The Centers for Medicare and Medicaid Services (CMS) recently began a comprehensive effort to reach out to the workers’ compensation industry in order to clarify Medicare Secondary Payer (MSP) policy and operational issues. Outreach initiatives include hosting MSP Open Door Forums, establishing a national “central case control” system to handle allocation submissions, hiring a review contractor and sponsoring a national educational tour to ensure that a consistent message is being delivered. While some of these CMS initiatives may appear to further hinder the settlement process by way of added bureaucratic layers, establishing a consistent methodology to address MSP issues should be helpful to the industry in the long run.
CMS piloted the first Medicare Secondary Payer Open Door Forum October 20, 2003 in Washington, D.C. The conference was well attended with 1200 callers participating during peak time. Participants raised many questions pertaining to Medicare Set-Aside (MSA) allocations. Paul Olenick, Division Director, CMM, Central Office in Baltimore addressed more issues at the second MSP Open Door Forum held on January 8, 2004.
The October and January forums were collectively productive in that four “top issues” surfaced, and various parties voiced their concerns and suggestions about efficiently processing allocation submissions.
Issue #1 Proper procedure for claims that do not meet CMS review thresholds at the time of settlement
Medicare’s interests must always be considered. An MSA arrangement is appropriate for Medicare beneficiaries at the time of settlement, regardless of the amount of the settlement. However, to determine if an MSA arrangement is appropriate in a workers’ compensation settlement involving an individual who is not yet a Medicare beneficiary, the following threshold criteria must be met:
- The total settlement is greater than $250,000 AND
- The claimant is reasonably expected to become a Medicare beneficiary within 30 months of the settlement date
According to CMS: “If both of the threshold criteria are not met in a settlement involving an individual who is not yet enrolled in Medicare, a CMS approved Medicare set-aside arrangement is not necessary and Medicare will make payments for workers’ compensation services that are otherwise reimbursable under Medicare once the individual enrolls in Medicare even when funds still remain in the individual’s settlement.”
Issue #2 The use of workers’ compensation fee schedule versus full actual charges
Paul Olenick stated that if a workers’ compensation (WC) fee schedule is to be used to compute the allocation, “…the settlement agreement must contain specific provisions that establish that the workers’ compensation carrier can and will ensure that the arrangement cannot be charged more than what would normally be payable under the workers’ compensation plan.” Participants were directed to the CMS memorandum released July 23, 2001 (question nine). According to the memo, “…it is important to note that when an arrangement’s settlement agreement does not contain specific provisions ensuring that providers, physicians and other suppliers cannot bill the arrangement more than the WC fee schedule amounts, then the regional office must review the sufficiency of that particular arrangement based upon full actual charge estimates.”
Issue #3 Whether or not professional administration fees can be extracted from the corpus of the Medicare Set-Aside account
According the CMS policy memorandum released May 7, 2004, “Administrative fees/expenses for administration of the MSA Arrangement and or attorney costs specifically associated with establishing the MSA Arrangement cannot be charged to the set-aside arrangement.”
CMS considers these costs to be part of the settlement negotiations and they must be paid from a source that is “completely separate from the Medicare set-aside arrangement funds.”
Issue #4 The correct method to index the MSA allocation for inflation
Determining and applying medical inflation factors for allocations is a hotly debated issue. Olenick referred to the July 23, 2001 CMS memorandum that requires inflation indexing for Medicare set-asides.
The Centers for Medicare and Medicaid Services received input from a variety of sources stating that because workers’ compensation carriers are not required to index medical inflation factors when settling a claim, indexing should not be required for MSA allocations. Since medical goods and services inflate at different rates, determining the rate of inflation appropriate for an individual case becomes challenging. Parties involved in MSA arrangements are requesting a consistent methodology for indexing inflation and applying interest discounts. To date, CMS has not fully resolved this issue. (The Philadelphia Regional Office currently requires an index rate of 4.4 percent and a discount factor of 3 percent for submitted allocations.) Olenick said that CMS is working to develop an easy and proper way to apply medical inflation factors to an MSA allocation.
Input on this topic is welcome and CMS established an email address for that purpose: email@example.com
Will the Medicare Drug Benefit impact allocations?
While these four issues appear to be the priority for CMS, ramifications from recent legislation approving a Medicare drug benefit effective in January 2006 will also have to be addressed.
Should the cost of prescription drugs be included in the MSA allocation? The drug benefit program is elective and beneficiaries will pay premiums; if prescription drugs are included in an allocation effective 1/1/06, would the beneficiary be forced to enroll in the prescription drug program in order to use funds set aside in the allocation? At this time, CMS does not require a proposed MSA allocation to include or make allowances for the new Medicare drug benefit. Policy decisions regarding this issue will be applied to future allocations, not to those already approved.
Clearing the submission path
In order to expedite the submission process, all workers’ compensation MSA proposals should be sent to a central location as of May 1, 2004. The Coordination of Benefits Contractor (COBC) will ensure all necessary documentation is included in allocation submissions. The contractor does not actually perform the reviews; if the package is complete, documents will be scanned and forwarded electronically to the appropriate regional office for approval. If a submission is incomplete, it will be returned to the submitting party. There are concerns that a centralized review unit will result in additional delays. This may be justified because if a submission is sent directly to a regional office, the regional office has been instructed to route it to the COBC, and that could further delay approval by weeks.
Another challenge for this new “joint venture” is the backlog of cases that the review contractor is tackling. Last year, CMS hired a contractor to begin reviewing proposed allocations submitted to CMS prior to October 1, 2003. That process began in November and as of early January, only 120 submissions out of 640 cases were completed. During the process, the contractor found that 70 percent of the submissions required more information, contributing greatly to the delays. Parties involved in submitting allocations voiced concern about the timeliness of reviews and whether the contractor had adequate staffing and experience for efficient processing. CMS admits that there is a “learning curve” but feels that the contractor has adequate manpower to review the proposals and handle the sizable workload.
Send proposed allocations to:
C/o Coordination of Benefits
P.O. Box 660
New York, NY 10274-0660
Attention: WCMSA Proposal
CMS uses cross matching to identify double payments
CMS has implemented a system to identify Medicare beneficiaries who have also filed a WC claim. This system cross matches CMS records with those in state Worker's Compensation databases.
Moving toward a better system
While today’s submission process to CMS may seem to be a hindrance, hopefully the concentrated outreach efforts by CMS will positively impact the workers’ compensation industry and protect Medicare’s interests at the time of settlement. Will it all make a difference? For those involved in the workers’ compensation industry trying to comply with Medicare Secondary Payer policy and follow CMS direction, the initiatives are welcome but there’s a long way to go. CMS wants the dialogue and progress to continue. During the 2004 calendar year, CMS will sponsor a national tour to present “set-aside basics.” In addition, MediPro Seminars, LLC (www.mediproseminars.com) sponsored a program to address a number of issues surrounding Medicare Secondary Payer provisions on June 23-25 in Atlanta. The event featured industry experts including staff from the CMS Atlanta Regional Office and Central Office in Baltimore.
Barbara Fairchild, RN, BSN is the Director of Product Development for NuQuest Resources, Inc., a subsidiary of Protegrity Holdings, Inc. NuQuest is a national provider of Medicare Set-Aside Allocation (MSA) services, medical and vocational disability management and other specialized services. You can reach Barbara at toll free: 866-858-7161 or at bfairchild@MyNuQuest.com.
This article is being reprinted with the permission of NuQuest Resources