For Now, Non-Submit WCMSAs are Still OK Under Certain Circumstances

Despite recent updates from CMS, non-submit MSAs are still OK to use under certain circumstances in light of current statutory, regulatory, and administrative law.

Rafael Gonzalez, Esq. Cattie & Gonzalez, PLLC

Recent CMS announcements about non-submit MSAs have caused concern amongst some workers’ compensation stakeholders. They believe that use of a non-submit MSA product may constitute MSA non-compliance in and of itself. The law firm of Cattie & Gonzalez believes the opposite is true. Non-submit MSAs not only have a place in the larger scheme of Medicare Secondary Payer (“MSP”) compliance, they are at times the only option available to address the future medical provisions of the MSP Act. This article details those recent announcements from CMS, describes the differences between traditional MSA allocations and non-submit MSA products, analyzes the true meaning of Medicare’s MSA workload review thresholds, and then systematically addresses the use of MSA products (traditional MSAs and non-submit MSAs) in light of the review thresholds. While future MSA regulations may change what follows, this is the current map of the WCMSA landscape in a pre-MSA regulation world.

Introduction.

In early 2022, Medicare announced changes which caused great concern for the workers’ compensation community nationwide. On January 10, 2022, the Centers for Medicare and Medicaid Services (“CMS”) issued version 3.5 of its?Workers’ Compensation Medicare Set-Aside (“WCMSA”) Reference Guide ?(the “Reference Guide”), adding Section 4.3 (The Use of Non-CMS-Approved Products to Address Future Medical Care). Our blog posts dated?January 18, 2022 ?and?February 15, 2022 ?covered the substance of the update and provided our analysis of the update. On February 18, 2022, CMS held a town hall webcast to explain and expand on the update. Our blog post released?later that day ?revealed the shaky foundation upon which CMS has built its new non-submit WCMSA policy. If you missed any of those posts, we encourage you to review and consider those prior to reading on so that our suggestions which follow make sense to you.

WCMSAs in 2022: Submit or Non-Submit? This article revives a issue about WCMSAs which has been debated in great detail at continuing education events in the past five (5) years. The debate today, however, is not happening in a darkened ballroom. It’s not happening in an ivory academic tower. It’s not hidden from CMS ears as in the past. CMS is fully aware that the use of certain non-submit WCMSA solutions under certain conditions do not fully adhere to the Medicare Secondary Payer (“MSP”) Act, and certainly does not adhere to CMS’ vision of what the MSP Act permits it to expect from parties resolving workers’ compensation claims involving future medicals.

This article provides insight on the following: 1) the difference between a traditional WCMSA allocation and untraditional WCMSA solutions (aka non-submit MSAs); 2) the criteria under which CMS will review a WCMSA proposal; 3) the protection (or lack thereof) afforded by non-submit WCMSA solutions; and 4) when to use traditional WCMSA allocations and untraditional WCMSA solutions in light of the current CMS workload review threshold for WCMSAs. Non-submit MSA should continue to be used under certain conditions so long as the provider of the non-submit provides certain assurances about defense of that product should CMS later disagree with its conclusion.

The Difference Between a Traditional WCMSA Allocation and Untraditional WCMSA Solutions.

For more than a decade, the only WCMSA solution was a traditional WCMSA allocation. Since the issuance of the Patel Memo in 2001 and the birth of the cottage MSA industry that followed, traditional WCMSA allocations were the workers’ compensation community’s preferred WCMSA solution.?

In its simplest form, the WCMSA allocation is a medical report. Typically prepared by reviewers with a medical background (such as nurses), the WCMSA allocation is the result of the review of medical records, medical bills, life care plans, medical cost projections, pharmacy summaries and other medically based documentation. The reviewer uses those source documents to calculate a claimant’s future cost of medical care that is related to the compensable workers’ compensation claim. Then, that overall future cost of care is bifurcated between Medicare covered and non-Medicare covered future medicals. The WCMSA allocation that results contains the cost of future Medicare covered medical expenses related to the compensable workers’ compensation claim. Recipients of that WCMSA allocation would then submit the allocation to CMS for review and approval (with varying levels of success). For years, this was the standard.

