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Saving a Settlement

February 8, 2022

Rasa Fumagalli JD, MSCC, CMSP-F

Most workers’ compensation attorneys have probably encountered a CMS WCMSA determination that is higher than the original Workers’ Compensation Medicare Set-Aside proposal that was submitted for review. A higher WCMSA determination post CMS review may occur for a variety of reasons. For example, there may be a variation in the pricing software used by the submitter and CMS’ Workers’ Compensation Review Contractor (WCRC). Or the WCRC may have been presented with additional information in response to a development letter that supports the higher WCMSA determination. Other reasons may include the addition of treatment projections for a resolved condition or a denied condition. Once the initial surprise of an increased WCMSA coming from CMS wears off, the parties should consider their options for salvaging the settlement.

Although CMS does not have a formal appeal process, Section 16.1 of CMS’ Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (Version 3.4) provides for a “request for re-review” in two situations. The first option is available when the CMS determination contains “obvious mistakes” such as a mathematical error or the failure to recognize that a treatment included in the CMS projection has already occurred. The second “missing documentation” option for re-review is available when the submitter has additional evidence that is dated prior to the submission of the original proposal but wasn’t considered by CMS. Section 16.1 specifically states that a disagreement between the submitter and CMS about the inclusion or exclusion of a specific treatment or medication is not considered a mathematical error.

In addition to the re-review, there is also an “amended review” process which is available under very specific circumstances. Section 16.2 of the WCMSA Reference Guide provides that the following criteria must be met to submit the one-time re-review request to CMS:

  1. The CMS determination letter must have been issued at least 12 but no more than 72 months prior,
  2. As of the date of the request for re-review, the case has not yet settled.
  3. The projected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount
    • The approval of a new generic version of a drug is an insufficient reason for an amended review.

The amended review submission must include a new cover letter, all medical documentation related to the settling injury/ body parts since the previous submission date, the most recent six months of pharmacy records, a consent to release form and a summary of the expected future care. The amended review also requires the submitter to provide medical record references showing that specific CMS determination line items have already taken place or been replaced by other treatment recommendations. If different care is being recommended, these new line items must be added. Submitters will not be allowed to supplement the request for the amended review. Once the amended review request is approved by CMS, the new approved amount will take effect on the date of the settlement.

It is important to note that the amended review process is only available once and should be used strategically, i.e. at the point when you are most likely to obtain the lowest CMS determination. In addition, the submission may require that you secure more than the last two years of injury related records. If the CMS determination was issued five years ago, you will need to obtain and provide records from the date of the last medical report included in the original WCMSA proposal submission to the time of the amended review submission.  Since the submitter will not be allowed to supplement the request for the amended-review, it is extremely important that all of the necessary documentation is included in the submission.

In the event that the parties prefer to save the settlement without involving CMS any further, they will have to find a way to avoid a cost shift of post settlement injury related care to Medicare. This might be done through the funding of an evidence-based medicine MSA that is professionally administered in order to extend the life of the funds.  If the funds are sufficient for the post settlement injury related care, there shouldn’t be an issue with Medicare ever being presented with bills for this treatment. Should the funds be insufficient however Medicare will exclude its payments for the injury related medical expenses until the settlement funds expended for services otherwise covered by Medicare use up the entire settlement. This risk is one that may be unacceptable to the parties.

Another way to potentially bridge the gap is to explore funding options for the WCMSA using structured settlement annuities.  Structured settlement annuities can greatly reduce the cost of funding by using rated ages and the time value of money.  Typically, there is a 20-30% cost savings by using a structured settlement to fund a WCMSA versus lump sum funding.

Synergy’s WC Medicare Expert Case Evaluation service provides the workers’ compensation practitioner with a case specific consultation that addresses the various Medicare Secondary Payer compliance options in a case in order to help select the best strategy for the settlement.

Learn more about Synergy’s WC Medicare Expert Case Evaluation services here.