J.5 Appendix E- WCMSA Ref Guide v3-6_031522.pdf

Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA)

Reference Guide

Version 3.6

March 15, 2022 COBR-Q1-2022-v3.6

WCMSA Reference Guide Table of Contents ii

Table of Contents

1.0 About This Reference Guide

1.1 Changes in This Version of the Guide

2.0 Introduction to Workers’ Compensation and Medicare

2.1 Medicare as Secondary Payer

2.2 Reporting a WC Case

2.3 Past and Future Medical Services

3.0 What Are Workers’ Compensation Medicare Set-Aside Arrangements?

4.0 Should I Consider Submitting a WCMSA Proposal?

4.1 Considerations and Guidelines

4.1.1 Commutation and Compromise

4.1.2 Outstanding WC Claims

4.1.3 Other Health Coverage

4.1.4 Hearing on the Merits of a Case

4.2 Indications That Medicare’s Interests are Protected

4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care

5.0 WCMSA Funding Structures

5.1 Lump-Sum WCMSAs

5.2 Structured WCMSAs

6.0 Who Can Help with the WCMSA Process?

7.0 How is CMS Approval of a WCMSA Amount Obtained?

8.0 Should CMS Review a WCMSA?

8.1 Review Thresholds

9.0 WCMSA Submission Process Overview

9.1 WCMSAP Submissions

9.2 Paper or CD Submissions

9.3 Receipt Review

9.4 WCRC Review

9.4.1 WCRC Review Process

9.4.2 WCRC Team Background and Resources Used

9.4.3 WCRC Review Considerations

9.4.4 Medical Review

9.4.5 Medical Review Guidelines

9.4.6 Pharmacy

9.5 Regional Office Receipt

9.6 Final Determination

iii

10.0 Information Needed for WCMSA Submission

10.1 Section 05 – Cover Letter

10.2 Section 10 – Consent to Release Note

10.3 Section 15 – Rated Age Information or Life Expectancy

10.4 Section 20 – Life Care / Future Treatment Plan

10.4.1 Current Treatment

10.4.2 Future Treatment

10.5 Section 25 – Settlement Agreement or Proposed or Court Order

10.5.1 Indicate How Much of the Settlement is for Past v. Future Medical Expenses

10.5.2 Use of WC Fee Schedule vs. Actual Charges for WCMSA

10.5.3 Total Settlement Amount

10.6 Section 30 – WCMSA Administration Agreement

10.7 Section 35 – Medical Records

10.8 Section 40 – Payment History

10.9 Section 50 – Supplemental or Additional Information

11.0 How do I Submit a WCMSA?

11.1 Electronic Submission via the WCMSAP

11.1.1 Benefits of Using the WCMSAP

11.2 Paper Copy/CD Submission via the Mail

11.2.1 Paper Copy

11.2.2 CD

12.0 What Happens after a WCMSA Has Been Submitted?

13.0 Sample Submission

14.0 Tips for Improving Your WCMSA Review Process

15.0 Review Process and Policies

15.1 Time Frame

15.2 Criteria

15.2.1 Compromise of Future Medical Expenses

15.2.2 No Waivers of Specific Services Related to Future Medicals

15.3 Case Status and Communications

16.0 Review Following Conditional Approval

16.1 Re-Review

16.2 Amended Review

16.3 Required Resubmission

17.0 Account Set-Up and Administration

17.1 Administrators

iv

17.2 Interest-Bearing Account

17.3 Use of the Account

17.4 Medicare Entitlement and WCMSA

17.4.1 Loss of Medicare Entitlement after CMS Approval of a WCMSA

17.4.2 Use of WC Settlement Funds Prior to Medicare Entitlement

17.5 Annual Attestation and Record-Keeping

17.6 Electronic Attestation

17.7 Medicare.gov Link

18.0 CMS’ Monitoring

19.0 What Happens if Circumstances Change?

19.1 WCMSA is Under-Funded

19.2 Death of the Claimant

19.3 Structured WCMSA Funds Topics

19.3.1 Funds Left Over/Carried Forward

19.3.2 Funds Used in a Given Period

19.4 Change of Submitter

Appendix 1 Contact Information

Appendix 2 Abbreviations List

Appendix 3 Glossary

Appendix 4 WCRC Proposal Review Reference Tools

Appendix 5 Sample Letters

Approval Letter

Zero Set-Aside Letter

Below Threshold Letter

Beneficiary Below Threshold Letter

Development Letter

Closeout Letter

Appendix 6 Sample Submission

Appendix 6: 05 – Cover Letter

Appendix 6: 10 – Consent to Release Note

Appendix 6: 15 – Rated Age Information or Life Expectancy

Appendix 6: 20 – Life Care/Future Treatment Plan

Appendix 6: 25 – Settlement Agreement or Proposed or Court Order

Appendix 6: 30 – WCMSA Administration Agreement

Appendix 6: 35 – Medical Records

Appendix 6: 40 – Payment History

Appendix 7 Major Medical Centers by State, NPI and ZIP Code v

Appendix 8 List of Previous Version Changes

Figures Figure 9-1: WCMSA Submission Process Overview Figure 9-2: WCRC Medical Review Steps Figure 10-1: Blank Consent to Release Note Figure 10-2: Example Consent to Release with Instructions

