed 15% option. In those cases, MSAs ranged from $11,500 (4% of total settlement) to $570,000 (91% of total settlement) with an average MSA at 47% of total settlement. Claims that are merely ineligible due to random dollar amount establishment will pay on average 32% more in future medical projections than cases that happen to be under threshold.
Of the 318 eligible claims, the average indemnity payout was $56,300, and of the 82 ineligible cases, most paid out less than $100,000 in indemnity.
Of the 318 eligible claims, 92 of them were worse off by taking the fixed 15% option. On average, the 15% contribution was 235% more than the MSA as would have been projected under CMS standards and submitted.
Of the remaining 226 that were eligible for the fixed 15% option, the traditional MSAs would have funded nearly $10 million, whereas under the new option, only $6.5 million would have been set aside; therefore, Medicare’s exposure to providing related benefits again increases particularly because nearly half of the cases included MSAs that made up more than half of the total settlement amount.
Although these losses in reduced set-asides would likely not be a part of the scoring since it is not a realized expense yet, the additional contractor costs that would be needed to increase its production to get cases out in 60 days, funding for the appeal process and the losses in collection of past conditional payments and future exposure in cases settling for less than $25,000 will show enough negative financial impact to kill this bill, again.
Now for arguments sake, to evaluate the impact of the bill, we must assume that CMS’ methods are even the proper estimation of Medicare’s future exposure, which I strongly dispute. Based upon the changes from the previous bill, it is obvious that H.R. 5284 is attempting to codify CMS policies and that is part of the problem with the broken system they are trying to legislatively fix. I have never supported the use of AWP, but understand that CMS needed to pick something that could be implemented consistently across all jurisdictions for the ease of tasking its contractor (try not to get stuck on the fact that they haven’t been terribly consistent in its application). Forget the spinal cord stimulators and intrathecal pumps we’ve unnecessarily funded over the years just because CMS told us to despite claimants’ absolute refusal to undergo such surgeries. The bill does nothing to take the subjective and overreaching problems out of the process that are the main drivers of the true MSA spend. Even if the CMS calculation method suddenly became reasonable, the fact that neither the fixed percentage option nor the approval program are available to all claims renders it unfair and constitutional implications come into play. The only way a fixed percentage would work is if it were mandatorily applied to all claims, but that would force claims with little to no medical exposure to pay as well. But in the aggregate if applied to all claims, the contribution & contractor savings would likely be sufficient to provide treatment, particularly considering that much of it would have been Medicare’s responsibility anyway. Much of the MSA treatment projected is an exacerbation of a preexisting condition and/or natural aging. Seldom are joint replacements, absent a crush injury, solely the result of a work injury as opposed to a lifetime of obesity or degenerative predisposition. Seldom do chronic back pain cases not have a history of prior back problems evident in the record. But if the individual happens to reach the need for treatment during work, then Medicare is forever spared the expense and given that Medicare is an entitlement gained from years of mandatory payroll contributions on both the employer and employee, doesn’t it seem wrong to deny the employee the benefit he paid for and to make the employee pay for the same coverage twice? Why is no attention ever paid to the free ride that Medicare gets in cases like these where it is shifting the burden of medical care onto the private sector?
But the one thing this analysis really made me think about is if we are not going to get an MSA evaluation because we can send 15% of our total settlement directly to Medicare and be done with it, how does one arrive at total settlement amount as defined in subsection (p)(2) as it includes “all future medical expenses”? If an MSA evaluation was already obtained to determine total settlement amount and it ends up being less than $250,000 when added to the indemnity (which is likely less than $100,000 based upon the data above), how do you then send 15% for a maximum contribution of $37,500 when you now actually know that the MSA was more? Would that still be “an intentional shifting of the burden to Medicare” if mandated by statute?
My position remains the same that it has always been – we don’t need a legislative fix to a voluntary program. We, as an industry, need to find and agree upon alternative solutions that don’t involve the federal government and, believe it or not, that would make the federal government happy too because it could stop funding contractors to manage these unnecessary programs. If we, as an industry, take measures to ensure that Medicare never makes payments related to an insured injury, then Medicare has no exposure and is protected. Over the last decade, we have proven that we’re not afraid to write large checks in furtherance of that cause but unfortunately those funds were put into the hands of claimants leaving no one, including Medicare, protected should the funds not be utilized properly. The risk of future reimbursement demands by Medicare is one that can be managed and as an industry full of professionals who allegedly do just that, why are we pursuing unnecessary solutions from the federal government?