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Home » Archives for July 2011

Archives for July 2011

Medicare Set Aside Compliance Rules Directly From CMS

July 27, 2011 By JL Risk Management Consultants

Medicare Set Aside Compliance Rules -A History and Analysis

The Medicare Set Aside compliance rules begins with the MSA Memo from CMS . I have been asked numerous times over the last few months on the status of the Workers Comp Medicare Set asides. Many question centered around what type of claims have to be reported and what are the penalties for not reporting.

Graphic of Magnifying Glass Compliance Rules Medicare

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The text below is verbatim from a June 11, 2008 memo provided by CMS to clear up any misunderstandings. You may want to print this post if you do not already have this memo. I will point out a few critical parts of this memo along with some of the facts I have been given on this subject. I will cover a few of the questions I received in my next post.

Office of Financial Management/Financial Services Group

June 11, 2008

I thought I would first add in the statute that the CMS published on MSA’s and then proceed from that point.

Statutory Language for the Medicare Secondary Payer Mandatory Reporting Provisions in

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007

(See 42 U.S.C. 1395y(b)(7)&(b)(8))

SEC. 111. MEDICARE SECONDARY PAYOR.

(a) In General- Section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) is amended by adding at the end the following new paragraphs:

(7) REQUIRED SUBMISSION OF INFORMATION BY GROUP HEALTH PLANS-

(A) REQUIREMENT- On and after the first day of the first calendar quarter beginning after the date that is 1 year after the date of the enactment of this paragraph, an entity serving as an insurer or third party administrator for a group health plan, as defined in paragraph (1)(A)(v), and, in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary, shall–

(i) secure from the plan sponsor and plan participants such information as the Secretary shall specify for the purpose of identifying situations where the group health plan is or has been a primary plan to the program under this title; and

U.S medicare set aside gavel

Wikimedia Commons – U.S. Air Force photo/Airman 1st Class Grace Lee

(ii) submit such information to the Secretary in a form and manner (including frequency) specified by the Secretary.

(B) ENFORCEMENT-

(i) IN GENERAL- An entity, a plan administrator, or a fiduciary described in subparagraph (A) that fails to comply with the requirements under such subparagraph shall be subject to a civil money penalty of $1,000 for each day of noncompliance for each individual for which the information under such subparagraph should have been submitted. The provisions of subsections (e) and (k) of section 1128A shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual.

(ii) DEPOSIT OF AMOUNTS COLLECTED- Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund under section 1817.

(C) SHARING OF INFORMATION- Notwithstanding any other provision of law, under terms and conditions established by the Secretary, the Secretary–

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(i) shall share information on entitlement under Part A and enrollment under Part B under this title with entities, plan administrators, and fiduciaries described in subparagraph (A);

(ii) may share the entitlement and enrollment information described in clause (i) with entities and persons not described in such clause; and

(D) IMPLEMENTATION- Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.

(8) REQUIRED SUBMISSION OF INFORMATION BY OR ON BEHALF OF LIABILITY INSURANCE (INCLUDING SELF-INSURANCE), NO FAULT INSURANCE, AND WORKERS’ COMPENSATION LAWS AND PLANS-

(A) REQUIREMENT- On and after the first day of the first calendar quarter beginning after the date that is 18 months after the date of the enactment of this paragraph, an applicable plan shall–

(i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this title on any basis; and

(ii) if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.

(B) REQUIRED INFORMATION- The information described in this subparagraph is–

(i) the identity of the claimant for which the determination under subparagraph (A) was made; and

(ii) such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.

(C) TIMING- Information shall be submitted under subparagraph (A)(ii) within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability).

(D) CLAIMANT- For purposes of subparagraph (A), the term `claimant’ includes–

(i) an individual filing a claim directly against the applicable plan; and

(ii) an individual filing a claim against an individual or entity insured or covered by the applicable plan.

(E) ENFORCEMENT-

(i) IN GENERAL- An applicable plan that fails to comply with the requirements under subparagraph (A) with respect to any claimant shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. The provisions of subsections (e) and (k) of section 1128A shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual.

Safe medicare set aside money

Wikimedia Commons – Abc10

(ii) DEPOSIT OF AMOUNTS COLLECTED- Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund.

(F) APPLICABLE PLAN- In this paragraph, the term `applicable plan’ means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement:

(i) Liability insurance (including self-insurance).

(ii) No fault insurance.

(iii) Workers’ compensation laws or plans.

(G) SHARING OF INFORMATION- The Secretary may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits.

(H) IMPLEMENTATION- Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.’.

(b) Rule of Construction- Nothing in the amendments made by this section shall be construed to limit the authority of the Secretary of Health and Human Services to collect information to carry out Medicare secondary payer provisions under title XVIII of the Social Security Act, including under parts C and D of such title.