Tables Table 9-1: Verifying Jurisdiction and Calculation Method (Normal Pricing) Table 9-2: Verifying Jurisdiction and Calculation Method (Other Pricing) Table 9-3: Spinal Cord Stimulator Surgery CPT Codes Table 10-1: WCMSA Document Requirements Checklist Table Appendix 4-1: WCRC Proposal Review Reference Tools Table Appendix 7-1: Major Medical Centers by State, NPI, and ZIP Code

WCMSA Reference Guide Confidentiality Statement vi

Confidentiality Statement The collection of this information is authorized by Section 1862(b) of the Social Security Act (codified at 42 U.S.C 1395y(b)) (see also 42, C.F.R. 411.24). The information collected will be used to identify and recover past conditional and mistaken Medicare primary payments and to prevent Medicare from making mistaken payments in the future for those Medicare Secondary Payer situations that continue to exist. The Privacy Act (5 U.S.C. 552a(b)), as amended, prohibits the disclosure of information maintained by the Centers for Medicare & Medicaid Services (CMS) in a system of records to third parties, unless the beneficiary provides a written request or explicit written consent/authorization for a party to receive such information. Where the beneficiary provides written consent/proof of representation, CMS will permit authorized parties to access requisite information.

WCMSA Reference Guide

1.0 About This Reference Guide

This guide was written to help you understand the process used by the Centers for Medicare & Medicaid Services (CMS) for approving proposed Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) amounts and to serve as a reference for those choosing to submit such amounts to CMS for approval. Submitters may include injured workers themselves (claimants), their attorneys, Workers’ Compensation (WC) Medicare Set-Aside Arrangement (MSA) agents or consultants, or claimants’ other appointed representatives.

This guide reflects information compiled from all WCMSA Regional Office (RO) Memoranda issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules. The intent of this reference guide is to consolidate and supplant all historical memoranda in a single point of reference. Please discontinue the reference of prior documents.

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.

1.1 Changes in This Version of the Guide

Version 3.6 of this guide includes the following changes:

Clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3), as well as documentation and re-review tips (Sections 9.4.1.1 10.2, and 16.1).

2.0 Introduction to Workers’ Compensation and

Medicare

2.1 Medicare as Secondary Payer

“Medicare Secondary Payer” (MSP) is the term used when the Medicare program does not have primary payment responsibility on behalf of its beneficiaries—that is, when another entity has the responsibility for paying for medical care before Medicare. Until 1980, the Medicare program was the primary payer in all cases except those involving WC (including Black Lung benefits) or for care that is the responsibility of another government entity. With the addition of the MSP provisions in 1980 (and subsequent amendments), Medicare is secondary payer to group health plan insurance in specific circumstances, but is also secondary to liability insurance (including self-insurance), no-fault insurance, and WC. An insurer or WC plan cannot, by contract or otherwise, supersede federal law, for instance by alleging its coverage is “supplemental” to Medicare.

WC is a primary payer to the Medicare program for Medicare beneficiaries’ work-related illnesses or injuries. Medicare beneficiaries are required to apply for all applicable WC benefits.

If a Medicare beneficiary has WC coverage, providers, physicians, and other suppliers must bill WC first.

In order to comply with 42 U.S.C. § 1395y(b)(2) and § 1862(b)(2)(A)(ii) of the Social Security Act, Medicare may not pay for a beneficiary's medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” If responsibility for the WC claim is in dispute and WC will not pay promptly, the provider, physician, or other supplier may bill Medicare as primary payer. If the item or service is reimbursable under Medicare rules, Medicare may pay conditionally, subject to later recovery if there is a subsequent settlement, judgment, award, or other payment. (See 42 C.F.R. § 411.21 for the definition of “promptly” with regard to WC.)

