Attachment_J.1.5_-_Appendix_E_WCMSA-Reference-Guide-Version-2_5_Online_Amendment_2.pdf

Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA)

Reference Guide

Version 2.5

Rev. 2016/4 April COBR-Q1Q2-2016-v2.5

WCMSA Reference Manual Confidentiality and Disclosures ii

Confidentiality and Disclosures

Confidentiality and Disclosure of Information Section 1106 (a) of the Social Security Act as it applies to the Centers for Medicare & Medicaid Services (CMS) - (42 CFR Chapter IV Part 401

§§ 401.101 to 401.152) prohibits disclosure of any information obtained at any time by officers and employees of Medicare Intermediaries, Carriers, or contractors in the course of carrying out agreements under Sections 1816 and 1842 of the Social Security Act, and any other information subject to Section 1106 (a) of the Social Security Act. Section 1106 (a) of the Act provides in pertinent part that "Any person who shall violate any provision of this section shall be deemed guilty of a felony and, upon conviction thereof, shall be punished by a fine not exceeding

$10,000, or by imprisonment not exceeding five year, or both." Additional and more severe penalties are provided under Title XVIII (Medicare) USC Section 285 (unauthorized taking or using of papers relating to claims) and under Section 1877 of Title XVIII of the Act (relating to fraud, kickbacks, bribes, etc., under Medicare).

These provisions refer to any information obtained by an employee in the course of their performance of duties and/or investigations (for example, beneficiary identification number, beneficiary diagnosis, social security number, pattern of practice of physicians, etc.). Any unauthorized inspection or disclosure of IRS return information in violation of any provision of

Section 6103 may bring damages as described in IRC Sections 7431 and 7213, which include, but are not limited to, a fine of any amount not exceeding $5,000 or imprisonment.

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WCMSA Reference Manual Table of Contents

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

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

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9.6 Final Determination

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... 41

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 Re-Review

17.0 Account Set-Up and Administration

17.1 Administrators

17.2 Interest-Bearing Account

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17.3 Use of the Account

17.4 Medicare Entitlement and WCMSAs

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

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

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 5: 05 – Cover Letter

Appendix 5: 10 – Consent to Release Note

Appendix 5: 15 – Rated Age Information or Life Expectancy

Appendix 5: 20 – Life Care/Future Treatment Plan

Appendix 5: 25 – Settlement Agreement or Proposed or Court Order

Appendix 5: 30 – WCMSA Administration Agreement

Appendix 5: 35 – Medical Records

Appendix 5: 40 – Payment History

Appendix 7 Previous Version Changes vi

WCMSA Reference Guide Table of Contents

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 10-1: WCMSA Document Requirements Checklist

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)

Memorandums 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. For comprehensive explanations, please refer to the WCMSA

RO Memorandums.

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 2.5 of this Guide includes the following changes:

Updates were made to reflect Non-Group Health Plan (NGHP) Ongoing Responsibility for

Medicals (ORM) recovery changes. See Part 2.2.

Guidelines for use of ICD-9 and ICD-10 codes were updated. See Parts 9.4.4 and 10.4.2.

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 Section 1862(b)(2) 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), use the Section 111 COB Secure Website for reporting. Otherwise, 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

MSP Claims Investigation Project

P.O. Box 138899

Oklahoma City, OK 73113-8897

NOTE: This mailing address is for reporting a WC occurrence, not for the submission of proposed WCMSA amounts. See What Are Workers’ Compensation Medicare Set-Aside Arrangements? for an explanation of WCMSAs, or Part 11.2 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 Health Insurance Claim Number (HICN) 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).

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.

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 claimant 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 claimant 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.

http://go.cms.gov/NGHPR

Medicare is required by statute (42 U.S.C. § 1395y(b)) to seek reimbursement for conditional payments related to the claim. 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 (“properly spent”). 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 properly spent before Medicare begins to pay for claim-related care.

3.0 What Are Workers’ Compensation Medicare Set-

Aside Arrangements?

A WCMSA allocates a portion of the WC settlement for all future claim-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 properly spent before Medicare will begin to pay for care related to the WC claim.

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 claim-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 single payment, 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 claimant for services related to claims against the responsible party (and the responsible party’s liability insurance); that is, 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 or his or 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 claim 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 claim that exceed the approved set-aside amount.