(c) Implementation- For purposes of implementing paragraphs (7) and (8) of section 1862(b) of the Social Security Act, as added by subsection (a), to ensure appropriate payments under title XVIII of such Act, the Secretary of Health and Human Services shall provide for the transfer, from the Federal Hospital Insurance Trust Fund established under section 1817 of the Social Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of such Act (42 U.S.C. 1395t), in such proportions as the Secretary determines appropriate, of $35,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for the period of fiscal years 2008, 2009, and 2010

Workers Comp Medicare Set Aside reporting was required for all Workers Comp claims effective 01/01/2011. My last post was taken from the CMS memo from 2008. I wanted to point out a few areas from the memo that should concern all employers.

Graphic of Medicare Set Aside Road With Dollar Sign

(c) starrandassociates.net

If you are not in compliance the fine is “a civil money penalty of $1,000 for each day of noncompliance for each individual for which the information under such subparagraph should have been submitted.”

That is an astounding amount of money even for one file. For instance, one file not reported for six months would result in a fine of $180,000. With the Feds having a budget shortfall, this could be a cash cow for CMS.

One of the other questions we have come across is concerning offshore accounts such as captives and risk retention groups. I have been told by various MSA experts and the CMS that if the claim originated in the US, regardless of where the policy was initiated, the claims that reach the minimum thresholds must be reported to the CMS or be subject to the fines. I discussed these minimum thresholds in this post.

The other concern that I have is that the CMS has often said it is the ultimate responsibility of the employer to report the claims. Are you sure that your carrier or TPA has reported your claims timely and accurately? I have often heard that “our carrier or TPA” has that handled.

During our premium audits and reserve reviews, we have noticed some areas on MSA’s that were cause for concern. I thought that I would point them out as a way to avoid fines or other problems due to misreporting Medicare Set Asides.

Picture of Coat Having Notes Medicare Set Aside Compliance Rules Concept

(c) 123rf.com

Acknowledgement Letters

If your carrier or TPA is properly reporting claims, you should be receiving a status report from the CMS. We have found that very often during premium and reserve reviews that no one has seen any such report, which is really an acknowledgement letter.

If you are not receiving the acknowledgement letters – (from CMS), please contact the Coordination of Benefits (COB) Contractor. Customer Service Representatives are available to provide you with quality service Monday through Friday, from 8:00 a.m. to 8:00 p.m., Eastern Time, except holidays. The COB Contractor’s toll free number is 1 (800) 999-1118 or TTY/TDD: 1 (800) 318-8782 for the hearing and speech impaired.

As pointed out in my last post, the fines are very steep for non-compliance on reporting. I do not recommend calling your TPA or carrier if you are not receiving the letters, call the CMS directly as noted. The employer has the ultimate responsibility.

Past vs. Future Medicals

Picture Of Doctors Standing Compliance Rules In White Background

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One mistake we noticed is there was no differentiation between future or past medical costs and other costs on the Medicare Set Aside submission or noted in the settlement. This a great example from the CMS –

A settlement that does not specifically account for past versus future medical expenses will be considered to be entirely for future medical expenses once Medicare has recovered any conditional payments it made. This means that Medicare will not pay for medical expenses that are otherwise reimbursable under Medicare and are related to the WC case, until the entire settlement is exhausted.

Example: A beneficiary is paid $50,000 by a WC carrier, and the parties to the settlement do not specify what the $50,000 is intended to pay for. If there is no CMS approved Medicare set-aside arrangement, Medicare will consider any amount remaining after recovery of its conditional payments as compensation for future medical expenses.

Medicare Set Aside vs. Offshore Entities

I wanted to cover this topic again as it is not found in any of the CMS examples. If a claim happens on US soil, the settlement is subject to the MSA rules. This has not been specifically addressed by the CMS. I do not think any employer would want to supply the test case for non-compliance in this area.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: MSA WCMSA Tagged With: amended, enactment, MSA Memo

LinkedIn Workers Comp Group Has 10,000 Members

July 25, 2011 By JL Risk Management Consultants

LinkedIn Workers Comp Group

This is the largest LinkedIn Workers Comp Group to date.  Please see the press release for the Workers Compensation based group on LinkedIn. This is one of the discussion groups that I mainly participate in overall.

Work Comp Analysis Group Reaches 10,000-member Milestone

St. Louis (July 20, 2011)—The Work Comp Analysis Group (WCAG) announced today that it has reached the milestone of 10,000 members. The free resource, which was founded in late 2008, is the largest online discussion group dedicated exclusively to workers’ compensation issues on LinkedIn.

Text Of LinkedIn Workers Comp Group Logo

Wikimedia – LinkedIn

WCAG is widely recognized in the industry for the quality and variety of the content on its discussion board. Members in the group reflect a wide range of professions including risk managers, adjusters, attorneys, regulators, medical case managers, physicians, and other professionals who serve the industry.