2.2 Reporting a WC Case

All WC occurrences that involve a Medicare beneficiary should be reported to the Benefits Coordination & Recovery Center (BCRC). If you are a Responsible Reporting Entity (RRE) making an initial report of ongoing responsibility, use the Section 111 COB Secure Website for reporting. For the submission of WCMSA information, contact the BCRC by phone or mail.

Customer Service Representatives are available Monday through Friday, from 8:00 a.m. to 8:00 p.m., Eastern Time, except holidays. The BCRC's toll free number is 1-855-798-2627 or TTY/TDD: 1-855-797-2627 for the hearing and speech impaired.

Written reports of WC occurrences should be addressed to:

Medicare—Medicare Secondary Payer Medicare Secondary Payer Claims Investigation Project P.O. Box 138897 Oklahoma City, OK 73113-8897

NOTE: This mailing address is for reporting a WC occurrence, not for the submission of proposed WCMSA amounts. See Section 3.0: What Are Workers’ Compensation Medicare Set-Aside Arrangements? for an explanation of WCMSAs, or Section 11.2: Paper Copy/CD Submission via the Mail for the WCMSA submission address.

When contacting the BCRC to report a new WC occurrence by phone or by mail, please be sure to have the following information available:

• Injured person’s name

• Injured person's Medicare ID (Health Insurance Claim Number [HICN] or Medicare

Beneficiary Identifier [MBI]) or Social Security Number (SSN)

• Date of incident

• Nature of illness/injury

• Name and address of the WC insurance carrier

• Name and address of the injured person’s legal representatives

• Name of insured

• Policy/claim number

Once this information is received, the BCRC will apply it to the beneficiary’s Medicare record and send it to the Commercial Repayment Center (CRC) for processing. The CRC will issue a Conditional Payment Letter (CPL) or Conditional Payment Notice (CPN) to the insurer, copied to the beneficiary, explaining Medicare’s recovery rights with respect to conditional payments and outlining next steps in the process. Please note that Medicare's interests cannot be determined until the specifics of the WC occurrence are noted on the beneficiary's record. For inquiries after submission of the WC occurrence, beneficiaries and their representatives should contact the BCRC using the contact information above or in Appendix 1, and non-beneficiaries should contact the CRC at 1-855-798-2627 (TTY/TDD: 1-855-797-2627 for the hearing and speech impaired).

2.3 Past and Future Medical Services

Generally, the term “past medical services” refers to Medicare-covered and otherwise-reimbursable items and services that the beneficiary receives before he or she obtains a WC settlement, judgment, award, or other payment. The term “future medical services” refers to Medicare-covered and otherwise-reimbursable items and services that the beneficiary receives after he or she obtains a settlement, judgment, award, or other payment.

In situations in which Medicare has paid for WC-claim-related care before the beneficiary has obtained a settlement, judgment, award, or other payment, those Medicare payments are referred to as “conditional payments.” They are considered conditional payments because Medicare pays under the condition that it is reimbursed when the beneficiary gets a WC settlement, judgment, award, or other payment.

Medicare is required by statute (42 U.S.C. § 1395y(b)) to seek reimbursement for conditional payments related to the settlement. Further, Medicare is prohibited from making payment where payment has been made (that is, where the beneficiary obtains a settlement, judgment, award, or other payment). Medicare remains the secondary payer until the settlement proceeds are appropriately exhausted. In many situations, the parties to a WC settlement choose to pursue a

CMS-approved WCMSA amount in order to establish certainty with respect to the amount that must be appropriately exhausted before Medicare begins to pay for care related to the WC settlement, judgment, award, or other payment.

Note: If Medicare is pursuing recovery directly from the WC insurer, the beneficiary, attorney, or other representative will receive a copy of recovery correspondence sent to the WC insurer.

For more information on insurer recovery, see the Non-Group Health Plan Recovery page:

http://go.cms.gov/NGHPR.

3.0 What Are Workers’ Compensation Medicare Set-

Aside Arrangements?

A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare (“Medicare covered”). When a proposed WCMSA amount is submitted to CMS for review and the claimant (who may or may not be a beneficiary) obtains CMS’ approval, the CMS-approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment.

The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-injury-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost. WCMSAs may be funded by a lump sum or may be structured, with a fixed amount of funds paid each year for a fixed number of years, often using an annuity.

