by Erin Collins & Shannon Metcalf, Hedrick Gardner Kincheloe & Garofalo, LLP
The Centers for Medicare and Medicare Services (CMS) issued an updated workers’ compensation Medicare Set Aside (MSA) Manual on July 31, 2017 (which was dated July 10, 2017), with new information and options with regard to MSAs. This article is intended to update practitioners on these developments and provide a brief analysis of the new changes, which include 1) a new one-time “Amended Review” process for previously approved MSAs; 2) seemingly new restrictions on CMS approval of “zero-dollar” MSAs; and 3) other various changes that likely impact the workers’ compensation practice.
The “Amended Review” Process:
CMS is now allowing “re-review” of prior approved MSAs under certain circumstances. The “Amended Review” process and allows parties to obtain a second review of MSAs where the parties believe the projected care has changed so much that the new proposed MSA would result in a 10% or $10,000.00 change (whichever is greater) in CMS’ previously approved amount. To be eligible for this re-review option:
- The case must still be open and may not have already settled;
- The original MSA must have been approved between one and four years from the date the Amended Review is requested;
- There must not be a previous request for an Amended Review (so can only do this once); and
- The requested MSA change must result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.
o Note, the new proposed MSA amount can be greater than or less than the approved MSA amount. The example CMS gives is for an Amended Review to increase the MSA.
This process could work well in files sitting around with old, approved MSAs that made the claim unable to settle at the time the MSA was approved by CMS. However, issues may arise where cases are “partially” resolved (ie: indemnity only) or cases are resolved on a contingent basis as it is unclear whether CMS will consider those cases to be “settled” and therefore, ineligible for review. Please also note the prior re-review processes are still in place, which includes: 1) the CMS determination contains obvious mistakes or 2) the parties have additional evidence not previously considered by CMS, which was available prior to the submission date which warrants a change in the CMS determination. These prior processes were historically only successful in a very limited set of circumstances.
Zero-Dollar MSA approvals:
The second change will likely impact practitioners with clients who have historically obtained CMS’ seal of approval on their decision to not set aside any funds for future Medicare-covered medicals for a Medicare beneficiary. For example, CMS traditionally would approve these “zero-dollar MSAs” in denied claims where no benefits had been paid by the Defendants and the settlement reflected a true compromise of a disputed claim. CMS’ placement of the discussion of “zero-dollar MSAs” in the user guide under the “Hearing on the Merits” section indicates the parties may now need to provide CMS with a court order after a hearing on the merits to get a zero-dollar MSA approved by CMS. From a practical perspective, there are very few scenarios where this is going to be possible in the North Carolina workers’ compensation process. It is still yet to be seen whether CMS is going to freeze all approvals of zero-dollar MSAs except for in very limited circumstances; however, practitioners should be cautious when electing to submit a zero-dollar MSA for approval as the response may ultimately be a full projection of lifetime future medicals.
Other Changes in the New MSA Manual:
There are a variety of other changes that took place in the July 10, 2017, version that will impact the value of MSAs moving forward. These changes include:
- CMS has advised they will now be including the cost of TENS units in cases involving treatment of chronic lower back pain.
- CMS has advised they will no longer be using “across the board” pricing for spinal cord stimulators or other implantable devices. They used to price replacements at a set price of $30,274 in every jurisdiction. Now they are going to price them out specifically for each jurisdiction, which means the pricing in NC will likely be a lot higher than the former price.
- CMS has advised the pricing for hospital services are not going to be based on what those should be in the specific area where the claimant lives, but based on what a major medical center in the state would charge. So, for instance, if your claimant was going to have surgery in a Fayetteville hospital, CMS will likely price it based on what a Charlotte or Raleigh hospital would charge for the same service, which will be more. Fee schedules are applicable throughout the state, but that does not mean certain hospitals do not use different codes for pricing, etc.
- CMS added the following language to the definition of “total settlement amount” when trying to determine if the review thresholds are met: “amounts forgiven by the carrier.” This can be interpreted many different ways, and could potentially be interpreted to include payment of Plaintiff’s portion of mediation fees and the Defendants’ agreement to not seek reimbursement for Claimant’s portion of the clincher processing fee. Remember, submission of an MSA to CMS is a voluntary process.
- CMS now allows parties to change MSA vendors. In the past only one vendor could be involved in the process of an MSA submission. Now a party can change vendors if desired.
These changes only impact MSAs that are going to be submitted to CMS. It is important to remember that CMS submission is a voluntary process and is not mandated by any federal law or administrative memorandum. Many parties still require/demand CMS submission as a part of their guidelines/claims handling and for those parties, these changes will most certainly impact the day to day handling of their claims. For parties that do not have specific requirements for CMS submission, it is important to remember that non-submission is always an option.