WCAG now has subgroups for Canada, Australia, and the National Workers’ Compensation and Disability Conference®. The group also has an industry jobs board, Twitter feed (@wcanalysisgroup) and a resource center that features over 30 industry blog feeds and links to the rules and statutes for all 50 states.

Mark Walls, Assistant Vice President – Claims for Safety National and the founder of the group, credited the members for making it such a success. “The strength of this group is the knowledge of our members and their willingness to share information with others. It is also an outstanding way to network with people from around the nation and outside the United States who are dealing with workers’ compensation issues.”

©J&L Risk Management Inc Copyright Notice

Filed Under: LinkedIn Tagged With: Australia, Canada

Premium Audits For Public Employers Now Due

July 21, 2011 By JL Risk Management Consultants

Public Employers Workers Comp Audits Now Due

The public employers are due for a  premium audit very soon.

Picture Of Woman Public Employers Holding Files

StockUnlimited

A large number of our clients are public entities. Most of them are self insured or at least partially self insured. There are still a large number of smaller public employers that buy regular insurance from the marketplace.

Most public employers’ budgets cover from July 1 until June 30 of the next year. There is a schedule that most insurance carriers follow. Usually, within 60 days after a policy has expired, the insurance company auditor will make a visit and audit the books to set a final premium.

One area that seems to cause a large amount of confusion about public employer premium audits is the area of subcontractors. As there are usually many departments in, for instance, a school district, there can be many independent contractors working simultaneously. If the premium auditor is left to guess if the worker is an employee or subcontractor, they are almost always going to designate the worker as an employee.

Certificates of insurance should be obtained from all subcontractors and be attached to their contracts. We have recently seen where even though the contractor’s employees were working under a certificate of insurance and a contract, they were still ruled as employees by the auditor. Providing these to the premium auditor may save headaches and $$.

Picture Of Public Employers With Couple Having Discussion

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Certificate of insurance tracking is also important. If the subcontractor’s certificate of insurance and policy expire during their contract, a current one must be obtained immediately. A premium auditor may designate the subcontractor as an employee if their certificate of insurance expires during the subcontract.

A suggestion is that a person be designated to keep track of the subcontracts and the certificates of insurance. A diary system such as Outlook(R) can be used to track certificates of insurance expiry.

 Why I am particularly sensitive to certificates of insurance is that one of the local school systems had a subcontractor working for them for several years. Their task was to remove trees and shrubs. The certificate of insurance had expired two weeks before the subcontractor fell off a ladder, landed on his head, and passed away after three weeks in ICU.

 The school system had to pay a death claim and extremely large hospital bills out of their own budget as their carrier denied the claim. I think their workers comp carrier did finally pay some of the bills but then canceled them mid-policy.

©J&L Risk Management Inc Copyright Notice

Filed Under: Premium audit Tagged With: public entities, simultaneously

XMods EMods EMR and Credit Scores – Differences

July 20, 2011 By JL Risk Management Consultants

Credit Scores And XMods EMods EMR

In my last post, I covered the similarities between XMods EMods EMR and credit scores. This post is about the differences. Some of the differences can be painful. I covered some of the differences in this article.

Differences

Vector of Side Face With Question Mark XMods EMods EMR Differences Concept

(c) 123rf.com

One of the main differences between the two is that credit scores can be corrected on any time in the past with no time limit. EMods or XMods are very difficult to correct once they are tabulated – on your Unit Stat Date. Even if you find an error, if it is more than four years old, there is usually no way to correct the E-Mod in this circumstance.

If the Experience Mod calculation was done incorrectly, you can correct it for up to four years in the past. However, if the reserves (Total Incurred) had too high a figure but have been tabulated at the Unit Stat Date, you usually will be out of luck. That is why it is very critical to have the correct reserve figures on each of your Workers Comp files before your E-Mod (Unit Stat Date) is tabulated. I cannot express the importance enough.

The delayed E-Mod system is another major difference. If you work on your credit scores now, some of the results will immediately show in your credit file. Your recent work on such programs as safety or return to work program will not tabulate fully into your EMod for three or four years. Patience is a very important virtue with the Experience Mod system.

Vector Graphic Of Businessman Sitting On Big Clock With XMods EMods EMR Bar Graph On Hand

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We have seen companies give up on their E-Mod reduction program only to see the E-Mod lower then increase again after abandoning the reduction program. This is one of the points that Senior Management in either a public or private employer must take into account. It is up to the Risk Manager or Workers Comp contact to educate their Senior Management that the results will not be immediate.

I have written many posts on an E-Mod reduction program. There are so many I cannot link to them. However, if you use the search box further down on the right side of the page, you can search the term E-Mod reduction for a list of posts on this subject.

