5 Medicare Secondary Payer Stories from 2022 and What They Can Teach Us

By: | January 27, 2023

Daniel M. Anders, Esq., MSCC, CMSP is the Chief Compliance Officer for Tower MSA Partners where he oversees all aspects of regulatory compliance associated with the Medicare Secondary Payer (MSP) statutes and local, state, and federal laws. Mr. Anders is an attorney with more than 20 years’ experience helping employers and other payers navigate the complexities of MSP compliance and settle workers’ compensation claims using Medicare Set-Asides. He can be reached at [email protected] or by calling 847-946-2880.

As we launch into 2023, here’s a look back at the top five Medicare secondary payer (MSP) compliance stories of 2022 and what to watch in the coming year.

Addition of Non-Submit MSA Policy to CMS WCMSA Reference Guide

2022 certainly started off with a bang when CMS added Section 4.3 to the CMS Workers’ Compensation MSA Reference Guide. Entitled “The Use of Non-CMS-Approved Products to Address Future Medical Care,” the policy, which was later amended, provides as follows:

  • A non-submit MSA represents a potential cost shift to Medicare.
  • At its sole discretion, CMS may deny payment for injury-related medical up to the total settlement amount less procurement costs and paid conditional payments.
  • If the non-submit MSA exhausts, it must be demonstrated that the MSA was sufficiently allocated at the time of settlement and the funds were spent properly.
  • It shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on or after January 11, 2022.
  • It does not apply to under-threshold MSAs (settlements that do not meet the CMS WCMSA review criteria).

Questions remain: To what extent will CMS issue denials where a non-submit MSA is used? How will this process work when a non-submit MSA exhausts? What steps will CMS take to determine the sufficiency of the MSA when the claim was settled? And what evidence will CMS require to prove the MSA funds were spent correctly?

Ametros Study Confirms Post-Settlement Medicare Denials Do Occur

The question of whether CMS denies payment for injury-related care was answered, at least for CMS-approved MSAs, in an extensive study Ametros published in January 2022.

This first-of-its-kind study examined a random sample of five percent of the Medicare beneficiary population over a three-year period. They estimated that the following number of claims were denied because WCMSA funds were responsible for their payment.

  • 35,980 in 2018
  • 36,060 in 2019
  • 30,720 in 2020

The report’s key conclusion is “Medicare is systematically denying MSA recipients’ claims, and with steady frequency,” per A Study of CMS Policy on Treatment Denials for Injured Workers with a Medicare Set Aside.

CMS Releases Key Metrics on WCMSA Review Program

It was not only Ametros that published data related to the MSP program in 2022. For the first time, CMS released data on its WCMSA review program.

CMS shared statistics for the three-year period of 2020 through 2022. The data compared proposed MSA amounts with the CMS-recommended amounts, typically referred to as the “approved” MSA amounts.

Key takeaways from a review of the three years of data:

  • MSA reviews are down, a 17% decline over three years.
  • Review methodologies remain consistent.
  • The average recommended MSA remains consistently between $80K-$85K.
  • A billion dollars in recommended MSAs every year.

Hopefully, this will become an annual report, and CMS will add more data points around MSA administration after settlement and conditional payment recovery.

CMS Withdraws Proposed Rule on Future Medicals in Liability

In a surprise move, CMS withdrew its proposed rule on future medicals in liability settlements from review by the White House Office of Information and Regulatory Affairs (OIRA review and approval are required before a proposed rule is published).

It was anticipated that CMS would release the proposed rule in 2022 for comment, but it did not even get to that step in the regulatory process.

The future of formal CMS guidance for liability settlements remains unknown. While CMS can resubmit a proposed rule for release, we do not know when or if it will.

Notably, in its recently released solicitation for its next five-year Workers’ Compensation Review Contractor contract, CMS included an option for liability MSAs reviews starting in April 2024. However, while CMS anticipates 19,200 workers’ compensation MSA submissions per year, the solicitation indicates it expects just 1,000 LMSAs per year, with an option to increase to an additional 3,000 per year. This low number suggests a high-dollar or other type of threshold if the agency puts LMSA reviews in place.

In response to CMS’s lack of guidance, Tower MSA Partners released an updated version of its guidance document, Navigating Through the Fog: Medicare Future Medicals & Liability Settlements.

First Anniversary of PAID Act Implementation

On December 11, 2021, payers gained access to the past three years of Medicare beneficiary enrollment status in Medicare Part C (known as Medicare Advantage) plans and Part D (prescription drug) plans through the Section 111 reporting data.

Previously, workers’ compensation payers were required to reimburse these plans for conditional payments but did not know which plans the Medicare beneficiary used.

The PAID Act did not introduce new requirements for resolving debts with Part C and D plans. However, it does allow payers, in some cases, to more easily identify and contact these plans. Observations one year out:

  • In terms of the technical aspects of the transmission of PAID Act data, there have been minimal problems.
  • Not all Responsible Reporting Entities have chosen to accept the PAID Act data into their claims systems.
  • While the enrollment information for Part C and D plans is accurate, the same can’t be said for the contact information. CMS did issue a memo in April 2022 to Part C and D plans asking them to provide contact information, which can receive inquiries from Non-Group Health Plans in compliance with the PAID Act.
  • Tower MSA Partners has seen an increase in clients’ pre-settlement requests to contact Part C and D plans about reimbursement claims since the PAID Act was implemented.

What to Watch for in 2023

Section 111 Penalties: February 18, 2023 is the due date for CMS to issue final regulations on criteria for imposing Section 111 penalties for improper mandatory reporting.  We expect issuance before this date with final regulations becoming effective this year.

MSA Review Contractor: Capitol Bridge, the Workers’ Compensation Review Contractor, is in the last year of its five-year contract to review MSAs for CMS. In January, CMS published a solicitation for a new five-year contract set to begin on April 4, 2023.

The new contract contemplates 19,200 WC MSA submissions with no increase over the contract period.  The thing to watch here is whether CMS keeps Capitol Bridge or brings in a new contractor.

As we head into 2023, payers need to pay special attention to the Section 111 reporting penalties regulation.  These up-to-$1,000-per-day-per-claim penalties could represent a significant burden to payers. Accuracy and timeliness in reporting claims pursuant to CMS guidelines will be essential to the avoidance of such penalties. &