Something happened in the mid-2010s to change that dynamic. The genesis of the change lay in the fact that CMS did not always agree with the conclusions contained in the WCMSA allocation. Perhaps the allocation failed to apply a proper life expectancy. Maybe the allocation was light with respect to the anticipated frequency of a spinal cord stimulator implant. Possibly, the allocation was not applying CMS standards for the prescription of opioids. All of these factors (and many more) led to the Workers’ Compensation Review Contractor (the “WCRC”), CMS’ WCMSA review contractor, to issue an increased number of “counter higher” letters to the submitter of the allocation. A counter higher letter indicates CMS’ disagreement with the proposed WCMSA allocation figure. Sometimes, that disagreement was minor, a matter of hundreds or thousands of dollars. Sometimes, that disagreement was major, a matter of tens or hundreds of thousands of dollars. Those disagreements continue to present day.

After receiving more than enough “counter higher” letters, parties developed strategies to mitigate this potential settlement disruptor. Some built protocols which allowed for the parties to settle only indemnity benefits, leaving future medicals open, in the event CMS (through the WCRC) issued a counter higher letter to the WCMSA proposal. Others sought a more permanent solution which would allow them to continue resolving workers’ compensation claims without seeking CMS approval of the WCMSA.

Parties seeking this alternative solution understood that CMS review/approval was voluntary, not mandatory. It was not mandated by CMS to have the WCRC review/approve a WCMSA proposal (that would be left to certain state workers’ compensation commissions such as Maryland and Virginia). If Medicare did not require review/approval of a WCMSA allocation, was it possible to create a WCMSA allocation or otherwise “consider” Medicare’s future interests in a way that created less friction for the workers’ compensation system? The answer was ‘Yes’ and the tool to accomplish that goal was the non-submit MSA.

The non-submit MSA is the untraditional WCMSA solution. Non-submit MSAs take a variety of forms, but three (3) primary non-submit WCMSA solutions rose to prominence: evidence based MSAs (“EBMSAs”); data driven MSAs; and MSA Legal Opinions.?

In reaction to a workers’ compensation community clamoring for alternatives, some MSA vendors created their own version of a non-submit MSA called an Evidence Based MSA (“EBMSA”). EBMSAs walked and talked like traditional WCMSAs in many ways. It was grounded in medical record review. It accounted for future medical care related to the compensable workers’ compensation claim. It appeared in form to be identical to a traditional WCMSA. The big difference, though, is that EBMSAs veered wildly off course from CMS pricing methodology. Instead of the worst-case scenario approach typically applied by the WCRC, EBMSAs relied on state specific standards of evidence for calculating the WCMSA figure. No more pricing out opioids for the life of the claimant. EBMSAs provided a more reasonable WCMSA figure that more tightly aligned with the state-specific legal realties of the claim.

Other MSA vendors created a second version of a non-submit MSA based on data. This approach, called a ‘Data Driven MSA’ or ‘Analytic-Powered MSA’ relies on historical data from thousands of previously approved WCMSAs by CMS. Applying that data to a client’s current claim, the vendors offering these non-submit MSA solutions would issue a WCMSA allocation that would be based on artificial intelligence (“AI”), not human eyes. The prevailing thought here was that if CMS has previously approved an item at a certain amount, it should be able to be relied on for future WCMSA reports.

Certain law firms also provided a non-submit MSA solution. Understanding that everything CMS believes about WCMSAs derives from the MSP Act, some law firms offered clients legal advice about their WCMSA exposure. Starting with the statutory, regulatory, and administrative guidance provided by CMS in the Reference Guide (among other sources), attorneys would apply case-specific facts to the legal background to provide clients with a WCMSA legal opinion that would answer the following questions: 1) Is a WCMSA necessary based on the facts of this case; and 2) If so, what is the proper amount of the WCMSA in order to comply with the future medical provisions of the MSP Act?

