Originally published in Course & Scope (January 2012) Newsletter of the Workers’ Compensation Section of the North Carolina Bar Association
Your new client Ralph Kramden, 66, comes to you seeking help. He has a $100,000 Medicare Set-aside Arrangement established after a minor 2005 bus accident at work. The MSA includes approximately $60,000 for a spinal cord stimulator, and Ralph reports that his doctor of the past couple of years says that Ralph is not a candidate for spinal cord stimulation (SCS) on account of the pacemaker that Ralph has had since 2002.
Ralph would really like to access some of the MSA funds. Over the years very little of it has been disbursed, and he has had very little pain and never relied on anything stronger than over-the-counter pain relief.
Upon further research you discover that SCS is indeed contraindicated for patients with pacemakers. In fact, a careful review of the 2007 submissions to CMS shows a significant over-allocation to the MSA. Aside from the issue involving the SCS (or lack thereof) it appears that brand name analgesics (notably Duragesic patches) were used.
Duragesic is a fairly powerful opioid patch that Kramden will likely never use. Further Duragesic use can be addictive, and probably should not be used indefinitely. In keeping with what the initial MSA submitters thought to be acceptable practice, the Duragesic was priced in the MSA over Kramden’s life. Fortunately, the MSA did reference “Duragesic, or acceptable generic.” You have learned that even if Kramden were using anything stronger than OTC analgesics for pain, a Duragesic generic (fentanyl) is now available at less than two-thirds the price of the Duragesic listed in the MSA prescription drug component.
The entire file leaves you wondering whether the CMS staff are still celebrating over the allocations made to Kramden’s MSA. Maybe hindsight is 20-20. Then you begin to wonder if Ralph has any recourse or right to modify the MSA.
What is galling is that while the entire MSA submission process is voluntary (albeit highly recommended if the case falls within MSA workload review thresholds) Kramden’s case would not even be reviewable had the current review thresholds been in place when CMS reviewed Kramden’s MSA back in 2007.[1] The solution then would have been: Fix it and move on.
The CMS Position: Yes, Yes With Limits, No
CMS takes the position that once an MSA has been reviewed and approved no funds should be released from the MSA for any purpose other than the purpose for which the MSA was established unless CMS approves. Upon discovery of such an unauthorized disbursement, future Medicare reimbursement could be denied until an amount equal to the entire settlement (net of reimbursed conditional payments) has been expended on injury-related expenses. Not pleasant, although a denied claimant would have access to the usual Medicare appeals process.
In an April 22, 2003, policy memo[2] CMS announced that if a treating physician concluded that a beneficiary’s medical condition “substantially improved” a written request together with appropriate supporting documentation could be submitted to the appropriate regional office.
Apparently the April 22, 2003, policy unleashed a workflow avalanche. In Q&A 10 of a July 11, 2005, policy memo CMS backtracked and limited review of revised WCMSA proposals to those submitted five or more years after the initial approval letter and justifying a 25% or more reduction in the then outstanding MSA funds. Ralph would have had a reasonably good chance of submitting a revised MSA proposal, less the SCS, and perhaps less the other analgesics (or at least priced at the generic level).
Unfortunately, effective August 25, 2008, CMS rescinded Q&A 10 of the July 11, 2005, policy memo. In effect, CMS is attempting to “freeze” allocations for future medicals at settlement date levels.
Well . . .Maybe
In spite of the air of finality in the August 25, 2008, memo, there may be a glimmer of hope for Kramden. Q&A 12 of the July 11, 2005, memo remains in force.
Q&A 12, entitled “Additional Information Submission after WCMSA Case Is Closed” might help Ralph out. The policy reminds readers that “[t]here are no appeal rights stemming from a CMS determination of the appropriate amount of a WCMSA” but that there are “several other options available.”
A submitter who believes that there are “obvious mistakes, such as mathematical errors or failure to recognize” previously paid expenses being included in the allocation is invited to contact the Regional Office issuing the final determination for a correction.
A submitter who believes evidence has been misinterpreted or who disagrees “for some other reason” has a couple of options. If a submitter believes additional evidence not previously considered would warrant a change in the MSA amount, the case may be resubmitted “with the additional evidence” and a request for review to the Coordination of Benefits Contractor (COBC). The request will be treated as a new WCMSA submission.
In the case of Ralph Kramden, it may be worthwhile to consider a re-submission under the foregoing policy. The fact that in 2007 he had a pacemaker that would have medically contraindicated the use of a SCS at the time of the WCMSA submission certainly falls under the heading of “additional evidence not considered at the time of the initial submission.” Had medical evidence been developed much later that pointed to the avoidance of SCS for pacemaker wearers, though not as strong a case, a submission might still be warranted.
With respect to the Duragesic component, two possible arguments could be advanced. First, Duragesic (or a generic equivalent) should not have been priced for Ralph’s life due to its addictive nature; the correct manner would have been limited to a specific duration (be sure to support this contention with medical records or a physician’s statement). Second (and as an alternative argument), now that a less expensive generic is available, any component remaining for the use of this generic should be repriced. With respect to the latter argument, there is no CMS guidance, but it is certainly worth the attempt.
Finally, CMS acknowledges that a claimant has recourse to the usual Medicare appeals route if payment is denied on the basis that the WCMSA has not been properly exhausted. The rights available to a denied Medicare claim are much more extensive, including eventual recourse to the federal courts. The amount involved, however, would have to be significant in order to justify the loss of Medicare during the appeals process, not to mention the direct costs associated with the appeal.
Summary
Unfortunately, there is no longer a procedure for reducing or eliminating an over-allocated MSA. On the other hand, CMS policy indicates a potential for reconsideration in cases of clear error or the development of new or additional evidence. The likelihood of a successful adjustment, however, is far from certain, and the practitioner and client will be required to consider whether the process is worth the time and effort.
[1] As of April 25, 2006, CMS reviewed MSA submissions involving total settlements in excess of $25,000. This was the policy in effect at the time Kramden’s 2007 was prepared. Effective May 11, 2011, CMS announced it would review only those MSA submissions that either (i) involved current Medicare beneficiaries with total settlements in excess of $25,000, or (ii) involved claimants with a “reasonable expectancy” of Medicare enrollment within 30 months and total settlements in excess of $250,000. Had the current policy been in place in 2007, Kramden’s MSA would not have fallen into the review threshold (at age 61 he did not have a reasonable expectation of Medicare enrollment within 30 months).
[2] CMS usually releases administrative practice, guidance and policy in the form of “Regional Administrator” letters from various national office directors.
