We are not even a week into 2017, but already have news to share regarding Medicare’s planned expansion of its Workers’ Compensation MSA review process to liability in 2018. In its recently released Request for Proposal for the Workers Compensation Review Contractor (WCRC), the Centers for Medicare and Medicaid Services (CMS) includes an option allowing CMS to expand the responsibilities of the WCRC to review of Liability Medicare Set-Asides (LMSAs) and No-Fault Medicare Set-Asides (NFMSAs) effective July 1, 2018.

The CMS WCRC RFP Solicitation may be viewed here.

Background on CMS Review of MSAs

Since 2001 CMS has had in place an official voluntary review process for Worker’ Compensation Medicare Set-Asides (WCMSAs). A WCMSA, as CMS states, is a “financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury.” The purpose of the review then is “to independently price the future Medicare-covered medical services costs related to the WC injury, illness, and/or disease and to price the future Medicare covered prescription drug expenses related to the WC injury, illness and/or disease thereby taking Medicare’s payment interests appropriately into account.”

These WCMSA reviews were initially handled by the CMS Regional Offices spread throughout the country, but eventually transitioned to a centralized WCRC in 2005 (The CMS Regional Offices must still approve the review recommendation of the WCRC before it is released to the WCMSA submitter). CMS’s RFP solicitation for the new WCRC contract indicates the contract is to be awarded by June 30, 2017 with a contract term running for five years from July 1, 2017 to June 30, 2022.

Expectations for Liability MSA Reviews

Presently, CMS allows its 10 Regional Offices to accept voluntary requests for review of LMSAs at each office’s discretion. Some Regional Offices have consistently refused to review any LMSAs while other offices agree to review based upon criteria that seemingly changes over time and bears no indication that it is indeed the official policy of CMS. It appears then that just as it did in 2005 when CMS took the responsibility away from the Regional Offices for reviewing WCMSAs, CMS is now considering centralizing the process of reviewing LMSAs with a contractor, leaving the Regional Offices to only approve of the contractor’s recommendations.

Some may recall CMS launched a prior initiative to establish a formal policy for consideration of future medicals in liability settlements when it issued an Advanced Notice of Proposed Rulemaking in 2012. This initial effort was ultimately withdrawn by CMS in 2014. CMS’s new initiative began with this June 9, 2016 notice on the CMS website:

The Centers for Medicare and Medicaid Services (CMS) is considering expanding its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. CMS will provide future announcements of the proposal and expects to schedule town hall meetings later this year. Please continue to monitor CMS.gov for additional updates.

No town hall meetings were scheduled in 2016, however, based upon this RFP indicating LMSA reviews will not begin until at least July 1, 2018, CMS has given itself 18 months to develop and implement a formal LMSA review policy. In terms of how many liability settlements such a review process would impact, CMS seems uncertain. A Statement of Work attached to the RFP indicates “reviews could represent as much as 11,000 additional cases (based on all FY2015 NGHP demands), or as little as 800 additional cases annually, depending upon industry response.”

Tower MSA Takeaways

Over the past 15 years, starting with the formalized review of WCMSAs, continuing with the implementation of Section 111 Mandatory Insurer Reporting and recent stepped up efforts at denying injury-related medical care and recovery of conditional payments for medical care related to workers’ compensation, liability and no-fault claims, CMS has expanded its enforcement under the Medicare Secondary Payer Act. It is not surprising then that CMS’s next objective is formalizing a voluntary review process for LMSAs.

It has been our experience that when CMS does implement new policy and procedures it does take a deliberative approach evidenced by the at least 18-month timeframe signaled with this RFP to expand the MSA review process to liability and no-fault. Our expectation then is over the next 18 months or longer, CMS will provide additional announcements concerning the rules and procedures around expansion of the review process.

Tower MSA will be involved in these discussions and will keep you abreast of relevant developments. In the interim, there remain important obligations of parties to liability settlements and no-fault claims under the Medicare Secondary Payer Act. Rest assured that you can rely upon Tower MSA’s team of MSP compliance experts for consultation and expert guidance in liability and no-fault matters.

If you have any questions, please contact Tower MSA Partners, Chief Compliance Officer, Dan Anders, at (847) 946-2880 or daniel.anders@towermsa.com