Collectively, these non-submit MSA solutions captured the attention of the workers’ compensation community. For those comfortable with a solution that did not involve Medicare’s review/approval of its WCMSA, a non-submit MSA option became a key component to its ability to resolve a workers’ compensation claim in a reasonable amount of time for a reasonable amount of money.

The CMS Criteria Under Which It Will Review a WCMSA Proposal: Cases Meeting Threshold Versus Cases Under Threshold.

The proliferation of non-submit MSA solutions may be directly linked to one simple fact. CMS has not, and does not today, require the review and approval of WCMSA allocations. Historically, this fact was misunderstood. Folks would read?Section 8.1 of the Reference Guide ?and believe that CMS required review/approval of WCMSAs under certain circumstances. Section 8.1 provides:

“CMS will review a proposed WCMSA amount when the following workload review thresholds are met:?

? The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or?

? The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.?

Note: Please see Section 10.1: Section 05 – Cover Letter (E. Settlement Details) in this reference guide for more details about what information is included in determining this amount.?

A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:?

? The claimant has applied for Social Security Disability Benefits?

? The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision?

? The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits?

? The claimant is 62 years and 6 months old?

? The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD?

If a threshold is met, a WCMSA?can be submitted?to CMS for approval.” (Emphasis added).

Given the big windup and detail from CMS about the review thresholds themselves, it’s hard to fault a reader for missing the punchline. CMS buried the lead. The takeaway here should never have been that CMS approval of a WCMSA was mandatory. Instead, it should have been IF the parties wanted CMS review/approval of its WCMSA, it was possible only under limited circumstances. Specifically, CMS review/approval was only possible when a claim met its workload review thresholds. In all other situations, CMS review/approval of the WCMSA was an impossibility.

But what about cases that do not meet the review threshold? For years, most workers’ compensation stakeholders assumed that cases not meeting Medicare’s voluntary review threshold qualified for a type of “safe harbor”. In other words, if you were able to resolve a workers’ compensation case involving a current Medicare beneficiary for $25,000 or less, you could avoid “doing” a WCMSA. Same mistaken thought if the claimant has a “reasonable expectation” of Medicare enrollment within thirty (30) months of settlement and the gross settlement value totaled $250,000 or less. Parties would intentionally settle a case for $24,999, $24,500, or some other seemingly random figure just to avoid the need to “do” the WCMSA and gain CMS approval. They thought a “safe harbor” applied. They were mistaken.

The Reference Guide has clarified this over recent years. That same?Section 8.1 now contains the following statements: “These thresholds are created based on CMS’ workload, and are not intended to indicate that claimants may settle below the threshold with impunity.?Claimants must still consider Medicare’s interests in all WC cases?and ensure that Medicare pays secondary to WC in such cases.” (Emphasis added).” CMS has even gone as far in Section 8.1 as to provide specific examples of cases that failed to meet the review threshold, but still required that Medicare’s future interest be considered. One can only imagine the exposure created by this simple misinterpretation of the Reference Guide by the workers’ compensation community.

Do Non-Submit MSA Solutions Protect the Parties? It Depends.

As more and more people learned that CMS review of WCMSAs was voluntary, non-submit MSA solutions became more popular. If you could get a more reasonable WCMSA figure, avoid CMS scrutiny, and resolve your workers’ compensation case faster, what was the downside of not obtaining CMS approval of the WCMSA? The only true downside was that you were not getting the CMS gold seal of approval on your WCMSA. Do Non-Submit MSAs provide the same protection as a CMS approved MSA? It depends.