As always, if you feel you need assistance, please feel free to email or call us.

©J&L Risk Management Inc Copyright Notice

Filed Under: E-Mod X-Mod Tagged With: abandoning, differences, reduction program

E-Mods X-Mods EMR And Credit Scores – Similarities

July 19, 2011 By JL Risk Management Consultants

Similarities – E-Mods X-Mods EMR And Credit Score

A few weeks ago, I posted on E-Mods X-Mods EMR. 

I received a large number of questions on E-Mods X-Mods, better known as Experience Modification Factors. The questions from the blog readers were the same type that I have seen over the last few years. I will not repeat the questions to avoid making the post too long.

Hand Presenting E-Mods X-Mods Business Strategy Concept

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Due to a large number of emailed questions on E-Mods X-Mods, I wrote this article in early 2010. This post and the one in 2010 show the importance of understanding the Experience Modification Factor process.

E-Mods/X-Mods can be thought of as a credit score. I thought I would compare and contrast credit scores and E-Mods. X-Mods/E-Mods seem to have a few mysterious qualities. I will try to remove some of their mystique.

Similarities

We all have credit scores from the three major credit reporting agencies ranging from 400 – 800. Obtaining credit is almost impossible with a very low score. If any credit is advanced, the borrower or credit card user must pay extremely high interest rates.

Most E-Mods that I have seen are between .6 and 1.8. If a company with a high E-Mod wants to obtain insurance, the rates will be much higher if workers compensation insurance can be found in the regular insurance marketplace.

Picture Of Two Woman E-Mods X-Mods Similarity

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Insurance carriers report the claims data to a rating agency such as NCCI, WCIRB, or an independent state rating agency Creditors report your credit data to one of the three major credit reporting agencies

Both systems are based on lagging data. Credit systems have gotten better on being current over the last few years.E-Mods are based on past years data and use the E-Mod that was calculated six months prior to renewal.

You can obtain a free credit report once per year. Your insurance agent or rating bureau will usually provide an Experience Rating Sheet once per year, usually just before renewal. There is a cost to obtain either more than once per year.

Rating bureaus and credit bureaus are both reporting agencies. Neither one will correct the data that is reported.Borrowers must contact the creditor to have their credit data corrected and then reported again to the bureau. The same applies for a company trying to correct their Workers Comp insurance rating information. The carrier usually has to correct the data and report it to the rating bureaus.

If a consumer does not review their credit report carefully, they may be overpaying for credit due to inaccuracies on their credit reports. If the Experience Mod rating sheets are not reviewed carefully, an employer may be overpaying for Workers Comp coverage.

Picture Of Hand Covering E-Mods X-Mods Gold Coins

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X-Mod/E-Mod Rating sheets can sometimes seem very complicated and confusing as there is a large amount of data and calculations on the sheets. I have seen Experience Rating sheets so large they could not be emailed. They could only be printed and mailed. My last credit report almost made my head spin as the three reports added up to over 150 pages. It was like reading a novel of numbers.

A reactionary approach to E-Mods and credit scores will not suffice for improving either one. Improving either one is best with a proactive action plan. A borrower that waits until they apply for credit to find out their credit scores may be in for a shock. The same can be said for an employer that waits for their renewal to review their E-Mod.

The best time to start working on a credit score for the future is when the report is obtained from the credit bureaus. The same can be said for E-Mods. Credit scores and E-Mods take quite some time to improve overall.

Credit reporting agencies and Workers Comp rating bureaus still make mistakes. This has improved over time. I think it is due to the tremendous amount of data that has to be processed accurately. Even .001% of a billion calculations still is a significant number.

Next Up – Differences between credit scores and E-Mods

©J&L Risk Management Inc Copyright Notice

Filed Under: E-Mod X-Mod Tagged With: Borrowers, creditors, lagging data

Upcoming MSA Crisis Or Should I Say Past?

July 14, 2011 By JL Risk Management Consultants

The Upcoming MSA Crisis

Is an MSA crisis upcoming? I am not a Medicare Set Aside Agreement (MSA) expert. There are few people that actually are overall. The one concern I have is that I do not think all participants are compliant with the reporting requirements by the MSA.

Graphic Of Big Paper Boat With Man Inside MSA Crisis On Ocean

(c) 123rf.com

The Centers for Medicaid/Medicare (CMS) had delayed the upload of the claims data for months on end. I am under the impression they were also not ready for the task at hand. Handling that much data all at once equals crashed servers. It is the same as trying to access a very popular news article. The servers could never handle that much info.

My main point here is the deadline for reporting Workers Compensation claims that fall under the guidelines (see my last post) must have been reported by 1/1/11. The fine for not reporting is $1,000 per incident. The CMS memo is in my next post.