Any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account. If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received any portion of a third-party payment either directly or indirectly—a right to recover, or take back, that payment. CMS also has a subrogation right with respect to any such third-party payment. "Subrogation" literally means the substitution of one person or entity for another. If Medicare exercises its subrogation rights, Medicare is a claimant against the responsible party and the liability insurer to the extent that Medicare has made payments to or on behalf of the beneficiary for services related to claims against the responsible party (and the responsible party’s liability insurance). In this example, Medicare is substituting for the claimant in this situation. Medicare can be a party to any claim by a beneficiary or other entity against a responsible party and/or his/her liability insurance, and can participate in negotiations concerning the total liability insurance payment and the amount to be repaid to Medicare.

Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted. These arrangements are typically not created until the individual’s condition has stabilized so that it can be determined, based on past experience, what the future medical expenses may be. CMS prefers this, so that future medical and prescription drug costs can be planned with a reasonable degree of certainty.

Once the CMS-approved set-aside amount is exhausted and accurately accounted for to CMS, Medicare will pay primary for future Medicare-covered expenses related to the WC injury that exceed the approved set-aside amount.

4.0 Should I Consider Submitting a WCMSA

Proposal?

4.1 Considerations and Guidelines

An individual or beneficiary may consider seeking CMS approval of a proposed WCMSA amount for a variety of reasons. The primary benefit is the certainty associated with CMS reviewing and approving the proposed amount with respect to the amount that must be appropriately exhausted. It is important to note, however, that CMS approval of a proposed WCMSA amount is not required.

4.1.1 Commutation and Compromise

WC cases may involve past medical expenses, future medical expenses, or both. When a settlement includes compensation for medical expenses incurred prior to the settlement date, it is referred to as a “WC compromise case.” When a settlement includes compensation for future medical expenses, it is referred to as a “WC commutation case.” A settlement also has a commutation aspect if it does not provide for future medical expenses when the facts of the case indicate the need for continued medical care related to the WC illness or injury. A WC settlement can have both compromise and commutation aspects.

4.1.2 Outstanding WC Claims

If a Medicare beneficiary has outstanding WC-related claims that were not paid by either Medicare or the WC carrier prior to the settlement, the beneficiary is required to pay for related unpaid medicals bills out of his or her WC settlement. Medicare cannot pay because it is secondary to the WC settlement.

4.1.3 Other Health Coverage

A WCMSA is still recommended when you have coverage through other private health insurance, the Veterans Administration, or Medicare Advantage (Part C). Other coverage could be cancelled or you could elect not to use such a plan. A WCMSA is primary to Medicare Advantage and must be exhausted before using Part C benefits on your WC illness or injury.

4.1.4 Hearing on the Merits of a Case

Because the CMS prices based upon what is claimed, released, or released in effect, the CMS must have documentation as to why disputed cases settle future medical costs for less than the recommended pricing. As a result, when a state WC judge or other binding party approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. This shall include all denied liability cases, whether in part or in full. If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the entire dollar amount of the entire WC settlement. Medicare may also assert a recovery claim, if appropriate.

If a court or other adjudicator of the merits (e.g., a state WC board or commission) specifically designates funds to a portion of a settlement that is not related to medical services (e.g., lost wages), then Medicare will accept that designation.

4.2 Indications That Medicare’s Interests are Protected

Submitting a WCMSA proposed amount for review is never required. But WC claimants must always protect Medicare’s interests. A WCMSA is not necessary under the following conditions because when all three are true, they indicate that Medicare’s interests are already protected:

a) The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);

b) There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and

c) The individual's treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury.

In addition, if a settlement leaves WC carriers with responsibility for ongoing medical and prescription coverage once the settlement funds are fully spent, then a WCMSA is not necessary.

Notes:

• If Medicare made any conditional payments for WC injury-related services furnished prior to settlement, then Medicare will recover those payments. In addition, Medicare will not pay for any WC injury-related services furnished prior to the date of the settlement for which it has not already paid.

• CMS will not issue “verification letters” stating that a WCMSA is not necessary.

• CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.

4.3 The Use of Non-CMS-Approved Products to Address

Future Medical Care

A number of industry products exist for the purpose of complying with the Medicare Secondary Payer regulations without participation in the voluntary WCMSA review process set forth in this reference guide. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.”

42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.

As a matter of policy and practice, CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.

Notes: This official policy shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022; however, flags in the Common Working File for notifications received prior to that date will be set to ensure Medicare does not make payment during the spend-down period.

CMS does not intend for this policy to affect any settlement that would not otherwise meet review thresholds. This comment does not relieve the settling parties of an obligation to consider Medicare’s interests as part of the settlement; however, CMS does not expect notification or submission where thresholds are not met.

