CMS Holds MSA Non-Submit Town Hall Call and Is Still Wrong

CMS Holds Non-Submit MSA Town Hall Call & Is Still Wrong: Cattie & Gonzalez Present Non-Submit MSA Options in 2022

February 18, 2022, by Cattie & Gonzalez, PLLC

Executive Summary?– CMS has overstepped its legal authority with its recent non-submit MSA position. While some are certain to fall in line with CMS’ wishes, others will seek alternative means to take Medicare’s future interests into account when settling future medical care associated with a workers’ compensation claim. Our intent here is to provide employees, employers, carriers, and third-party administrators options to continue, in good faith, to appropriately, legally, and safely take Medicare’s future interests into account. This would allow settling parties to remain compliant with MSP law, continue current business practices, and keep within the mandates and requirements of each state law, which are advantageous to all workers’ compensation industry stakeholders.

Introduction.

2022 opened with fireworks in the Medicare Set-Aside (MSA) world. In January 2022,?CMS updated its Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide , announcing it would not honor non-submit, evidence-based WCMSA allocations. The announcement indicated that in such a situation, Medicare may deny payment of future medical bills related to the settled claim through the time in which the claimant could prove that he or she had spent the entirety, or 100%, of the settlement, minus procurement costs such as attorneys fees and litigation costs, on future medical expenses related to the claim.

On February 17, 2022, the Centers for Medicare and Medicaid Services (CMS) held a town hall webinarto discuss a variety of WCMSA topics, including a summary of what’s new in Medicare set-asides, and to address questions related to the inclusion of treatments, application of state rules, and re-reviews/amended reviews.?

The webinar started with opening remarks and was followed by a presentation and a live question and answer session by John Jenkins from CMS. Mr. Jenkins commented about several items of interest in the WCMSA world, including settlement documents, MSA electronic attestations, claim denials based on state laws, and WCMSA re-review and amended reviews process and procedures.?

Unfortunately, CMS addressed its latest announcement on non-submit WCMSAs, what everyone in attendance was primarily interested in hearing about, last, providing the subject the least amount of time. Mr. Jenkins spoke about the intent and need behind the latest clarification, reiterating that CMS’ latest announcement “was not new, or added any new responsibilities.” Mr. Jenkins indicated that CMS’ policy on under-threshold submissions and prospective/retrospective application of the policy “are still the same and very much in line with this latest non-submit announcement.”

Though he addressed several questions of interest to the workers’ compensation community, Mr. Jenkins did not answer any questions regarding current statistics which explained CMS’ rationale for its recent announcement, any questions regarding statutory or regulatory authority to dismiss altogether non-submit WCMSAs, any questions pertaining to the lack of clarity regarding CMS’ expectation that net settlement amounts be exhausted completely before Medicare becomes the primary payer on work comp related medical expenses, and any questions dealing with the unavailability of a full and comprehensive administrative appeals process allowing employers, carriers, and third party administrators to dispute Medicare’s denial of payments when there exists a non-submit, evidence-based, or legal opinion WCMSA. All questions being posed by the workers’ compensation community in light of the recent announcement.

So, now that we have heard from CMS on this latest announcement, now what? Where do we go from here? Are there viable options for injured workers and their representatives when taking Medicare’s future interests into account? What good faith alternatives exist for employers, carriers, third party administrators, and their lawyers to take Medicare’s future interest into consideration? Are there still non-submit WCMSA options available to litigants in workers’ compensation claims that will hold up in court? Do parties in work comp cases have any choice but to submit their WCMSA to CMS for review and approval in order to walk away from settlement protected? And what about cases or claims that fail to meet the review threshold? How can the work comp industry comply absent a CMS-approved WCMSA?

Medicare Lacks Statutory and Regulatory Authority to Dismiss Good Faith Attempt to Comply with MSP Act.

As we have previously shared with you , and once again state clearly here, Medicare currently lacks the statutory or regulatory authority to effectively enforce these recent announcements. The Medicare Secondary Payer (MSP) Act does not support this announcement. No current regulation Medicare has promulgated in support of the MSP Act supports this announcement. And the WCMSA submission process has always been and continues to be a voluntary process (according to CMS) for workers’ compensation litigants. Simply put, there is no legal basis for requiring parties to submit a WCMSA allocation for review and approval to CMS as the sole means of ensuring that parties comply with the future medical provisions of the MSP Act. Nothing in the CMS Town Hall call on February 17, 2022, changes that.