If one looks on the CMS MSA website, there is a complete website for the reporting requirements. I used to be a computer systems engineer many years ago. One of the most arduous tasks was converting data for another party to use. The normal rejection rate for a first pass upload is approximately 10%.

Businessman With And Umbrella MSA Crisis Wind Blowing

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The other side of the coin is what companies are required to upload data. My understanding is any type of property and casualty claim, which encompasses Workers Compensation. I am wondering about:

  • TPA’s – is it the responsibility of the TPA’s or the employer?
  • Onshore Captives
  • Offshore Captives
  • Risk Retention Groups
  • Holding Companies
  • PEO’s

I could list many more. The bottom line is that someone has to upload the data. My question is who has the final responsibility even if you have a regular insurance carrier? From what I have read, it is the employer’s ultimate responsibility regardless.

How does an employer know the data that was uploaded is accurate? What if not all claims are uploaded to the CMS as is required? I could go on and on with questions.

I will not geek out and get into the data structures. The best thing to remember (in my opinion) is you need to have a good consultant supervise all of the data uploads to CMS.

If anyone reading this has questions, please feel free to email me at [email protected] or call me at (800) 813-1386.

©J&L Risk Management Inc Copyright Notice

Filed Under: MSA WCMSA Tagged With: crashed, offshore captives, onshore captives, risk retention

Medicare Set Aside (MSA) Rules – In Nutshell

July 13, 2011 By JL Risk Management Consultants

Medicare Set Aside (MSA) Rules

Medicare Set Aside (MSA) rules confuse many people.

Recently, I posted on Medicare Set Asides (MSA or WCMSA). I received quite a few questions on how to quickly tell if MSA’s are necessary or not or Workers Comp files. I have seen flowcharts online that are not correct – one even by an MSA provider. The following is a quick synopsis.

Picture Of Physician With Computerize Globe On Hand (MSA) Rules Concept

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In settlements where the future medical is going to be closed as part of the settlement the following must be considered:

CLASS I BENEFICIARY

Claimant is considered a Class I Medicare beneficiary if:

a) Claimant is 65 years or older;

b) Claimant has been on SSDI for 24 months or longer; or

c) Claimant has End Stage Renal Disease (ESRD)

As such, regardless of settlement value and including “compromise” settlements, you must consider Medicare’s interests. Medicare will need to review all Class I beneficiary settlements valued at $25,000 or greater. Class I beneficiary settlements below $25,000 in value do not require submission to and approval from Medicare. You are still required to consider Medicare’s interests and include future Medicare related medical costs in an allocation within the settlement.

 

CLASS II BENEFICIARY with Settlement values greater than $250,000

Picture Of Father And Son (MSA) Rules Walking On Beach

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Medicare approval is needed when settlement value is $250,000 or higher AND where an individual has a “reasonable expectation” of Medicare enrollment within 30 months. Situations that constitute “reasonable expectation” include but are not limited to:

a) Claimant is on SSDI but not yet Medicare eligible;

b) Claimant has applied for Social Security Disability Benefits;

c) Claimant has been denied Social Security Disability Benefits but anticipates appealing that decision or is in the process of appealing and/or re-filing;

e) Claimant is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months);

f) Claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

Note: The Social Security Administration may use the following indicators when approving a claimant for SSDI benefits: Claimant has been deemed permanently and totally disabled; or Provider states that claimant cannot return to any reasonable gainful employment for a period of 12 months or longer.

CLASS II BENEFICIARY with Settlement value less than $250,000

Beneficiary (MSA) Rules couple

Wikimedia Commons – SuSanA Secretariat

Although Medicare approval is not needed for settlement value of under $250,000, when an individual does not have a “reasonable expectation” of Medicare enrollment within 30 months most insurers, self insurer, third party adjusters, and attorneys require a Medicare Allocation be completed for all cases greater than $25,000 to be certain Medicare’s interests are considered for future medical associated with a Liability or Workers Compensation settlement.

An appropriate portion of the total settlement needs to be identified as the Medicare Allocation. Additional services such as Structured Settlement, Custodial Medical and Indemnity Accounting, and Special Needs Trusts should be considered for complete administration, and to assure the client that the case will remain closed and appropriately managed according to the terms of settlement.

CLASS II BENEFICIARY with Settlement value less than $250,000

Although Medicare approval is not needed for settlement value of under $250,000, when an individual does not have a “reasonable expectation” of Medicare enrollment within 30 months most insurers, self insurer, third party adjusters, and attorneys require a Medicare Allocation be completed for all cases greater than $25,000 to be certain Medicare’s interests are considered for future medical associated with a Liability or Workers Compensation settlement.

An appropriate portion of the total settlement needs to be identified as the Medicare Allocation. Additional services such as Structured Settlement, Custodial Medical and Indemnity Accounting, and Special Needs Trusts should be considered for complete administration, and to assure the client that the case will remain closed and appropriately managed according to the terms of settlement.

