Workers’ Compensation Medicare Set-Aside Legislation Again Introduced in Senate; Substantial Flaws in Concept Remain
Heather Sanderson
June 26, 2018

For numerous years, a slightly varied version of essentially the same proposed legislation regarding Workers’ Compensation Medicare Set-Asides (WCMSAs) continues to be re-introduced in Congress (hereinafter referred to as “MSA Bill”). Just last week, the MSA Bill was again introduced in the Senate. It is titled “Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2018.” A copy of the most recently introduced MSA Bill can be found here. To read our 2015 blog on the prior version of the MSA Bill, click here.

The MSA Bill has generally failed to gain traction and support year after year. The two likely causes of this are the following:

  1. The MSA Bill seeks to formally legislate guidelines around the WCMSA process. Currently, the MSA and CMS review process have never been formalized in statute or legislation. All CMS guidance around protection of Medicare’s interest has been issued via administrative guidance (i.e., the WCMSA Reference Guide, CMS memoranda, etc.). While the Medicare Secondary Payer Act (MSP) does clearly indicate that Medicare should not pay where a beneficiary has received primary payment and MSAs in settlements with Medicare beneficiaries have become a de facto Best Practice in the industry, the MSP and its corresponding regulations have never explicitly addressed the MSA and CMS approval process. Essentially, to enact the MSA Bill would provide formal regulatory teeth to the WCMSA approval process that never previously existed. As such, the industry has been hesitant to provide CMS extra teeth into its currently voluntary MSA review program.
  2. When the MSA Bill was initially formulated close to ten years ago, the industry was experiencing many difficulties with CMS’ current contractor regarding inconsistencies in approvals, high/unreasonable Part D allocations in the WCMSA, and long turnaround times. However, the current and last contractor have become more consistent in their review policies, and turnaround times are reasonable. With all necessary documentation, CMS reviews WCMSAs within 3-4 weeks. As such, there is not currently a strong desire for WCMSA reform.

However, that’s not to say that the CMS review process is without flaw. Overallocation of prescription drugs, particularly opioids, continues to be an issue that such over-use potentially could cause long-term health issues for the beneficiary. Further, outside of a limited Re-Review/Amended Review process, no  appeal process providing full due process in our court system exists; a CMS determination is final.

Further, current attention and broader support for MSP reform seems to be on the PAID Act (click here for our blog on this legislation). The issue most pressing in the spotlight of MSP is nationwide litigation by Medicare Advantage Plans (or their assignors such as MSP Recovery LLC) pursuing double damages MSP private causes of action against primary payers, providers, and plaintiff attorneys across the country. The PAID Act would provide Medicare Advantage, Part D, and Medicaid enrollment data in the Section 111 query response file to primary plans so that they may be aware of and reimburse these liens, should any exist, and hopefully avoid the threat of unexpected double damages litigation.

Going back to the WCMSA Bill, below is a summary of most recent changes and noteworthy points:

Changes from the last version of the MSA Bill include: Removal of the threshold for settlements under $25k where the plan wouldn’t be considered primary (the Bill now seems to indicate there is no threshold to make a plan primary) and removal of all the Qualified MSA language (this was proposed in the prior Bill to make an MSA considered final and adequate without CMS review).

Other Noteworthy Points in the Current MSA Bill:

  • It limits an MSA exposure to “the duration of and limitations on benefits payable under the workers’ compensation law or plan involved.” A proper example of this would be Georgia’s limitation to WC paying for 400 weeks on non-catastrophic claims. Currently, CMS has provided for this same limitation in their WCMSA Reference Guide; however, CMS still requires a Court order which states that no exceptions under the state law have been met. Obtaining such a court order is not always reasonable nor practical; although some GA 400 week MSAs have now been approved by CMS. However, as stated, the extra step of obtaining a Court order must be conducted.
  • The MSA Bill provides that the MSA shall include payment for “items and services” covered by the workers’ compensation law or plan. “Items and services” are technically not prescription drugs as defined under the MSP. Does this MSA Bill seek to exclude Part D prescription drugs from the MSA? That is not clear, and this point is ambiguous in the text proposed.
  • The MSA Bill provides for an optional direct payment of the MSA funds to CMS. However, other than to say this amount shall be calculated by the applicable Fee schedule, it provides no other clarity on how this amount would be calculated. Additionally, the language does not speak to any benefit to the primary payer or the claimant in electing this option.

Overall, the MSA Bill is vague and missing out on a number of components more pressing and needed in WCMSA Reform. We will continue to monitor the MSA Bill’s progress.