The only future medical legal requirement that presently exists under current law is quite simple. Parties resolving workers’ compensation, auto, liability insurance (including self-insurance) and no-fault insurance claims must ensure that Medicare remains a secondary payer pre- and post-settlement. That’s it! Contrary to popular belief (and CMS officials on the February 17, 2022 call), there is no statutory or regulatory requirement today that specifically states that parties resolving a workers’ compensation claim must consider and protect Medicare’s future interests.

The MSP Act does impose the following obligation: If there is compensation being paid to a claimant for future medicals, Medicare is barred by statute from paying those same bills post-settlement. Inasmuch as the parties in a workers’ compensation claim allocate a certain number of dollars towards future medical expenses related to that claim, then current law requires the Medicare beneficiary to spend the allocated funds in medical care associated with the claim, at which time Medicare becomes the primary payer for any future medical bills related to the injuries associated with the settled claim. While a simple concept, it has been exceedingly difficult to execute in practice as the past twenty (20) years have shown us.

Here’s what happens in the real world. Medicare receives post-settlement medical bills from providers treating beneficiaries with regularity. When Medicare is billed under these circumstances, three (3) potential scenarios arise. First, Medicare may get that bill, pay that bill, and never realize it should not have paid the bill in contravention of the MSP Act. This happens all the time, and likely will continue to happen into the near future until CMS’s data collection and enforcement efforts become more robust.?

Second, Medicare may deny benefits to the beneficiary. This scenario involves Medicare receiving a bill from a provider, checking the beneficiary’s common working file for potential resolution of claims (i.e., settlement, judgment, award, or other payments) and finding the bill covers the same ICD-10 codes for which someone else has accepted responsibility. If this occurs, Medicare will reject the bill from the provider and instruct the provider to collect from the patient instead. According to a?recent study ?completed by Ametros, this happens regularly to injured workers to the tune of approximately 33,000 claims per year.?

Third, Medicare may receive a bill it should not pay and pay that bill, but Medicare can seek recovery of that mistaken payment. In Medicare lingo, this is a “conditional payment.” The MSP Act and the regulations do allow Medicare to recover conditional payments made under certain circumstances. Here, upon realizing the erroneous payment, Medicare could seek recovery from any party who made or received payment.

MSAs are a tool used to ensure that Medicare is not put into one of the 3 scenarios described above. CMS has gone to great lengths over the past twenty (20) years in an attempt to prevent those 3 scenarios. Sixteen iterations of WCMSA policy memos followed by almost as many revisions to its WCMSA Reference Guide have all been attempts by CMS to regulate WCMSAs administratively. Now, CMS has taken these efforts one step further; a step over the line.

Federal Administrative Agencies Cannot Govern Solely by Administrative Means.

While productive for the Medicare Trust Funds, the WCMSA path forged by CMS is not sustainable. Federal agencies like CMS cannot purport to promulgate policy by administrative means alone; some statute or regulation must also support those steps. At this point, our article could dive down a very deep rabbit hole of well-developed administrative law involving?Chevron-deference and?Skidmore-deference. We believe this article is not the place for such a detailed analysis.

Instead, we would present to you what the U.S. 11th Circuit Court of Appeals has said on this subject:

“In essence, the [HHS] Secretary is asserting that its field manual is entitled to deference … The Supreme Court has stated that ‘agency interpretations contained in policy statements, manuals, and enforcement guidelines are not entitled to the force of law’ … The HHS Secretary’s position is unsupported by the statutory language of the MSP Act and its attending regulations. The Secretary’s?ipse dixit?contained in the reference manual does not control the law. The district court also erred in relying upon the advisory language contained in a field manual as the rationale for its opinion upholding the actions of the Secretary … The reference manual advisory language is not law … The Secretary’s position would have a chilling effect on settlement, as the Secretary’s position compels plaintiffs to force their tort claims to trial, burdening the court system. It is a financial disincentive to accept otherwise reasonable settlement offers.”?

Bradley v. Sebelius, 621 F.3d 1330, 2010 WL 3769132 (11th Cir. 2010).

Until CMS promulgates a regulation about MSAs, it is legally incorrect to believe that the CMS announcement about non-submit MSAs would withstand judicial scrutiny. As a result, we believe that parties settling work comp claims today can continue to take Medicare‘s future interest into account by securing a non-submit, evidence-based, or legal opinion WCMSA allocation. We do however understand the industries’ concerns and worries regarding potential legal exposure in claims that they may have already settled with a non-submit, evidence-based, or legal opinion allocation, or in which they are contemplating settling with such an allocation. It’s one thing to state the legal case as to why CMS has overstepped here. It’s another thing to defend your position on behalf of a client that entrusts you with their confidence.

