At the 23rd Annual National Workers’ Compensation & Disability Conference on November 19-21, 2014, one of the sessions focused on the challenges faced in Medicare Secondary Compliance.
The session titled “Workers’ Compensation and Its Secondary Payers: Medicare and Medicaid” featured Tim Nay of Nay & Friedenberg, Vernon Sumwalt of The Sumwalt Law Firm and Jennifer Jordan of MEDVAL, LLC.
By Statute, Medicare is prohibited from making payments in situations where a Primary Payer is responsible. The methodology for compliance with this issue is a complex and constantly evolving issue faced by workers’ compensation payers such as self-insured employers and carriers.
There is much confusion about what is actually required to be in compliance. No Statutes require payers to fund future pharmacy expenses at AWP or to provide funding for future medical treatment that may never occur. These issues are based upon guidelines for the Medicare Set Aside review process that were developed by the Center for Medicare Services (CMS) and are simply that….,guidelines. They are not rules. The MSA approval process is voluntary. How a payer chooses to navigate this process is increasingly a risk management decision vs a compliance decision.
The issue of conditional payments is causing many problems around the country. When CMS sees a person has an open workers’ compensation claim, their file is flagged for possible secondary payment obligations. Unfortunately, what this has resulted in is people being denied Medicare coverage for conditions completely unrelated to their workers’ compensation claims. State insurance commissioners around the nation have been pushing CMS to get this issue resolved. There are many examples of cancer treatment being denied by Medicare because the person has an open workers’ compensation claim for a back strain.
The case law that is emerging on these issues is adding to the confusion. Judges often do not understand the requirements, and there have been numerous court cases where payers fully complied with the guidelines yet the courts ruled otherwise.
Last year there was over $1.8 billion in workers’ compensation Medicare Set-Asides approved by CMS. NCCI indicated that MSAs make up around 40% of total workers compensation settlement costs, with prescription drugs being the majority of this. These figures show what a huge issue this is for payers.
The next evolution of this issue is Medicaid. Last year, legislation was passed that extended Secondary Payer Recovery rights to Medicaid programs. Congress later delayed implementation of this legislation until 2016. This delay gives payers time to prepare for entirely new avenue of compliance issues that will require payers to not only deal with the Federal government, but all individual state governments who administer these Medicaid programs. States are not consistent in how these programs are administered, adding to the complexity this will present. It is expected that there will be continued changes in state’s Medicaid rules that payers will need to be aware of.
The expansion of Medicaid under the Affordable Care Act is heightening this issue. States will be under increased pressure to pursue secondary payers in order to cover budget shortfalls that this increased coverage is producing.
The intersection between Medicaid and workers’ compensation will most likely be seen in the issue of long-term care on catastrophic injury claims. The costs associated with this are covered under Medicaid, not Medicare.
Payers are reminded that the value of a workers’ compensation claim does not increase because of secondary payer compliance issues. The valuation of future medical expense should be based on the reasonably expected future medical care. Payers are not bound by CMS recommendations on how to value future medical, with pharmacy being the biggest example of this. CMS feels future pharmacy should be priced based on Average Wholesale Price, but AWP is actually higher than prescriptions cost at retail pharmacies.
Employers and carriers need to remain diligent on the issues of secondary payer compliance. Your obligations are framed by the workers’ compensation statutes, which determine what benefits need to be provided and for what duration. Payers need to keep in mind that the Medicare Set Aside process is voluntary. Increasingly, more payers are choosing not to proceed with approval by CMS because their “guidelines” result in costs that are significantly higher than actually seen in the real world.
Safety National’s “Conference Chronicles” showcases the educational content from risk management industry events around the nation, providing highlights from sessions so that those not attending can benefit from the insights and trends shared by industry thought leaders.