Is a CMS Counter an Approval?

Medicare Set-Aside Blog on January 24, 2013 | Posted by


Workcompcentral recently reported on a work comp appeal out of Tennessee that brought up the issue of enforcing settlements on the contingency of CMS approval. In this particular case, Liberty entered into a medical only settlement for around $80,000 contingent on approval by CMS, and CMS countered for a little over $550,000. Liberty appears to have tried to get CMS to change its opinion for nearly 2 years and the claimant got tired of waiting and moved to enforce the settlement. Regardless of the jurisdictional issues in play in this particular opinion, the ultimate issue here is whether a CMS counter is an approval or not. Liberty’s original motion to set aside the settlement agreement was based upon the failure of the condition precedent, i.e., approval by CMS. 


CMS approval would imply that CMS approved the amount of the MSA proposed when you asked the agency for its opinion. By proposing a different amount that it deems “protects Medicare’s interests,” CMS has essentially made a counter offer. This is really no different than the concept of offer and acceptance in contract law. By sending the initial proposal, the settling parties are saying they agree to fund an amount of money for future medical expenses in exchange for CMS not seeking future reimbursement in excess of that amount. By countering, CMS is saying that it rejects your offer and instead makes the offer that if you fund the alternative amount, then it will not seek reimbursement in excess of it and that is not an acceptance. 


To date most cases like this have been disposed of on the grounds of meeting of the minds. How can you possibly contemplate settlement on an amount different than that which you agreed? Yet many cases are upheld on the contractual agreement alone when parties agree to fund what CMS says. Unfortunately the decision to settle on those grounds is frequently made by people that have no direct experience with the WCRC and the frequently baseless and irrational determinations it puts forth. Recent trends include funding over the counter drugs not covered by Part D, funding MRIs with and without contrast but billed as 2 separate procedures and interchangeable state fees schedules when the abbreviations are close, like MA for Maryland rather than MD.  But because the WCMSA review program is voluntary and not governed by any law or regulation, CMS has no obligation to change these opinions, just as it is not obligated to grant one. The bright side to this is that you are under no legal obligation to follow that opinion either, UNLESS YOU HAVE AGREED TO DO SO BY CONTRACT. 


So the take away here is IF you insist that CMS’ opinion is of some value to you and you absolutely can’t live without it, consider 1) getting it early in the settlement process so you know what that number is before you agree to settle, 2) leaving yourself the option to leave medicals open or renegotiate if such an adverse determination comes back and 3) reconsidering your position on CMS approval until some formal rules become available. 


With respect to the underlying issues here, the case in Sullivan County was dismissed without prejudice to the claimant’s right to seek relief in Knox County. Now the original Knox County case was sent to Sullivan County after Liberty’s motion to dismiss was denied and not remanded in this order; therefore, it is assumed that claimant needs to start over. I sincerely hope that we get the benefit of witnessing the ultimate resolution of this case because the fact that CMS’ opinion is not binding standing on its own must be understood by legal and insurance professionals throughout the nation.


DRAINE v. S & ME, INC.
No. E2012-00384-WC-R3-WC
Supreme Court of Tennessee, Special Workers’ Compensation Appeals Panel
January 22, 2013