©J&L Risk Management Inc Copyright Notice

Filed Under: MSA WCMSA Tagged With: class beneficiary, ESRD, flowcharts, SSDI

Medical Bills – UC vs Fee Schedule – Are You Overpaying?

July 11, 2011 By JL Risk Management Consultants

Medical Bills U&C  – Overpaying?

Are you overpaying for medical bills in U&C or a fee schedule?  I posted my views on medical billing for Workers Compensation in this article. Workers Compensation bills, of course, are processed on a usual and customary (U&C) or a fee schedule basis. There seems to be a bit of confusion among J&L’s clients and people that I talk to at conferences or when I do presentations concerning U&C bills.

Medical Icon On Spotlight With Dollar Sign Shadow Medical Bills Graphic

(c) 123rf.com

Usually, when a Workers Comp bill is received, it is processed with a fee schedule and then certain bill processing providers will send the bills through their Preferred Provider Networks (PPO’s). A customary discount is taken – usually 10 – 20% for the medical providers that have signed on with the PPO.

As with health insurance PPO’s the medical providers trade the PPO discount for a theoretical higher volume of patients. Some networks allow a stacking of networks which will result in even a higher discount. Some states do not allow stacking of PPO networks.

Picture Of Man Frustrated Holding Medical Bills Paper

StockUnlimited

There are many derivations of the fee schedule and PPO network structures. This post would be too long if I even started to cover them all. The main area I wanted to address is the U&C bills. There are two main instances where medical bills should be processed under U&C:

  • If there are no Workers Comp fee schedules
  • Medical bills other than Workers Comp (disability, health, auto, liability, etc)

The one concern that most of our clients have is the cost of processing medical bills that do not have a fee schedule. Long term or short term disability cannot be processed as Workers Comp bills. They should be processed under a U&C agreement.There are many different levels of U&C. Medical bills other than Workers Comp are usually processed using many different factors such as address, etc. The one caveat here is that U&C bills are more expensive to process.

U&C bills often are subject to a nurse review, then varying different analyses to reduce the bills. U&C bills are much more likely to be protested or negotiated. The simple process mostly used for Workers Comp bills with a fee schedule does not apply.

Graphic Of Dollar Medical Bills Concept

(c) 123rf.com

Almost all U&C bills are processed on a % of saving basis. This consists of the medical bill processing company charging a % of the bill reduction, not on the total bill. For instance, if a $23,000 bill was reduced to $15,000 the medical bill processor will only charge a % of the $8,000 reduction – not on the $23,000.  

The medical bill processors we use have performed an outstanding job on U&C medical bills regardless of whether they were in a non-fee schedule Workers Comp state or if the bills were not Workers Comp. We recently added another provider that can be stacked on top of our normal medical bill processing. J&L had to search for months to find this type of processor.

Bottom Line – Are you overpaying for your medical bill processing be it Workers Comp or not? It is not very likely regardless of whether the medical bills are Workers Comp or another line of insurance. There are exceptions that you can easily spot with reports from your medical bill processor.

©J&L Risk Management Inc Copyright Notice

Filed Under: usual and customary Tagged With: bottom line, protested, stacking

Workers Comp Medicare Set Aside Concerns

July 8, 2011 By JL Risk Management Consultants

Workers Comp Medicare Set Aside (WCMSA)

There are a few concerns that I have concerning my last post on Workers Comp Medicare Set Aside. The info from the CMS website is in italics.

Annuities

Picture Of Physicians Workers Comp Medicare Set Aside Discussion

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 Payout totals for all annuities to fund the above expenses should be used rather than cost or present values of any annuities. Also, any previously settled portion of the WC claim must be included in computing the total settlement amount. In order to determine the total settlement amount when using an annuity, please be advised that Medicare determines the value of the annuity based on how much the annuity is expected to pay over the life of the settlement, not on the Present Day Value (PDV) or cost of funding that annuity.

 As a Chartered Financial Consultant, I often deal with annuities. My concern on the above passage is a very small annuity spread over many years can actually trigger the reporting limit. If an insurance carrier is looking at lifetime meds, one of the most efficient ways to settle claims will be affected.

If an employer/TPA/insurance carrier wants to avoid the reporting limit, the easiest method would be to shop for annuities that show a lower final payout. This could be detrimental to the injured employee over the long term.

Current Medicare Beneficiaries

 

Picture Of Family Together Workers Comp Medicare Set Aside On Beach

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However, CMS wishes to stress that this is a CMS workload review threshold and not a substantive dollar or “safe harbor” threshold. Medicare beneficiaries must still consider Medicare’s interests in all WC cases and ensures that Medicare is secondary to WC in such cases. In other words, if the total settlement amount is $25,000 or less, the parties to the settlement are still required to consider Medicare’s interests. The recommended method to protect Medicare’s interests is to enter into a Medicare Set Aside arrangement to protect Medicare’s interests, even though CMS will not review the proposal.