We feel adamant about this latest CMS’ announcement and position, especially given the fact that all claims settling under current CMS work threshold are not reviewable and therefore are not able to be approved by CMS. Further, without an appropriate appeals mechanism for employers, carriers, and third-party administrators to challenge Medicare‘s incorrect assumption that non-submit, evidence-based, and legal opinion WCMSAs do not correctly and accurately allocate for the Medicare beneficiaries future medical needs associated with the settled claim, we believe Medicare‘s most recent announcement violates several constitutional provisions, as well as the MSP Act.

Various Options Available to Comply with Future Medical Provisions of the MSP Act.

This article is written expressively and intently with one purpose in mind, to provide the workers’ compensation community with the understanding and confidence to know that?options still exist. Injured workers and employers, carriers, and third-party administrators need to know the various options available to comply with the future medical provisions of the MSP Act in light of CMS’ latest announcement on non-submit, evidence-based, and legal opinion WCMSA allocations. Depending on your tolerance for risk and desire to receive CMS’ golden seal of approval on your WCMSA, you can consider one or more of the following options:

Option 1: Submit Every WCMSA Possible to CMS for Review and Approval.

For some, the CMS non-submit announcement means a return to previous policies: submit every possible MSA to CMS for review/approval that meets the stated workload review thresholds. For the sake of being thorough, we will again state that submitting MSAs to CMS for review is a voluntary exercise. While certain state workers’ compensation commissions (such as Virginia) have mandated this practice before it will approve certain worker’s compensation settlements, CMS has always and continues to maintain that seeking CMS approval of an MSA is NOT mandatory.?

The workload review thresholds in place help manage the Medicare MSA review contractors workload. They do not provide parties safe harbors. Previously, CMS clarified this in Section 8.1 of the?WCMSA Reference Guide ?by sharing specific examples of cases settling under the review threshold where Medicare indicated that certain steps needed to be taken (despite the review process being unavailable) to ensure that Medicare remained a secondary payer.

This recent announcement is certain to drive certain parties back to CMS for review on cases eligible for review. The upside there is the certainty of compliance and the absoluteness of the amount the claimant will have to appropriately exhaust in order for Medicare to become the primary payer for claim related future medical care. When the federal government states there is but one path to follow and you follow it exactly right, you benefit from having done that.

While upside exists, there is a downside. The downside is the likelihood of CMS returning a counter-higher amount to your MSA proposal, thereby significantly increasing the cost of settlement, or in some circumstances, the inability to settle the work comp claim under the state law applicable to the case. The counter-higher resulting from CMS’ current MSA pricing methodology was the reason for the non-submit MSA movement in the first place.

The additional downside is that this option fails to address how to handle cases under threshold. While the MSA review process is available for some cases, “Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases.”?CMS WCMSA Reference Guide v3.5 dated January 10, 2022, Section 8.1 . If CMS review is not made available for all cases, stakeholders need a process in place to ensure Medicare pays secondary to WC. Necessarily, that process almost assuredly involves some type of non-submit MSA, be it EBMSA, MSA Legal Opinion or something else. Then, the question turns to what happens if you get one of those and Medicare later disagrees with the conclusions. More on that in a moment.

Option 2: Options for Non-Threshold Cases: Apply CMS Pricing Methodology.

What about cases that do not meet the current CMS submission threshold standards of $25,000 for current Medicare beneficiaries and $250,000 for Medicare beneficiaries to be within 30 months of settlement? Tens of thousands of workers’ compensation cases are resolved annually which fit this category. While CMS review/approval is not possible under the current workload review thresholds, all is not lost. Here is a potential solution involving the traditional WCMSA Allocation process:

· Settle indemnity benefits but keep medical care open. This option works in some cases, but oftentimes becomes the worst possible solution for all parties involved. The claimant can never truly escape or get away from the case, and employer/carriers can never truly close out their potential liability.

· Create the same WCMSA as if the case met threshold. Nothing prevents you from utilizing the exact same process in place for cases that met threshold. The only (significant) difference is that you are unable to obtain CMS’ review and approval of the WCMSA. This policy affects the greatest number of settlements in the workers compensation system, leaving both injured workers and employer/carriers with incomplete closure and potential future unreserved and unaccounted for liability. Plus, the parties have no assurance that the final MSA figure is correct, accurate, and reliable going forward. That leads us to the following 3 potential places where future medical responsibility could rest.