4.0 Should I Consider Submitting a WCMSA

Proposal?

4.1 Considerations and Guidelines

A claimant 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 properly spent. 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 claim. A WC settlement can have both compromise and commutation aspects. Please refer to the July 2001 WC RO Memorandum for more information.

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 to cover your WC claim-related expenses.

4.1.4 Hearing on the Merits of a Case

When a state WC judge 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. If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for Medicare-covered services related to the WC claim until after the entire dollar amount of the WC settlement has been spent on such services. Medicare will also seek reimbursement 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 claim.

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 claim-related services furnished prior to settlement, then Medicare will recover those payments. In addition, Medicare will not pay for any WC claim-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.

5.0 WCMSA Funding Structures

There are two kinds of WCMSAs. A claimant 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 claimant accepts a single payment intended to pay for all future medical expenses and disability benefits related to the WC claim. When a WCMSA is designated as a lump-sum commutation settlement, Medicare will not make any payments for claim-related medical expenses 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 surgical procedure or replacement and 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 claim-related medical expenses. If the fund is properly spent in a given annual period, Medicare will pay primary for further WC claim-related medical expenses during that period. In the next annual period, the replenished WCMSA funds again must be used, until the WCMSA amount is properly spent.

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.

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

8.0 Should CMS Review a WCMSA?

If a proposed WCMSA 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 amount stipulated by the parties, and it may refuse to pay for future claim-related medical expenses, even if they would ordinarily have been covered by Medicare. However, if CMS approves the

WCMSA amount and that amount is later properly spent, Medicare will pay Medicare-covered, claim-related medical bills regardless of the amount of care the claimant 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 amount is sufficient to cover future claim-related medical expenses. 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 claim-related medical expenses 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 Part 10.5 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 a denial of 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 of these 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 http://go.cms.gov/wcmsa for changes to these thresholds and for other changes in policies and procedures.

http://go.cms.gov/wcmsa

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.

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.

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

Figure 9-1 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, 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 of 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;

2. Insufficient payment histories, usually because the records do not provide a breakdown for medical, indemnity, or expenses categories;

3. Failure to address draft or final settlement agreements and court rulings in the cover letter or elsewhere in the submission;

4. Documents referred to in the file are not provided—this usually occurs with court rulings or settlement documents;

5. Submissions refer to state statutes or regulations without providing sufficient documentation, i.e., 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 claim?

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 a Major Medical Center within the state, and this fee is applied to all locations within the state.

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

No

Yes

8. Treatment, payment, pharmacy records complete, valid & up-to-date?

Start Develop for sufficient or correct information

WCRC receives

WCMSA proposal

No

7. Calculate life expectancy per operating rules;

based on standard age or rated age

1. Contact & claimant info present & consistent? Consent form signed?

2. TSA clear & threshold met?

Yes

Yes

9. Review plan; price appropriate future medical

& pharmacy services

3. DOI &

conditions being settled clear?

Is recommendation to approve WCMSA proposal at proposed amount?

Recommend CMS approve proposal

4. Set-aside amounts & breakdown agree clearly?

Recommend CMS counter lower or higher

End

Yes Yes

10. Explain decision rationale in response

5. Pricing method appropriate for jurisdiction or circumstances?

No Determine correct pricing method End

Yes

6. WCMSA

payment structure clear?

Step 1: Validate demographics and contact information.

1. Verify that claimant name, SSN, HICN, 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 on 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 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 claim-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. If there is no specification of how much of the total settlement amount is for medical expenses vs. prescription drug expenses, the reviewer will assume it is all for medical items and services.

Step 5: Verify jurisdiction and calculation method.

If settlement documents are included, the state listed in these documents is used as the pricing state. If no settlement documents are provided, the reviewer uses the pricing state listed in the submitter letter.

If the state does not have a fee schedule (Indiana, Iowa, Missouri, New Hampshire, New Jersey, Virginia, Wisconsin), the reviewer will price per actual charges, even if the submitter proposed fee schedule pricing. The reviewer will also default to actual charges if “Medicare fee schedule” is indicated in the cover letter. CMS uses only state fee schedules or actual charges.