 The concern here is that even a small settlement with a Medicare beneficiary has to contain a set aside agreement. This may likely affect a large number of lower dollar settlements. This will encourage the carriers/TPAs/employers to not settle these files.

Review Thresholds are Subject to Adjustment

Both the beneficiary and non-beneficiary review thresholds are subject to adjustment. The CMS reserves the right to modify or eliminate its review criteria if it determines that Medicare’s interests are not being protected. Claimants, employers, carriers, and their representatives should regularly monitor this website for changes in policies and procedures.

 This paragraph is actually what made me decide to write this article. The review thresholds are subject to adjustment. If the CMS decides their interests are not being protected in the overall Workers Comp industry, then they can modify the rules as they see fit?

 What happens if in 20 years, the CMS says that for the last 30 years, their interests have not been protected on ALL claims under $25,000? Are they allowed to retroactively require MSA’s to protect their interests? 

Picture Of Two Businessman Workers Comp Medicare Set Aside Discussion

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If a carrier/TPA/employer has settled a file that does not require CMS approval, but then the rules now require a WCMSA, would the settlement have to be redone? 

What if the settlement had already been paid and the file was closed? Would the file have to be reopened and a new settlement agreement completed? 

When all the data is reported to the CMS and the FIO, will the statistics change? My main point for this article is the CMS based their rules on the statistics they had in their possession. As most carriers have not reported their data, were the conclusions drawn by CMS based on accurate data? That worries me. 

©J&L Risk Management Inc Copyright Notice

Filed Under: MSA WCMSA Tagged With: annuity, PDV, retroactively, threshold

WCMSA – So This Is Not Federalization of Workers Comp ?

July 7, 2011 By JL Risk Management Consultants

WCMSA  = Federalization of Workers Comp?

The CMS WCMSA requirements could be the first steps in federalization of Workers Comp.  The last paragraph should be of concern to any carrier, employer or TPA. CMS can change the rules as they see fit as I read it. What happens if they decide to review, for instance, ALL claims over $25,000 regardless of status? That development would send shockwaves through the Workers Comp and the insurance industry overall.

Logo Of WCMSA CMS

Wikimedia – Centers for Medicare and Medicaid Services

I was going to rewrite these sections on Workers Comp Medicare Set Asides (WCMSA)  from the Center for Medicaid/Medicare Services (CMS). I thought I would leave them intact and not link you to the webpage and then have you search for them. This info is confusing enough without having to dig for it.  

The following is verbatim from the CMS website. I will write more on this in my next post.

CMS Review Threshold

It is not in Medicare’s best interest to review every WC settlement nationwide in order to protect Medicare’s interests per 42 CFR 411.46. (Ref: 7/23/01 Memo Q1(c)) A WCMSA is not necessary when resolution of the WC claim leaves the medical aspects of the claim open.

A WCMSA may be submitted to CMS for review in the following situations:

  • The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; OR
  • The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

Computing the Total Settlement Amount

Picture Of Man Computing Money WCMSA Using Abacus

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The computation of the total settlement amount includes, but is not limited to, wages, attorney fees, all future medical expenses (including prescription drugs), and repayment of any Medicare conditional payments. Payout totals for all annuities to fund the above expenses should be used rather than cost or present values of any annuities. Also, any previously settled portion of the WC claim must be included in computing the total settlement amount. (Ref: 4/25/06 Memo)

In order to determine the total settlement amount when using an annuity, please be advised that Medicare determines the value of the annuity based on how much the annuity is expected to pay over the life of the settlement, not on the Present Day Value (PDV) or cost of funding that annuity. (Ref: 4/21/03 Q17)

Example: A settlement is to pay $15,000 per year for the next 20 years to an individual who has a “reasonable expectation” of Medicare enrollment within 30 months. This settlement is to be funded with an annuity that will cost $175,000. The RO will review this settlement because the total settlement to be paid is greater than $250,000 ($15,000 per year x 20 years = $300,000). It is immaterial for Medicare’s purposes that the PDV or cost ($175,000) to fund this settlement is less than $250,000. (Ref: 4/21/03 Q17)

Current Medicare Beneficiaries

 

Agent Talking Couple WCMSA On Office

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Injured individuals who are already Medicare beneficiaries must always consider Medicare’s interests prior to settling their WC claim regardless of whether or not the total settlement amount exceeds $250,000. That is, ALL WC PAYMENTS regardless of amount must be considered for current Medicare beneficiaries.