1) Employer/carrier agrees to assume responsibility for future denial of Medicare benefits if claimant appropriately exhausts WCMSA allocated funds. This has the potential for affecting long term work comp insurance rates in all states, as cases settled 5, 10, 15 years ago return to employers/carriers seeking future payments. This would also lead the employer/carrier to seek professional MSA advice on a more regular basis to ensure that MSA dissipation occurs properly.

2) Alternatively, WCMSA vendors can agree to take on responsibility for future denial of Medicare benefits if claimant appropriately exhaust WCMSA allocated funds. The WCMSA vendor is the one who created the WCMSA based on their experience dealing with CMS. While some vendors today offer this as part of their non-submit MSA product, that guarantee often comes with strings attached such as using that same vendor for Medicare conditional payment resolution, Mandatory Insurer Reporting (MIR) under Section 111, and utilizing the vendor’s preferred release language (potentially making the vendor guilty of the unauthorized practice of law, a subject for a different day). This path, if accepted widely by the vendor community, will most likely cause vendors to increase prices of their services and thereby significantly increase claims costs.

3) Claimant agrees to hold employer/carrier/vendor harmless for future denial of Medicare benefits, acknowledging Medicare may hold claimant responsible for spending 100% of settlement funds on future medical bills related to claim. By and large, this is already happening in practice. While some non-submit MSA products purport to provide coverage for the claimant under these circumstances, the reality is that the protection provided by most non-submit MSA products only flows to the employer/carrier when the reality is that it is likely the claimant who Medicare will seek out first On this issue. This option transfers all responsibility to the Medicare beneficiary, which may affect his/her long-term Medicare coverage, and therefore his/her long-term health.

Option 3: Options for Non-Threshold Cases: Continued Use of Evidence-Based, Non-Submit, Legal Opinion WCMSAs.

Alternatively, you may be reading this and want to continue utilizing non-submit MSA solutions. You should know that you may continue to do that. Nothing prohibits you from continued reliance on non-submit MSA solutions. This is true for cases that meet CMS review thresholds as well as cases that fail to meet CMS review thresholds. The choice has been and remains yours.

On cases that meet review thresholds, continue to create an evidence based or non-submit or legal opinion WCMSA, and choose not to submit the WCMSA to CMS for review and approval. On cases that do not meet review thresholds, you can also continue to create an evidence based or non-submit or legal opinion WCMSA. Choosing option 3, like option 2 above, calls into question the protection one may expect if Medicare later disagrees with the conclusion and either denies benefits to the beneficiary or pays bills and seeks reimbursement of those from a responsible party. Isn’t that truly the million-dollar question?

In order for stakeholders to gain the same level of confidence obtained from a CMS-approved WCMSA, the provider of the non-submit WCMSA product must provide that same level of protection. Anything less is not good enough. As a professional in the industry, the WCMSA vendor providing the non-submit product should provide indemnification to the parties receiving the WCMSA in the event Medicare disagrees with the conclusion. The vendors know this space and sell products that purport to comply with the rigors of federal scrutiny in this space. The result of that, and the expectation parties properly have, is that the vendor will back up its conclusions with no strings attached. If they are not confident in their conclusion, why provide it in the first place?

Attorneys and law firms providing legal advice about WCMSAs already do this everyday. Clients seeking legal advice have a right to rely on legal advice provided by attorneys and law firms. To the extent a client relies on that legal advice to their detriment, the client has recourse. That client can sue the attorney and/or firm for legal malpractice. That client can report the attorney and/or firm to the state bar on ethics violations. Clients seeking legal advice about intellectual property rights can do this. Clients seeking legal advice about tax questions can do this. Clients seeking legal advice about WCMSA issues can also do this. You just might be hearing about this for the first time.

Some may choose to pursue a blended approach here depending on the extent to which the WCMSA vendor will provide protection to the parties. If the vendor is unwilling to extend that protection to all parties or will only extend it contingent on other conditions not satisfactory to the parties, the parties can take the vendor’s non-submit MSA product to a law firm and ask that law firm to provide a legal opinion which answers the following question: “Does the WCMSA provide by Vendor comply with the MSP Act?” Having a vendor’s non-submit WCMSA product with a WCMSA Legal Opinion wrapped around it as protection allows the parties to settle a case utilizing the preferred MSA solution with the protection of the law firm issuing the WCMSA Legal Opinion in the event Medicare ultimately disagrees. This is true no matter whether the case meets Medicare’ WCMSA review threshold or not.

Option 4: Post-Settlement WCMSA Account Management.