Vendors providing EBMSAs or Analytic-Powered MSAs may or may not back up their conclusions. For those that don’t, they issue the report and leave it to the parties to fend for themselves if CMS later disagrees. Remember, non-submit MSAs are not build for purposes of seeking CMS approval. Some vendors provide those non-submit solutions knowing that CMS would likely disagree with its conclusion. Over time, vendors providing non-submit MSA solutions like this will fail because too many others are providing assurances to recipients that they can rely on the conclusions rendered. How can those vendors make that guarantee?

For most vendors, it involves an indemnification process backed by an Errors & Omissions (“E&O”) insurance policy. For those readers unfamiliar with this type of insurance coverage, E&O insurance is a type of professional liability insurance that protects policy holders, their employees, and other professionals against claims of subpar, inadequate work or negligent actions. In the WCMSA context, this policy could cover the failure to accurately calculate a WCMSA figure among other things. Thus, for vendors who “guarantee” their non-submit MSAs, the E&O policy would cover WCMSA deficiencies later found by CMS. This could take the form of denial of benefits or Medicare paying bills but later seeking reimbursement of those payments.

For law firms providing MSA legal services, the “guarantee” takes another form. Attorneys are held to a higher standard than most. Attorneys not only have professional obligations, but ethical obligations to meet. Clients hiring lawyers for MSA legal advice are entitled to rely on that legal advice without any additional strings attached, just like any other area of the law. If a client relies on legal advice to their detriment, that client has recourse, just like any other area of the law. The client can sue the attorney for legal malpractice, or the client can report that attorney or firm to the state bar on charges of ethics violations. Those options are not available for recipients of non-submit MSAs from a vendor or non-legal professional. In either case, the provider of the non-submit MSA solution who “guarantees” the result would pay the difference. Thus, one can achieve the same type of certainty using a non-submit MSA as asking CMS to review/approve the MSA.

When choosing to go the non-submit MSA route (which is still OK in 2022 despite recent CMS announcements), you must understand the extent of the protection and guarantee being provided. For some vendors, the protection extends to all parties involved in the workers’ compensation case, no matter who actually hires the vendor and pays the bill for services rendered. For others, the protection only extends to the party who hires the vendor and pays the vendor’s bill.?

As an added wrinkle, some vendors will only extend that protection and guarantee if one or more other criteria are met. Those criteria may include one or more of the following: using the vendor to handle certain Medicare reporting obligations under the mandatory insurer reporting (“MIR”) provisions of the MSP program; using the vendor to verify, resolve, and satisfy any Medicare conditional payment obligations that may exist; and/or using the vendor’s Medicare release language when you finalize your settlement (a concept rife with legal and ethical concerns in and of itself; a topic for a different article). You should always ask the vendor to provide you the documentation proving that you and/or your client will be protected by the vendor in the event CMS disagrees with the conclusion of the non-submit MSA product.?

If you choose to rely on MSA legal advice, your concerns should be mitigated. Understand that lawyers are held to a higher standard. Be comfortable in the knowledge that lawyers understand the higher standard to which they are held. Still, ask questions if you have them. Allow the lawyers to share with you their thoughts about their legal and ethical duties to their clients. When you ask whether the legal advice protects all parties to the case, some lawyers may say the protection extends only to those who are clients of the firm rendering the advice. If this is the case, it becomes important who is paying the lawyer for the advice: employer/insurance carrier; claimant; or both? Others may say that it is permissible for the client to direct the lawyer with respect to who receives the benefit of the protection of the legal advice. If that is the case, the parties may very well rely on the current industry construct for MSAs (employer/carrier obtains MSA and pays for MSA) going forward.

Understanding the protection and guarantees being extended by the provider of the non-submit MSA product are critical to the comfort level you may have in continuing to rely on non-submit MSA solutions in the future. Having those assurances really is the only way to replicate a CMS-approved WCMSA.

Using Traditional WCMSA Allocation Versus Untraditional WCMSA Solutions in Light of CMS Review Thresholds.

