Verisk Analytics : Making Sense of the WCMSA Reference Guide 2.6

When the Centers for Medicare and Medicaid Services (CMS) released the latest Workers' Compensation Medicare Set-Aside (WCMSA) Reference Guide on July 31, 2017, we anticipated more insights to new processes; but the new guide presents as many questions as it proposes to answer. Questions remain about how limits to WCMSA re-reviews will play out and whether or CMS will implement a Liability Medicare Set-Aside (LMSA) review process. Following our comments on Amended Review (here), below are summaries and plain-language analysis about what changes might mean for submitting WCMSAs to CMS.

Hearings on the Merits of the Case

Summary: This section was updated to address CMS' need to '…have documentation as to why disputed cases settle future medical costs for less than recommended pricing,' which includes '…all denied liability cases, whether in part or in full.'

Analysis: It's unclear how new language will apply to the current WCMSA process, but we're concerned that the section now echoes CMS' October 2016 unannounced rule change to the zero-dollar MSA review process. We're opposed to reviving an attempt to require that parties either 1) show to a degree of reasonable certainty that treatment is not required for the industrial injury or 2) provide a court decision (after a hearing on the merits) that the insurer is not responsible for the claim. That would essentially force both parties and the courts to try every claim to obtain CMS-approved zero-dollar MSAs.

Spinal Cord Stimulators

Summary: CMS added a section to address the pricing methodology for spinal cord stimulators (SCS), including the SCS procedure codes, the methodology for pricing inpatient and outpatient facility fees, and anesthesia fees. CMS will consider the number of leads planned for the spinal cord stimulator, because that can affect pricing. CMS also provided a schedule for increased frequency for the spinal cord stimulator reprogramming visits for the first year of the SCS implants and adjusted its SCS revision schedule to allow for a nine-year interval if the device is rechargeable. Otherwise, CMS will continue to use the replacement schedule of every seven years.

Analysis: This is a significant change to pricing for spinal cord stimulators-from using flat prices across the board to a methodology that mirrors the way CMS is calculating surgery prices with a fee schedule. We anticipate spinal cord stimulator prices may be priced lower in some jurisdictions with conservative fee schedules, while the price will likely be higher in states with more generous fee schedules. States without fee schedules will likely see the highest prices because billed charges or usual and customary fees will apply.

CMS' Application of State Statutes

Summary: CMS included additional requirements and guidance for submitters seeking to limit future treatment in a WCMSA. There are two main changes:

• CMS will specifically look for the supporting documentation that will '…show by finding from a court of competent jurisdiction, or appropriate state entity as assigned by law, that the specific WCMSA proposal does not meet the state's list of exemptions to the legislative mandate'
• The update imposes a new and significant limitation- allowing one chance to provide the required documentation for these requests at the time of the original submission. Re-review requests to provide documentation will not be considered, which is likely an exception to re-review option #2, Amended Review.

Analysis: CMS has made it harder to argue a reduction in treatment based on state statute because it has limited re-review for those requests. The full impact of this change hinges on whether CMS is more willing than before to consider and accept the application of state statutes to limit treatment. CMS previously allowed for state statutes to be factored into the WCMSA review process, but in practice, it rarely limited or reduced treatment as a result. If this update signals a more systematic and analytic approach, submitters with a strong understanding of state rules, statutes, and nuances will be able to take greater advantage of this change.

Utilization Reviews

Summary: Tucked away in the updated language affecting state statute considerations was additional language addressing the treatment impact of utilization reviews for states with '…some type of state-authorized utilization review board…' CMS implies that, for applicable states, it will consider limiting treatment based on utilization review findings - only if the submitter provides '…the alternative treatment plan showing what treatment has replaced the treatment in question from the beneficiary's treating physician for those items deemed unnecessary by the utilization review board.' In line with the state statute arguments, CMS will bar re-review for files that did not present the required documentation at the time of the original submission.

Analysis: This update seems tailored to address the applicability of the California independent medical review (IMR) process but would affect any state with a state-authorized utilization review process. CMS has been excluding treatment from a WCMSA when an IMR determination finds it is not medically necessary and appropriate. Now, CMS is imposing a new requirement, one that will present significant issues if the treating physician is uncooperative or unwilling to present alternatives to the initial recommendations. While CMS' new willingness to apply utilization reviews to limit treatment can be viewed as a positive change, the requirement to show replacement treatment will blunt the effectiveness and application of this policy.