Option 4 should be considered in conjunction with all options above, but specifically with Options 2 or 3. In situations where the parties wish to challenge Medicare‘s denial based on appropriate exhaustion of funds allocated in a non-submit, evidence-based, or legal opinion allocation, it is imperative to have clear and detailed records as to how every dollar of the allocated amount was spent. Post settlement WCMSA account management in the form of professional custodial administration or legal advice and counsel are not only vital but an absolute necessity in this regard. Leaving the WCMSA to the injured worker to self-administer should no longer be an option absent specific representation on retainer to provide that claimant with guidance upon request going forward.

Guidance may take a few different forms. If the claimant agrees to engage an MSA professional administrator and provide that custodian with possession of the WCMSA funds, that custodian should provide professional administration over all monies in and out of the account, including annual and lifetime accounting to CMS. This arrangement provides proper guardrails in event Medicare later disagrees with whether the WCMSA funds were properly exhausted.

If the claimant wishes to keep possession and control of WCMSA funds, the parties should insist that the claimant be provided legal advice and counsel regarding use of WCMSA funds to pay for medical services related to claim,?

Medicare allowed, at the appropriate fee schedule on a go forward basis. That lawyer or law firm would, presumably, have deep experience with WCMSA issues, and be ready to represent the claimant (or claimant’s counsel to the work comp settlement or to the employer/carrier with whom the claim was resolved) in front of Medicare, and administrative law judge (ALJ), the Medicare Appeals Council (MAC) or in federal district court if necessary.

In either situation, the claimant must have clear, concise, and detailed records of every dollar spent out of the allocated amount to explain how Medicare’s future interests were not only taken into account but carried through exhaustion of the funds appropriately and correctly allocated towards future medical expenses related to the settled claim. CMS has made it quite clear in its most recent WCMSA Reference Guide as well as on the Town Hall call on February 17, 2022, that it is the injured worker who stands to lose first when funds are exhausted prematurely.

Option 5: Prepared legal course of action.

Regardless of which party takes on the responsibility for post-settlement Medicare denials, that party must have a prepared legal course of action for if/when Medicare denies payment of a bill as a result of not honoring a non-submit, evidence-based, or legal opinion WCMSA allocation. As the Ametros report has made clear (and validated by Mr. Jenkins from CMS), Medicare is denying benefits to claimants whose WCMSAs have been reviewed and approved by CMS. Further, according to Mr. Jenkins, CMS stands ready to (and perhaps already is) deny benefits when it believes Medicare should remain the secondary payer.

To combat and be ready for this possible outcome, parties resolving workers’ compensation claim should be prepared to:?

· request redetermination, reconsideration, hearing, or request for review of their MSA;?

· submit as evidence a copy of the non-submit, evidence-based, or legal opinion WCMSA allocation, along with all tables, studies, research, pricing, and medical bases for the allocation;?

· provide an explanation and detailed analysis of the non-submit, evidence-based, or legal opinion WCMSA allocation via testimony from plaintiff counsel, defense counsel, adjuster or representative of the self-insured employer or insurer or third-party administrator, and the creator of the WCMSA allocation; and

· explain every dollar spent out of the non-submit, evidence-based, or legal opinion WCMSA allocation so as to be able to argue that all monies allocated toward future medical expenses for the related condition have been appropriately exhausted, thereby requiring Medicare to become the primary payer of the bill denied, at issue, or in question.?

This is a big ask on the parties resolving the workers’ compensation claim. This is why the parties should anticipate this potential outcome, and agree on a law firm that would step in to represent the parties’ interests against CMS should CMS disagree with their chosen path to ensure Medicare remains a secondary payer post-settlement.

Conclusion.

CMS has overstepped its authority on non-submit MSAs. Our lawyers feel adamant about this latest CMS' announcement and position, especially given the fact that all claims settling under current CMS work threshold are not reviewable and therefore are not able to be approved by CMS. Further, without an appropriate appeals mechanism for employers, carriers, and third-party administrators to challenge Medicare‘s incorrect assumption that non-submit, evidence-based, and legal opinion WCMSAs do not correctly and accurately allocate for Medicare beneficiaries’ future medical needs associated with the settled claim, we believe Medicare‘s most recent announcement violates several constitutional provisions, as well as the Medicare Secondary Payer Act.?

Therefore, we strongly believe settling parties continue to have various options and choices when considering how to take Medicare’s future interests into consideration. Cattie & Gonzalez would be pleased to assist workers’ compensation litigants in this regard, providing legal counsel and advise on all available remedies and options, and then helping you to carry out such plans and activities into fruition. For more information, please visit our?website , email us at?[email protected] , or call (844) 546-3500.