You still have a choice about what type of WCMSA solution to use. Despite recent CMS announcements that may indicate the contrary, you may use non-submit MSAs if you wish and here’s why: MSAs are not mandated by statute, MSAs are not mandated by regulation, and CMS does not offer unlimited access to its WCMSA review process.?

It would be one thing if the WCMSA review process was open to all comers, regardless of Medicare enrollment status and gross settlement amount. The fact is that it is not an open process (as discussed in detail above). Plus,?CMS requires its interest be considered in all workers’ compensation cases . It is impossible to rely on a CMS approved MSA when the case fails to meet the review threshold. CMS won’t review it, even if you want it to do so. Thus, this logic puzzle worthy of a Philosophy 101 college course ends at the same point we started. It’s OK to use non-submit MSAs in 2022, just like it was in 2021, 2020, and so forth.?

The better question to ask is under what circumstances should a non-submit MSA solution be used versus a traditional MSA allocation. Let’s review that under the four (4) possible paths involving the type of MSA solution used (traditional versus non-submit) and whether the case meets the review threshold (yes versus no).

Traditional WCMSA Allocation and Case Meets Review Threshold.

· OK to use them? Yes

· OK to ask for CMS approval? Yes

This is the scenario that CMS wishes all parties would use going forward when a matter meets the review threshold. Obtaining the traditional WCMSA allocation, created using CMS pricing methodology as set forth in the Reference Guide, and asking for CMS approval is the best practice in CMS’ eyes. Remember, it’s not mandated by statute, it’s not mandated by regulation, and it’s not even mandated by the Reference Guide itself.?

Section 1.0 ?of the Reference Guide says, “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.” Also recall that same Reference Guide says in?Section 8.1 ?that “Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases.” So, OK to either submit or not submit the traditional WCMSA allocation, but not OK to forego the issue in its entirety. According to Medicare, every workers’ compensation case must address this issue of future medicals.

Traditional WCMSA Allocation and Case Fails to Meet Review Threshold.

· OK to use them? Yes

· OK to ask for CMS approval? No

This scenario exposes the limitations of the current CMS WCMSA review process in light of its recent announcement. CMS wants all parties to use traditional WCMSA allocations and wants all WCMSAs to be submitted for approval. It wants to control and micromanage the process. However, this is impossible today as the current review thresholds limit what the WCRC can review. While submission is voluntary, it’s not really voluntary when it is impossible to submit under certain circumstances.?

Given that CMS won’t review the traditional WCMSA allocation, that does not mean parties can ignore the issue. There is no ‘safe harbor’ for WCMSAs. CMS says its interests must be considered in all workers’ compensation cases. As a result, you would still need to do something about the MSA issue. Obtaining a traditional WCMSA allocation and incorporating that into the settlement would be a valid path forward. If you have concerns about the validity of the conclusion rendered by the WCMSA allocation, ask the provider what guarantees it provides. If those don’t meet your satisfaction, perhaps seek a lawyer’s legal advice about the validity of that figure and allow the law firm to protect you on the MSA issue going forward instead of the vendor.

Non-Traditional WCMSA Solution and Case Meets Review Threshold.

· OK to use them? Yes

· OK to ask for CMS approval? Yes but not recommended

Here’s where things get interesting in light of recent CMS announcements. We know the CMS WCMSA review process is voluntary not mandatory. We know that CMS prefers traditional WCMSA allocations using its pricing methodology. We know that CMS says its interests must be considered in all workers’ compensation cases. After all of that, are non-submit MSA solutions still a viable option even when a case meets the review threshold??

Yes, yes they are. Unless you are resolving a case in a state like Maryland or Virginia who mandate CMS review all MSA proposals that meet review thresholds (but for certain limited circumstances), a non-submit MSA solution remains a viable option. The caveat is that you cannot expect CMS to approve the conclusion rendered by a non-submit MSA solution if you decide to seek CMS approval of that WCMSA. There is a fundamental disconnect between the CMS WCMSA review process followed by the WCRC and the legal realities of a workers’ compensation case. It’s the entire reason for the non-submit MSA movement in the first place. While CMS may disagree with the WCMSA number if it sees it at some point in the future, that alone should not foreclose you relying on that solution?so long as the WCMSA provider will defend its conclusions if challenged later by CMS.

