CMS Releases new policy memo
In a memo dated 08/25/2008, Centers for Medicare & Medicaid Services addresses several important aspects of the Medicare Set-Aside process.
First, CMS has released policy regarding pricing of implantable devices. In the example given, Spinal Cord Stimulators now must come with specific rationale for the pricing used. In the past, in contradiction of CMS policy and defying all logic and reasonableness, the WCRC simply used a fixed amount for a SCS regardless of jurisdiction or fee schedule. MEDVAL has always used the new methodology outlined in the memo and now CMS apparently agrees with our approach.
But Medicare Set-Aside allocators be forewarned. In CMS’s own words “Effective with WCMSA submissions received by the Centers for Medicare & Medicaid Services’ (CMS’) Coordination of Benefits Contractor on or after September 1, 2008, if the WCMSA proposal includes the pricing for any Implantable Device(s) and does not include enough information as illustrated on the sample, “Pricing for a Spinal Cord Stimulator,” or if the WCMSA proposal does not include pricing for any Implantable Device(s), and it is determined upon review of the WCMSA proposal, an Implantable Device(s) is recommended for the claimant and CMS will then utilize its own cost-finding methodology“. Emphasis added because that’s just plain scary.
Second, CMS has rescinded prior guidance that will allow parties to petition CMS for release of the set-aside funds if certain conditions were met. Never mind that carriers and claimants probably agreed to and funded higher Medicare Set-Asides than reasonable with the promise that the work of the WCRC could be undone after five years with the benefit of hindsight. For now, unless some disenfranchised claimant comes forward to represent the class and challenge this policy on its constitutional merits, CMS has just “protected the trust fund” on the backs of unsuspecting payers. Generally, well crafted public policy dictates a grandfather clause when new legislation affects prior, irrevocable decisions. Even the IRS gets that.
Finally, Centers for Medicare & Medicaid Services has strengthened the language of determining life expectancy via a rated age. Now the submitter must certify that they used all of the rated ages obtained. The problem with using a median rated age is that rated ages have little to no bearing on a claimant’s actual life expectancy. Rated ages are used primarily by life insurance companies to make their annuity rates more or less competitive for a given class of claimants. It makes no sense that a 42 year old quadriplegic rated standard by Met Life (because they don’t want the business) should be averaged with a 65 year old rating from Liberty Life (who does and is comfortable with the risk). Individual rated ages have no bearing on a claimant’s actual life expectancy. Plus, the life companies and structured settlement brokers sure must be tired of providing rated ages for the convenience of CMS.
We applaud the pricing methodology for implantable devices. We deplore CMS’s decision to rescind the ability to petition for redress of a poorly reviewed Medicare Set-Aside (of which there are many). And the rated age guidance will have little to no effect since brokers will learn to only give the Medicare Set-Aside companies the highest rated age since they are not a party to the attestation requirement. Besides, insurance company provided rated ages have no place in determining actual life expectancy any more than the WCRC has in predicting a claimant’s future medical needs. But then again CMS proved in its May 2008 memo that it did not actually care about empirical proof of life expectancy as compiled by the CDC when it implemented the universal use of Table 1 which totally disregards sex, race and any other contributing factors that have been proven to effect life expectancy.
MEDVAL 1-888-SET-ASIDE (1-888-738-2743)
Medicare Set-Aside Allocation/Arrangement Recommendations
Submissions to Centers for Medicare and Medicaid Services
Pharmacy Benefit Management