Total Settlement Amount

Summary: This update addresses a subcategory of 10.5 in the previous manual pertaining to settlement agreements and proposed court orders. CMS expanded and clarified the definition of 'total settlement' to list specific categories similar to the way CMS defines 'total settlement amount' for the WCMSA submission threshold analysis.

Analysis: When considered in conjunction with the position defined under section 10.5, this change appears to be aimed at expanding the definition and amount of the total settlement amount for cases where, due to an underfunded WCMSA, Medicare denies payment for otherwise covered services. Since the claimant would need to exhaust the whole settlement before Medicare would make payment, CMS' expansion of what they view as total settlement amount could lead to circumstances where, the amount CMS expects to be exhausted for treatment may actually exceed the amount the claimant receives in a workers' compensation claim.

Verifying Jurisdiction and Calculation Method

Summary: CMS provided detail about using ZIP codes for calculating WCMSA medical services.

Analysis: Using ZIP codes for pricing a WCMSA will affect only regional states with different regional fee schedules: California, Florida, Illinois, Pennsylvania, New York.

CMS Clarifies Fee Schedule for Longshore Claims

Summary: Longshore claims will use the Office of Workers' Compensation (OWCP) fee schedule for the ZIP code of the claimant's residence.

Analysis: CMS is validating its policy of using the OWCP fee schedule in longshore claims.

Change of Submitter

Summary: CMS added a new section addressing change of submitter requirements.

Analysis: How CMS handles requests to change the submitter of records was never previously addressed in any of the versions of the WCMSA reference guide. Traditionally, CMS did not allow a change of submitter once a WCMSA decision has been issued, but the new language in the WCMSA reference guide specifies that a change of submitter is not allowed once the claim has settled. If CMS changed their policy, it would imply re-review requests could be made by different submitters as long as the claim did not settle which is something CMS did not previously allow.

Amended Review

Summary of Changes: CMS released additional information on the Amended review process which was originally announced via the WCMSAP manual update. CMS expanded the re-review options to include an amended review which will allow parties to request a review of all current medical documentation and evidence even if it post-dates the date of the original submission.

Analysis: Most of the requirements for the amended review option were addressed in the 7/10/2017 WCMSAP manual update, but the WCMSA reference guide expanded the range of files that are ineligible for amended review to include settled claims. Additionally, submitters will need to include a 'CMS recommendation sheet' with line item changes and will not be allowed to supplement the request for re-review with further documentation or clarification. Unfortunately, it is still unclear how CMS' intends to apply the 10% or $10,000.00 threshold for eligibility.

Closed Files Older Than 12 Months

Summary: CMS requires a full submission of documentation when a WCMSA submission has been closed for a year or more.

Analysis: This change makes sense, because when a claim has been closed for a year or more, the treatment has presumably changed. So it is reasonable to treat the claim as a fresh submission. With the new amended review option, it will be interesting to see if CMS will reset the original submission date to match the re-submission date.

Updated Off-Label Medication Requirements

Summary: CMS added language to the off-label medication section, including reference to the Medicare manual on unlabeled use of drugs. Second, CMS noted off-label indication listed in recognized compendia, and the peer-reviewed sources are consulted to determine inclusion in the WCMSA. The previous guide did not reference the peer-review sources.

Analysis: Including peer-review sources in off-label medications may further support a practice already in place-or could be the impetus for CMS to price additional medications or expand the use of a drug for inclusion in the WCMSA. In any case, the peer-review sources of the off-label use of drugs must be examined closely for each drug since this information can update frequently in the accepted compendia.

Changes in Terminology

Throughout the new reference guide, we see:

• 'claim' has been replaced with 'injury'
• 'claimant' has been replaced with 'beneficiary'
• 'WCRC' (Workers' Compensation Review Center) now is 'CMS contractor'

Users may interpret these changes as portending future liability and/or no-fault MSAs, an initiative that seems to be gaining momentum in the last year.

We will continue to monitor this progress as well as the practical implication of the numerous changes and clarifications outlined in this latest WCMSA Reference Guide. If you have questions about the recent updates to the WMCSA Reference Guide, please feel free to e-mail Sid Wong at Sidney.Wong@verisk.com.