We previously covered some of the questions you should ask the MSA provider about defense of its MSA product if CMS denies benefits later or pays bills but then seeks reimbursement of those payments. Consider due diligence on this issue to be mandatory if you want that protection to apply to you. Ask questions such as:

· What circumstances are covered by the insurance policy you have in place?

· Are you willing to provide us a copy of your policy for our review?

· Does the policy protect the purchaser of the MSA product or all parties contemplated in the case?

· Are attorneys representing parties to the workers’ compensation claim also protected?

· Will the policy pay bills in the interim while dealing with Medicare on the issue?

· What governing body certified your “Certified” non-submit MSA product?

· What happens if the insurance carrier providing the coverage goes bankrupt or insolvent?

· What happens if the MSA provider goes bankrupt or insolvent??

· What happens if the MSA provider is bought/merges with another company after our settlement is complete?

· If no insurance policy exists and you say you will stand behind the conclusion, what exactly does that look like?

After you have conducted your due diligence and are satisfied, feel free to move forward. Even if you don’t feel satisfied, you can still potentially use that solution. If you obtain the non-submit MSA (EBMSA or Analytics-Powered MSA) and questions remain about protection, you can always approach an MSA lawyer with that MSA and ask whether it complies with the MSP Act. Under these circumstances, that might be your best-case scenario. A medically based EBMSA or Analytics-Powered MSA providing the MSA amount and MSA legal advice confirming that the conclusion complies with federal law.

Non-Traditional WCMSA Solution and Case Fails to Meet Review Threshold.

· OK to use them? Yes

· OK to ask for CMS approval? No

This final possibility highlights the dichotomy of the current review thresholds and the recent CMS announcement. CMS advises that a CMS-approved MSA is the only MSA it will respect going forward. But when it’s impossible to obtain CMS approval of your MSA (as the case fails to meet threshold) and CMS poses no further options to fill the gap, there necessarily must be alternatives. Non-submit MSAs work perfectly fine in 2022 under these facts. But the same rules apply as if using a non-submit MSA and the case does meet threshold. Above, we discussed in great detail the questions to ask, the concerns to soothe, and the added layers of protection to consider. Perhaps one day, CMS will open the review thresholds for all WCMSAs to be reviewed if desired. Until that day, non-submit MSAs remain as viable as they were last month, last year, or five years ago.

Conclusion.

Non-submit MSAs have been a solution that work for the workers’ compensation community. Claims resolve faster thanks to non-submit MSAs. Injured workers are able to exit the system faster and receive medical treatment from their own chosen providers thanks to non-submit MSAs. Employers and insurance carriers are able to remove claims from their books faster thanks to non-submit MSAs.?

Non-submit MSAs are not prohibited by federal law. Non-submit MSAs are not prohibited by regulation. It seems the only folks around the country who have an issue with non-submit MSAs is CMS. There is a simple way for CMS to remedy that if it so chooses. Until then, the workers’ compensation community should feel free to use non-submit MSA solutions, understanding some of the caveats that now accompany that decision.

About Rafael Gonzalez, Esq.

Rafael is a partner in?Cattie & Gonzalez, PLLC ,?a national law firm focusing its practice on federal Medicare/Medicaid secondary payer compliance and legal issues. In addition to assisting clients with Medicare mandatory reporting, conditional payments, and set asides issues, he helps clients with Medicaid third party liability liens and Medicaid special needs trusts issues. He has over 35 years experience in?the liability, no-fault,?and work comp insurance industry.?You can connect with him on?LinkedIn ,?Twitter ,?Facebook ,?Instagram and?YouTube , or reach him at [email protected] or 844.546.3500.