5.0 WCMSA Funding Structures

There are two kinds of WCMSAs. An individual or a beneficiary may obtain a settlement that provides for a lump-sum WCMSA or a structured WCMSA.

5.1 Lump-Sum WCMSAs

A WCMSA can be established as a lump-sum arrangement where the beneficiary accepts a single payment intended to pay for all future medical expenses and disability benefits related to the work injury or disease. When a WCMSA is designated as a lump-sum commutation settlement, Medicare will not make any payments for the claimant’s medical expenses (for work-related injuries or diseases) until all the funds within the WCMSA (including any interest earned on the funds in the account) have been completely exhausted. These same basic principles also apply to structured settlements. Generally, WCMSAs that are lump sums are easier to monitor than structured arrangements.

5.2 Structured WCMSAs

A WCMSA can also be established as a structured arrangement, where payments are made to the account on a defined schedule to cover expenses projected for future years. In a structured WCMSA, an initial deposit is required to cover the first surgery or procedure for each body part, and/or replacement and the first two years of annual payments. The initial deposit (“seed money”) is followed by subsequent annual deposits (or a shorter time period if CMS agrees to such), based on the anniversary of the first deposit. If in any given coverage year the deposited funds are not exhausted (i.e., used up, spent), they are carried forward to the next period and added to the next annual deposit. The whole fund, including carry-forwards, must be exhausted before Medicare will pay primary for any WC injury-related medical expenses. If the fund is exhausted appropriately in a given annual period, Medicare will pay primary for further WC injury-related medical expenses during that period. In the next annual period, the replenished WCMSA funds again must be used, until the WCMSA amount is appropriately exhausted.

6.0 Who Can Help with the WCMSA Process?

Setting up a WCMSA arrangement, submitting the proposal to CMS for approval, and selecting the best way to administer the arrangement can be complicated. If you are an injured worker who will need future medical treatment, an attorney may be able to explain this process and provide legal help. An attorney can also help you consider whether you should have a separate administrator for your WCMSA. You may also find it useful to seek advice from financial and tax professionals in the planning phases and once the WCMSA is established.

Once a WCMSA is established and funded, it must be administered. This can be done by the claimant, by the claimant’s representative payee, appointed guardian, or conservator, or by a professional administrator. The administrator must establish the WCMSA account, pay Medicare-covered services from the WCMSA account, and provide CMS with a reporting of the expenditures from the WCMSA. See the WCMSAP User Guide and the WCMSA Self- Administration Toolkit for more information on administering the account and proper reporting to CMS. The user guide is located at https://go.cms.gov/wcmsa and the Toolkit at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers- Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Self-Administration.

7.0 How is CMS Approval of a WCMSA Amount

Obtained?

Generally there are four steps involved in creating a CMS-approved WCMSA. These steps are explained in more detail in the sections that follow:

1. Analysis of the claim and medical information in order to determine the amount of money required for the fund

2. Negotiation of a tentative settlement and preparation of draft settlement documents to settle the WC case, incorporating terms for creation and administration of the WCMSA (CMS is not a party to the settlement)

3. Obtaining approval from CMS for the amount of the proposed WCMSA

4. Finalizing the settlement and funding the WCMSA https://go.cms.gov/wcmsa https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Self-Administration https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Self-Administration

8.0 Should CMS Review a WCMSA?

If a proposed WCMSA total settlement amount meets the workload review thresholds outlined below, the proposal can be submitted to CMS for approval. If the parties to a WC settlement stipulate a WCMSA amount but do not receive CMS approval, then CMS is not bound by the set-aside amount stipulated by the parties, and it may refuse to pay for future medical expenses related to the WC work-related injury, even if they would ordinarily have been covered by Medicare. However, if CMS approves the WCMSA amount and the account is later appropriately exhausted, Medicare will pay Medicare-covered, WC work-injury-related medical bills for services otherwise covered and reimbursable by Medicare regardless of the amount of care the beneficiary continues to require.

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 requires that you comply with CMS’ established policies and procedures in order to obtain approval.

CMS reviews proposed WCMSA amounts in order to determine if the proposed WCMSA amount is sufficient to cover future claim-related medical expenses related to the WC settlement, judgment, or award. Note: A WCMSA amount should not be submitted to CMS when the resolution of the WC claim results in the medical portion of the claim being left open—that is, the resolution does not include medical expenses and the WC plan or carrier maintains ongoing responsibility for medicals (ORM), i.e., the WC plan or carrier will continue to pay for medical expenses related to the WC injury after settlement.

8.1 Review Thresholds

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.

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.

