Medicare Secondary Payer compliance is an industry in and of itself in the workers’ compensation space, but it is also an important antidote to the “cost shifting” effect found when workers’ comp claimants seek necessary medical treatment related to their work injury through publicly funded sources. In essence, workers’ comp payers are obligated to “protect Medicare’s interest” when a settlement with an injured worker includes the medical portion of the claim. However, just because a primary payer intends or believes that it established such protection does not mean that it actually did so.
Louisiana Comp Blog reached out to both the national and local representatives of one of the most prominent MSP compliance companies – NuQuest Bridge Pointe – to discuss what mistakes they encounter the most and how payers and employers can enhance their efforts to be compliant. Read on for tips from the experts: Kip Daniels, Senior VP of Business Development out of the national NQBP office, and Gwen Bourgeois, an Account Executive whose territory encompasses Louisiana, Mississippi and Alabama.
Comp Blog: What are the most significant misunderstandings about MSP compliance and MSAs that you encounter among workers’ comp professionals?
Daniels: The most significant misunderstanding that we run into is the issue of submitting MSAs to CMS for review and approval. Basically, throughout the industry, there is a perception that it is a requirement for primary payers to submit their MSAs for review. However, if in fact you read the statute and regulations governing this, nowhere in there will you find those particular requirements. Furthermore, CMS has published their Workers’ Compensation MSA Reference Guide and it’s clearly outlined in that document that the CMS MSA process is entirely voluntary. That being said, the insurance industry as a whole is very conservative, so there’s this urge to get the rubber stamp and avoid any post-settlement exposure. At NuQuest/Bridge Pointe we offer some products that actually indemnify our clients if that ever were to happen, but I understand the concern.
Comp Blog: Regarding that concern, on the flipside, there’s a companion urge to resist the numbers CMS is coming back with, because some MSAs can be valued at one million-plus dollars, correct?
Daniels: Oh definitely. The numbers CMS is sending back for a lot of these cases is just exorbitantly high, extremely high. The best example I can give is an analogy that our legal counsel uses. He says that the CMS approval process is like someone putting all of their receipts over the course of a year in a box and then, come April 15th, sending them to the IRS and saying, ‘Okay so, let me know what I owe you.’
CMS takes an extremely conservative approach with their methodologies. Especially when you compare their methodologies with current standards of care and evidence based medicine, we typically find that their allocations are 35 to 40 percent higher. That’s the difference between future medical being kept open or closed at the time of settlement.
Comp Blog: As you said before, insurers tend to be very conservative. What advice do you have for a payer that does get the MSA, it seems very high, and they are negotiating the settlement?
Daniels: Well, absent some kind of mathematical mistake, it’s basically not realistic to get CMS to lower whatever number they send back on the claim. So at that point the parties are basically left with a decision: fund that number or come up with something that is medically and legally defensible. But you’re risking some major exposure there, plus the potential harm to the injured worker if he or she permanently or temporarily exhausts their MSA funds at a lower than CMS amount. From where I’m standing, I would say that if the carrier doesn’t want to fund the MSA at the CMS amount, that they seek out a company that will either indemnify them with their services or provide a compromise solution. They should also seriously assess their level of risk tolerance at a systemic level rather than at the desk level of the individual adjuster handling the claim.
Comp Blog: Let’s move to the post-settlement arena. Some payers have complained that there’s an issue with lump sum payments which include the MSA. Presumably, there is some legal exposure that they face if they give up the CMS-approved amount and then the claimant manages the funds for the future medical inappropriately, whether intentionally or unintentionally. Do you have any thoughts about that issue?
Daniels: It’s a strange circumstance because, when a settlement is reached and the payer funds the MSA at the CMS amount, that would seem to be a very risk averse move, but in reality, that insurer has taken a risk tolerant approach by handing that money over as a lump sum to the injured worker. They know full and well that the likelihood that the person administers and utilizes those funds correctly are slim to none. That to me is the head-scratcher through this entire process.
And also, it’s more than just the lump sum issue. Even if you take advantage of an annuity, putting the injured worker out there on their own to handle those funds – it’s a very difficult task. I’m not promoting that the injured worker should be forced to have their MSA professionally administered, but what I am saying is that there has to be some type of support service provided to this individual. And then, if they choose not to use those resources, so be it. For example, in our self-administration support services, it’s basically like a post-settlement bill review so that the providers aren’t charging that person as though they’re uninsured and paying one hundred percent.
Comp Blog: On a related note, would you say that leaving the injured worker out there to self-administer when you’re reasonably aware that they won’t or don’t know to use the funds appropriately is a moral or ethical problem as well?
Daniels: I tend to agree with you there, and the one person you can’t blame when those funds are prematurely exhausted is the injured worker. You have to look at the experts in the system – counsel on both sides, claims personnel, etcetera – to do what is right in that situation. Like anything else though, money talks. All parties involved in a settlement stand to gain financially, and that’s why people cut corners.
Comp Blog: Where do you see the MSP industry and the regulations surrounding such issues moving in the future?
Daniels: On the legislative side we track a number of bills on the national scale, and there have been recent developments with that – the SMART Act in particular. Medicare has been somewhat slow to implement parts of that, and the implementation of other initiatives in recent years has not been as smooth as the industry would have liked. But on local levels, and in Louisiana right now, I’m looking at measures that would lower the overall cost of MSAs, like a prescription drug formulary. Especially when an injured worker is on a complex cocktail of drugs, the side effects can be massive, so keeping the initial prescriptions under control is vital.
And then when the claim reaches that one year mark, primary payers in Louisiana have the benefit of a reverse offset, so I think that the trend should move toward more primary payers cutting their losses and hiring someone to guide the injured worker through the Social Security Disability Benefits application process.
Comp Blog: Gwen, what about your local perspective on these issues?
Bourgeois: On a local level, one of the biggest issues I see is the fact that comp adjusters aren’t required to obtain CEU credits and thereby creating some gaps in knowledge regarding CMS requirements and updates amongst various professionals within the industry. Some carriers will pay for their adjusters to go to workers’ comp and MSP conferences, so that can fill the gap, but for the ones that don’t get a chance to attend, there are problems.
I act as an advocate on that level and I urge adjusters to think about early intervention more than anything. If you have a claimant that slips through the cracks and gets hooked on drugs or something like that, it’s going to become a trainwreck financially, and also for that individual and their life. I recommend looking at every claim at that six month mark and asking questions about the prescriptions they’re on and who they’re treating with. At the same time though, I understand, I was an adjuster at one point in my career. They are so bogged down with files, it’s very hard to think big picture on each claim.
Editor’s Note: You can learn more about NuQuest/Bridge Pointe and their products and services here.