settlement solutions best practices - pbm | ancillary · 2016-09-16 · 15 • adds mandatory...

July 20, 2016

Settlement Solutions Best Practices A Workers’ Compensation Continuing Education Course

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Disclosure

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Medicine is an ever-changing science. As new research and clinical experience broaden our

knowledge, new treatment options and approaches are developed. The authors have checked with

sources believed to be reliable in their efforts to provide information that is complete and generally in

accord with the standards accepted at time of publication.

However, in view of the possibility of human error or changes in medical sciences, neither Optum nor

any other party involved in the preparation or publication of this work warrants the information contained

herein is in every respect accurate or complete, and are not responsible for errors or omissions or for

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information contained herein with other sources.

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Medical Disclaimer

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• The display or graphic representation of any product or description of any product or

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product by the presenter or any accrediting body. Rather, from time to time, it may

facilitate the learning process to include/use such products or services as a teaching

example.

• Accreditation of this continuing education activity refers to recognition of the educational

activity only and does not imply endorsement or approval of those products and/or

services by any accrediting body.

• CE credits for this course are administered by the CEU Institute. If you have any issues

or questions regarding your credits, please contact [email protected].

Disclaimer

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Presenters

Lavonya Chapman, Esq. RN Rafael Gonzalez, Esq.

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• Mandatory Insurer Reporting (MIR) Best Practices – Querying for Medicare Beneficiary Status

– Ongoing Responsibility for Medical

– Total Payment Obligation to Claimant

• Conditional Payment Resolution Best Practices – Pre-Settlement Resolution

– Post-Settlement Resolution

• Workers’ Compensation Medicare Set Aside Best Practices – Allocation

– Approval

– Prescriptions

– Redevelopment and Re-reviews

– Administration

Agenda

Mandatory Insurer Reporting Best Practices

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• Enables the Centers for Medicare and Medicaid Services (CMS) to pay appropriately for Medicare-covered items and services furnished to Medicare beneficiaries.

• Helps CMS determine when other insurance coverage is primary to Medicare.

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

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• Adds mandatory insurer reporting rules for two specific functions:

– Ongoing Responsibility for Medical (ORM)

– Total Payment Obligation to Claimant (TPOC)

• Does not eliminate Centers for Medicare and Medicaid Services’ existing processes for:

– Self-identifying pending liability insurance (including self-insurance), no-fault insurance or workers’ compensation claims to CMS’s Benefits Coordination and Recovery Center (BCRC)

– Non-Group Health Plan (NGHP) MSP recoveries, where appropriate.

• Includes penalties for noncompliance

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

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• Any applicable plan (Refer to 42 U.S.C. 1395y(b)(8)(F))

• The term “applicable plan” means the following laws, plans or other arrangements, including the fiduciary or administrator for such law, plan or arrangement

Plans Required to Report

Liability Insurance (including self insurance)

Workers’ Compensation Law or Plan

No-Fault Insurance

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• General liability insurance

• Homeowners’ liability insurance

• Automobile liability insurance

• Product liability insurance

• Malpractice liability insurance

• Uninsured motorist liability insurance

• Underinsured motorist liability insurance

• Medical payments insurance coverage

• Personal injury protection insurance coverage

• Medical expense insurance coverage

• Workers’ compensation plans of the 50 States, the District of Columbia, American Samoa, Guam, Puerto Rico and the Virgin Islands, as well as the systems provided under the Federal Employees’ Compensation Act and the Longshoremen’s and Harbor Workers’ Compensation Act

Applicable Plans*

*Not an all-inclusive list

Poll Question # 1

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The Responsible Reporting Entity (RRE) must provide the identity of a Medicare beneficiary whose illness, injury, incident or accident is at issue so as to enable an appropriate determination concerning coordination of benefits, including any applicable recovery. Data elements include: • Name, address, DOB and SSN of Medicare beneficiary

• Employer/Carrier, Defendant/Insurer, Self-Insured name, address, contact information

• Date of Accident/incident – CMS

– Industry

• Alleged injuries, physical, emotional problems associated with accident

• ICD-9 or ICD-10 codes for specific body parts and treatment

What Must Be Reported

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• The data submission process takes place between the RREs, or their designated reporting agents, and the CMS Benefits Coordination and Recovery Center (BCRC).

• The BCRC manages the technical aspects of the Section 111 data submission process for all Section 111 RREs.

• RREs may submit claim information through either:

– An electronic file exchange, OR

– A manual direct data entry (DDE) process using the Section 111 COBSW (if the RRE has a low volume of claim information to submit).

• Ongoing DDE and quarterly file submissions are to contain only new or changed claim information using add, update and delete transactions.