Also note that both the beneficiary and non-beneficiary workload review thresholds are subject to adjustment. CMS reserves the right to change or remove these thresholds based on Medicare’s interests. Claimants, employers, carriers, and their representatives should regularly monitor the CMS website at https://go.cms.gov/wcmsa for changes to these thresholds and for other changes in policies and procedures.

Further, note that if a claimant’s WC settlement does not meet the current workload review thresholds, CMS will not issue a “verification letter” indicating that the review criteria have not been met, or indicating that a WCMSA is unnecessary. CMS will honor the threshold in effect at the time of settlement.

Example 1: A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim is offered settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00).

Example 2: A 47 year old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.

9.0 WCMSA Submission Process Overview

When a WCMSA proposal is submitted on paper or CD, the Benefits Coordination & Recovery Center (BCRC) transfers it to CMS’ computerized system and checks it for completeness. Then it is ready to be reviewed by the Workers’ Compensation Review Contractor (WCRC). Proposals submitted online via the WCMSA Portal (WCMSAP) go directly to the WCRC for review.

These two submission methods represent the only acceptable delivery methods. Either the BCRC or the WCRC may request more information from the submitter as necessary. The WCRC applies CMS’ criteria in reviewing proposals, and forwards the proposals along with a recommendation on the appropriate funding amount to the assigned CMS Regional Office (RO) for a final determination.

https://go.cms.gov/wcmsa

For more information on the submission process and documentation requirements, please see Section 11.0: How do I submit a WCMSA?.

The following figure illustrates the submission process and all of the entities involved. A single-direction arrow indicates one-way communication. A double-direction arrow indicates two-way communication. More detailed information about this process immediately follows this diagram.

Figure 9-1: WCMSA Submission Process Overview

9.1 WCMSAP Submissions

When a WCMSA case is submitted online via the WCMSAP, case information is electronically transmitted to the CMS system used to report and track WCMSA cases. The submitter will receive an alert which can only be viewed on the WCMSAP. This alert acknowledges that the case was received.

9.2 Paper or CD Submissions

When the BCRC receives a WCMSA proposal via hard copy (paper documents, including faxes) or via CD, it manually prepares, sorts, and scans all eligible WCMSA proposals, including all documentation received, into the CMS system used to report and track WCMSA cases.

9.3 Receipt Review

The review process is as follows:

1. New Case: If the submitted WCMSA proposal is for a new case and all required documentation has been submitted, it is ready for WCRC review. However, if any required documents are missing, the submitter is asked for the missing information, in a phase called Development.

2. Existing Case: If the submitted WCMSA documentation is for an existing case, it is matched with and appended to the existing case. At this point, and if the submitted documentation is complete, the case is ready for WCRC review.

3. Deceased Beneficiary: If the WCMSA submission is for a beneficiary who is possibly deceased, the submitter is notified that, according to CMS’ records, the beneficiary is deceased, and the submitter is requested to submit evidence to the contrary. If supplemental information is not supplied, the case is systematically closed.

The process varies depending on the method of submission. For hard copy submissions, the BCRC performs the checks for completeness, makes requests for additional information, and enters the documents into Medicare’s computerized system.

For portal submissions, no document scanning and entry is necessary. The WCMSAP will also check CMS’ records for a death date for the beneficiary at the time of submission. Any requests for additional information or for proof that the beneficiary is living will arrive through the portal, with an email notification.

The BCRC’s role in this process is limited to preparing and developing the case. Once the case is ready, the WCRC performs the initial review of the proposal.

9.4 WCRC Review

9.4.1 WCRC Review Process

The WCRC receives submissions from the BCRC and from the portal, and performs an independent review of the adequacy of both the medical and prescription drug costs proposed.

The WCRC first reviews the case in detail for completeness and accuracy. If errors are found in a submitted case, the submitter is notified.

a) If the case was submitted via the WCMSAP, the submitter will be notified via an e-mail alert to the address provided during the WCMSAP account setup.

b) If the case was submitted via paper or CD, the submitter will receive a letter via the postal service.

Both types of notification contain the case control number and the type of error found.

The WCRC then reviews and evaluates the adequacy of the proposal submitted. Using some or all of the evaluation tools listed in Appendix 4, the WCRC evaluates the likely need for, and prices medical treatments and prescription medications for, the expected duration of the claimant’s life. Based on these findings, the WCRC makes recommendations as to the disposition of the case, the prescription drugs proposed and costs, treatment plans and costs, and the WCMSA amount. In other words, the WCRC ultimately renders an opinion to CMS as to whether the WCMSA amount proposed is adequate to protect Medicare’s interests.