If the state has a fee schedule and the submitter chooses fee schedule per the cover letter, the reviewer will use the most current version of the state fee schedule to price the medical services.

If a state institutes or changes a fee schedule, the WCRC will apply the new fee schedule immediately upon learning of its official publication, regardless of official effective date, for any case still in process on that date.

The WCRC will price using the method chosen by the submitter in the cover letter or in a document referenced by the cover letter, whenever possible. If the submitter uses a mixture of both methods, the WCRC will price using fee schedule as much as possible.

If the state has a fee schedule and the submitter chooses actual charges, the review will price per actual charges.

If the case is a Longshore Harbor Workers’ Compensation Act case and no settlement documents were provided, the reviewer looks to the submitter for guidance on the pricing method. If that is by fee schedule, the only possible fee schedule to use is the current Office of Workers’

Compensation Programs fee schedule for the ZIP code of claimant’s residence.

If development is required, and no response or an insufficient response is given, the WCRC will price using actual charges.

Step 6: Verify payout method: lump sum versus annuity.

If the submission includes settlement documents, the reviewer uses the payout method, if any, listed in such documents. If there are no settlement documents, the reviewer will use the payout method as requested in writing by the claimant or claimant’s attorney. If there is no such written request, the reviewer will use the method stated in the submitter cover letter. The default method, should all else fail, is the lump sum payout.

If the cover letter is unclear or if information conflicts with other information in the submission, the case will require development and will take longer to process.

When annuity is selected, the submitter provides a proposed “seed” or initial deposit amount.

This amount should include the cost of the first procedure and first replacement, if any. The seed includes the first two years of the annual amount. See Section 05 – Cover Letter in this Guide for instructions on how to calculate the seed amount, with an example.

The seed includes the cost of the first surgery, including all costs such as prescription drugs, physician fees, anesthesia fees, and facility fees. If the surgery is preceded by an associated trial, i.e., trial SCS or trial intrathecal (IT) pump, the cost of the trial is also included since it is considered part of the same procedure. If there are no surgeries, the first procedure (if any, such as injections) is included. Series of spinal injections are not included but series of knee viscosupplementation is included if three are anticipated to be accomplished as a series of three weekly injections.

The first replacement of Durable Medical Equipment (DME), prosthesis, or orthotics is included in the seed funds if the cost of such items exceeds $500.

The seed includes the cost of surgeries, procedures, drugs, or replacement items as noted above.

It does not include the cost of diagnostic studies, complications, and hospitalizations for non-surgical treatment.

Step 7: Calculate life expectancy using standard age or median rated age.

Rated ages (RAs) are optional. For all cases with BCRC receipt dates of 10/01/08 or later (or reopened cases where the scan date of the reopening document is 10/01/08 or later), the submitter must supply a statement that all rated ages obtained on the claimant have been included. If this is missing, the WCRC will use actual age in processing the submission.

If an RA is provided, acceptable proof of the RA is necessary. Rated ages must name the claimant, must be by an insurance company, must be on insurance company or settlement broker letterhead, must be independent, and must give a specific rated age or life expectancy. If there is not at least one RA that meets these criteria, the WCRC will use actual age in processing the submission. Reviewers may drop RAs that are not valid.

If no RAs are provided, if there are no valid rated ages, or if the appropriate RA statement is not provided, actual age is used in calculating the life expectancy.

The reviewer evaluates the issue date of the RA against the proposed settlement date (PSD). This date is the later of the following: BCRC receipt date plus 120 days, or the pricing date plus three months. One year is added to the RA if one year has passed from the issue date to the PSD. If two years have passed from the issue date of the RA, two years are added to the rated age. If three years have passed from the issue date of the RA, the rated age is not used in determining the median rated age.

If there are multiple RAs from the same source, only the most recently issued RA from that issuer is used. When there is more than one valid RA, reviewers will use the median. When calculating the median RA, the reviewer drops decimals and uses the resulting whole number.

For example, if the calculated RA is 49.5, the decimal is dropped and the age of 49 is used as the median RA.

If you include a valid RA in a proposal, the reviewer will use that instead of actual age unless you request otherwise in writing.

To determine life expectancy, the reviewer uses the current Centers for Disease Control (CDC) life expectancy table (see Section 15 – Rated Age…