However, CMS no longer reviews new WCMSA proposals for Medicare beneficiaries where the “total settlement amount” is $25,000 or less (i.e., low dollar threshold Medicare beneficiaries). In order to increase efficiencies in our process, and based on available statistics, CMS instituted this workload review threshold. However, CMS wishes to stress that this is a CMS workload review threshold and not a substantive dollar or “safe harbor” threshold. Medicare beneficiaries must still consider Medicare’s interests in all WC cases and ensures that Medicare is secondary to WC in such cases. In other words, if the total settlement amount is $25,000 or less, the parties to the settlement are still required to consider Medicare’s interests. The recommended method to protect Medicare’s interests is to enter into a Medicare Set Aside arrangement to protect Medicare’s interests, even though CMS will not review the proposal. (Ref: 7/11/05 Memo Q1 and 2)

Settlements Greater than $250,000 where the Claimant is “Reasonably Expected to Become a Medicare Beneficiary”

(Ref: 4/21/03 Memo Q2)

An individual has a “reasonable expectation” of Medicare enrollment if any of the following situations apply:

Line Graph WCMSA Medicare Costs

Wikimedia Commons – Kaiseng98

(a) The individual has applied for Social Security Disability Benefits;

(b) The individual has been denied Social Security Disability Benefits but anticipates appealing that decision;

(c) The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits;

(d) The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or

(e) The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

To the extent a WC settlement meets both of the criteria (i.e., the settlement is greater than $250,000 AND the claimant is reasonably expected to become a Medicare beneficiary within 30 months of the settlement date), then a CMS-approved Medicare set-aside arrangement is appropriate.

Review Thresholds are Subject to Adjustment

(Ref: 7/11/05 Memo Q2; 4/25/06 Memo)

Both the beneficiary and non-beneficiary review thresholds are subject to adjustment. The CMS reserves the right to modify or eliminate its review criteria if it determines that Medicare’s interests are not being protected. Claimants, employers, carriers, and their representatives should regularly monitor this website for changes in policies and procedures.

©J&L Risk Management Inc Copyright Notice

Filed Under: Work Comp Federalization Tagged With: duration, immaterial, substantive

Will Feds Control Workers Comp In Future or Just States?

July 5, 2011 By JL Risk Management Consultants

Will The Feds Control Workers Comp In 10 Years? 

In the future,  will the  Feds control Workers Comp. In my last post, I commented on how the Federal Government, namely CMS, is encroaching on the state-by-state sovereignty of Workers Compensation. The CMS is basically overvaluing Workers Compensation pharmacy benefits.

Picture Of Woman Pharmacy Feds Control Workers Comp with Medicine Background

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The response to this intrusion is for the employers and their insurance carriers/TPA’s to not settle the medical indemnity on claims where the CMS has jurisdiction. I was not shocked to see this development as I have noticed small but important power grabs by the federal government.

One of the most recent cases where the Feds seem to be overreaching is the decision by OSHA to subpoena the Workers Comp records from an insurance carrier. Two teenage males were killed in an incident in IL. The complicating factor was one of them was 14.

OSHA decided to subpoena the inspection records, and in fact, all records from their insurance company. The insurer, Grinnell Mutual, fought the subpoena as having a federal agency with access to an insurance company’s safety inspections may have a highly negative effect on employers requesting safety inspections by their insurance carrier. OSHA has been granted access to all of the insurer’s records including communications between Grinnell Mutual and the employer.

 

Picture Of Male Doctor Feds Control Workers Comp With Green Background

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The following is a quote from Dr. David Michaels – OSHA administrator – “The court affirmed OSHA’s authority to obtain relevant information from an employer’s workers’ compensation insurance company. This is not surprising legally, but it does illustrate that workers’ compensation and OSHA are not separate worlds divorced from each other.”  

I do agree that there are extenuating circumstances. However, this may result in employers not being compliant with safety inspections by their carrier. As OSHA cannot inspect all employers, would this not have a negative effect on safety?

I have written often on the federal government’s increasing interest in Workers Compensation. This is a quick list of the articles I have written on the states’ Workers Compensation systems being encroached on by federal agencies:

  • A fellow Workers Comp author points out the increasing reach of our federal government into Workers Comp
  • The CMS was put in charge of the Federal Insurance Office
  • A Senator thinks the federal government is overreaching into Workers Compensation

There are other articles in this blog on the Federalization of Workers Compensation. The three above are a random sample. You can search the word – federalization – using the search box on the right side of the page to find more articles on this subject.

If the Feds control Workers Comp in the future, additional forms for every aspect will be required at every step. m

I have received many questions on what are the minimum thresholds for having to obtain CMS approval to settle a file. I will cover that next time.

©J&L Risk Management Inc Copyright Notice

Filed Under: CMS Tagged With: extenuating, granted access, Grinnell, overreaching

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James J Moore
Raleigh, NC, United States

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:
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