During its review, the WCRC may need to develop the case for additional information or documentation. If the submitter does not respond to the development letter within the allotted time frame (i.e., 30 days for cases submitted to the BCRC, 20 business days for cases submitted on the WCMSAP), the case is closed for lack of response. If the submitter does respond, but the response is insufficient, another request may be sent to the submitter. If more than one development request has been sent, the timestamp of the most recent request will be used to calculate the response time frame.

9.4.1.1 Most Frequent Reasons for Development Requests

The five most frequent reasons for development requests by the WCRC:

1. Insufficient or out-of-date medical records. Medical records are required documents for all submissions, including situations where the parties are in dispute.

2. Insufficient payment histories, usually because the records do not provide a breakdown for medical, indemnity or expenses categories. Payment histories are required documents for all submissions, including situations where the parties are in dispute, and must include breakdowns for payment categories along with identification of any category codes.

3. Failure to address draft or final settlement agreements and court rulings in the cover letter or elsewhere in the submission. Draft or final settlement agreements and court rulings are required documents for all submissions, if they exist. For settlements where conditional payments are made as an element of the agreement, the WCRC will not accept a letter indicating that draft or final settlements do not exist.

4. Documents that are referenced in the file are not provided—this usually occurs with court rulings or settlement documents.

5. References to state statutes or regulations without providing sufficient documentation (i.e., to which payments the statutes/regulations apply or a copy of the statute or regulation, or notice of which statutes or regulations apply to which payments).

9.4.2 WCRC Team Background and Resources Used

All of the WCRC reviewers are licensed healthcare professionals, including registered nurses, physicians, nurse practitioners, and professional counselors. These reviewers also maintain various credentials and certifications, such as Certified Case Managers, Life Care Planners, Certified Coders, Rehabilitation Counselors, and Legal Nurse Consultants. Several are also licensed in the practice of law. The WCRC reviewing staff has knowledge of:

• International Classification of Diseases (ICD)-9, ICD-10, Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) coding practices

• Medicare coverage guidelines

• Anatomy, physiology, and pharmacology

• Clinical practice guidelines

• Utilization review standards and practices

• State-specific workers’ compensation guidelines and pricing structure

• Health Insurance Portability and Accountability Act (HIPAA) and related healthcare confidentiality regulations The WCRC reviewers have many resources to assist them in their daily reviewer responsibilities, including pharmacists, attorneys, the medical director, and certified coders. The reviewers also have access to clinical guidelines, workers’ compensation fee schedules, and Medicare coverage guidelines to assist with their reviews. See Appendix 4 for a list of specific resources used in reviews.

9.4.3 WCRC Review Considerations

After the WCRC case reviewer validates that the injury has been accepted as a compensable injury, the next step is to project related future medical care. These considerations are key to review accuracy:

Are there previous injuries that affect the resolution of the accepted injury?

Are there underlying medical conditions that will affect the type of future care or the length of care necessary to bring about the best possible outcome?

Are there underlying conditions requiring concurrent medications or treatment, but which are not related specifically to this work injury?

Are non-treating provider reviews and examinations taking precedence over the treating providers’ treatment plan?

Are the medical pricing rules used appropriate for the particular region?

The WCRC team reviews all of the submitted records and attempts to determine the future care required for the individual claimant, taking into consideration the claimant’s specific condition, other comorbidities, and the claimant’s past use of healthcare services. Reviewers use evidence-based rationale for their determinations, taking into account both published guidelines and current peer-reviewed medical literature.

Medical pricing may vary based on injury, age, location, and other factors. Each submission is reviewed independently of other submissions for claimants with the same injury and age. This accounts for any differences in WCMSA amount determination.

For example, a reasonably healthy and active 45-year-old claimant who recently had total knee replacement surgery is likely to require a revision of the surgery (second knee replacement) during his 30-year life expectancy, as the replacement joint wears out. However, another 45-year-old claimant with a recent total knee replacement but who is sedentary and in poor health due to diabetes mellitus and coronary artery disease may not require or be a satisfactory risk for such a revision in the future.

If a claimant might need a revision or replacement surgery in the last 1–3 years of life expectancy, the decision to include this revision in the WCMSA depends on the type of revision and on the claimant’s overall condition. For example, a claimant in the last 1–3 years of life expectancy is unlikely to have a revision of a total hip replacement surgery, but a spinal cord stimulator (SCS) for pain management would likely be revised if needed.

The WCRC considers both the claimant’s past history of treatment and the recent trending of treatment in determining plans for future treatment frequency. For example, if a claimant was seeing the physician every year initially, but records indicate more frequent visits recently, that will be considered in the determination. There is currently no plan to establish a set of standards for specific conditions.

The WCRC relies on evidence-based guidelines for prescription medication and medical treatment allocations; however, these are guidelines, not rules. The final determination is also based on the claimant’s past use and future recommended treatment as supported by the medical records and by current peer-reviewed medical literature. See Appendix 4 for a list of resources the WCRC uses.

The WCRC strives to comply with the laws of the state determined to be the appropriate state of venue. The reviewers research the applicable state regulations and fee schedules. In previous years, the WCRC has priced WCMSAs using the highest fee schedule zone possible within any state that uses fee schedules. Currently the WCRC prices WCMSAs according to the correct region for the state of venue. Hospital fee schedules are currently determined using the Diagnosis-Related Groups (DRG) payment for the median major medical center within the appropriate fee jurisdiction for the pricing ZIP code, unless otherwise defined by state law (see Appendix 7).

9.4.4 Medical Review

The WCRC follows ten steps in its medical review process. For a list of resources used in the process, see Appendix 4. The diagram below shows the steps in order, with decision points. The steps are numbered in the diagram and explained in the text following the diagram.

Figure 9-2: WCRC Medical Review Steps

Step 1: Validate demographics and contact information.

1. Verify that claimant name, SSN, Medicare ID (HICN or MBI), address, date of birth, and gender are consistent with the submitter letter.

2. Check that contact information is present for claimant’s attorney, carrier, employer or carrier attorney submitter, WCMSA administrator, and Social Security Administration (SSA) representative payee (if there is one).

3. If a professional administrator is proposed, verify that the full contact information is available.

4. Check that a consent-to-release note is valid and signed by the claimant, Power of Attorney (POA) holder, or guardian. If there is a POA or guardian, submitted documents must support that relationship.

Step 2: Verify that the total settlement amount (TSA) is clear and that the review threshold is met.

If the TSA is not clear in the submitter letter, the case cannot be reviewed until it is clarified through development.

Cases that are clearly under threshold will be closed as ineligible. Cases not clearly meeting the threshold requirements are developed so that the WCRC can determine whether the case is eligible for review.

Step 3: Verify that dates of injury and conditions being settled are clear.

Multiple dates of injury that are settling can be included in one WCMSA. Document each date of injury (DOI) with the accepted and alleged body parts for each date of injury. The submitter also has the option to submit separate WCMSA proposals for different DOIs for the same claimant.

It is helpful if the submitter includes the ICD-9 or ICD-10 codes for each condition for each DOI. Do not use both ICD-9 and ICD-10 codes on one submission; use only ICD-10 codes for DOIs on or after 10/1/2015. (ICD-9 codes will continue to be allowed for submissions with a DOI of 9/30/2015 or earlier.)

It is also helpful to include medical records, a payment history, and detailed prescription history for each DOI being settled.

The reviewer will also determine whether parties are settling on all body parts or portions of the claim, or if some portions of the claim will remain open. If the carrier will continue to pay for all WC claim injury-related medical care for the claimant, then the case is ineligible for review. If the proposal involves settling all medical claims for all body parts, the case is eligible for review.

Also, if the agreement states that the carrier will continue to pay for some medical services but not others for the same body part, the WCRC considers this as not settling for all treatments for that body part. For example, the WCRC cannot work a case where a submitter wants to settle medical claims for a body part, but leave open prescription drugs for the same body part.

For multiple WC settlements per claimant, the cover letter should be clear on how the submitter expects the cases to be handled. If the cover letter is not clear, the WCRC will discuss with the submitter whether to process the settlements as one WCMSA proposed amount, or as multiple separate amounts. The cases will be closed until the submitter clarifies in writing which is the preferred option, at which point the cases will be reopened.

Step 4: Verify the proposed set-aside amounts.

The reviewer will first review a settlement document, signed by all parties and state-approved, for the proposed total settlement amount. If such an amount is not accompanied somewhere in the file by a proposed life expectancy, the reviewer will ignore the amount in the settlement document. If the submitter proposes a different amount, the reviewer will use the settlement documents’ amount. If there is no settlement document with a proposed total amount, the reviewer will review the cover letter for proposed WCMSA amounts and the specific breakdown for proposed medical and prescription amounts. The amounts should add up to the total and be identical in both the submitter letter and the proposed future treatment tables provided with the submission. If the submitter letter is not clear as to the proposed set-aside amount or there are any discrepancies, the WCRC will develop the case, which delays review.