How and When to Report

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• Agents are not RREs for purposes of Section 111 MSP reporting responsibilities.

• The RRE remains solely responsible and accountable for complying with CMS instructions for implementing Section 111 and for the accuracy of data submitted.

• An RRE may not shift its responsibility to report under Section 111 to an agent, by contract or otherwise.

• RREs may contract with another entity to act as an agent for reporting purposes. Agents can create and exchange Section 111 files with the BCRC on behalf of the RRE.

• The RRE must register for reporting and during registration, may designate an agent.

Use of Agents

Querying for Medicare Beneficiary Status

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• CMS allows RREs that are file submitters to submit a query to the BCRC to determine the Medicare status of the injured party.

• The query record must contain the injured party’s

– Social Security Number (SSN) or

– Medicare Health Insurance Claim Number (HICN), and

– Name, date of birth and gender.

• The BCRC will use this information to determine if the individual has been identified as a Medicare beneficiary. If so, the BCRC provides the Medicare HICN (and other updated information for the individual) found on the Medicare Beneficiary Database (MBD).

Querying for Medicare Beneficiary Status

Poll Question # 2

Ongoing Responsibility for Medical

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• Refers to the RRE’s responsibility to pay, on an ongoing basis, for the injured party’s (Medicare beneficiary’s) medicals associated with the claim.

• Often applies to no-fault and workers’ compensation claims, but may occur in some circumstances with liability insurance (including self-insurance).

• Reporting ORM triggers when the RRE has made a determination to assume responsibility for ORM, or is otherwise required to assume ORM – not when (or after) the first payment for medicals under ORM has actually been made.

• Medical payments do not actually have to be paid for ORM reporting to be required.

• The dollar amounts for ORM are not reported, just the fact that ORM exists or existed.

Ongoing Responsibility for Medical (ORM)

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ORM Reporting

ORM for no-fault insurance, liability insurance (including self insurance) and workers’ compensation* claims that existed or exists on or after January 1, 2010 must report.

*Exclusion apply

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Workers’ Compensation ORM Exclusion

• The claim is for “medicals only;

• The associated “lost time” is no more than the number of days permitted by the applicable workers’ compensation law for “medicals only” (or seven calendar days if applicable law has no such limit);

• All payment(s) has/have been made directly to the medical provider; AND

• Total payment for medicals does not exceed $750.

ORM Reporting

ORM for no-fault insurance, liability insurance (including self insurance) and workers’ compensation claims that existed or exists on or after January 1, 2010 must report.

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• Medicare uses the information submitted in the Alleged Cause of Injury, Incident or Illness (Field 15) and the ICD Diagnosis Codes (starting in Field 18) to determine what specific medical services claims should be paid first by the RRE and considered only for secondary payment by Medicare.

• The provided ICD-9/ICD-10 codes must be detailed enough to identify medical claims related to the underlying injury, incident or illness claim reported by the RRE.

ICD Diagnosis Codes

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• The Common Working File (CWF) is a Medicare application that maintains all Medicare beneficiary information and claim transactions.

• The CWF receives information regarding claims reported with ORM so that this information can be used by other Medicare contractors for claims processing.

• This ensures Medicare remains the secondary when appropriate, and informs Medicare to seek reimbursement when payments have been made that are the responsibility of the primary payer or applicable plan.

How ORM Information is Shared

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ORM may end when:

• A no-fault (med pay, PIP) limit is reached

• Liability policy limit is exhausted

• Treating physician in liability or work comp case indicates no further medical care related to the claim is needed

• There is a judicial determination that medical care related to the claimed accident or injury is no longer necessary

• The statute of limitations has run or elapsed

• The Medicare beneficiary passes away

• The RRE otherwise no longer has ORM

ORM Termination

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• When ORM ends, the RRE reports an ORM Termination Date.

• ORM Termination Date signals to Medicare the last date on which the RRE had ongoing responsibility for medical care associated with the claim. Any payments made by Medicare thereafter are to be considered primary, or Medicare’s responsibility.

ORM Termination

Total Payment Obligation to Claimant

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• Refers to the dollar amount of a settlement, judgment, award or other payment in addition to or apart from ORM.

• Generally reflects a “one-time” or “lump sum” settlement, judgment, award or other payment intended to resolve or partially resolve a claim.

• The dollar amount of the total payment obligation to, or on behalf of, the injured party in connection with the settlement, judgment, award or other payment.

Total Payment Obligation to Claimant (TPOC)

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• Is not necessarily the payment date or check issue date • Is the date the payment obligation was established • Can be the date the obligation is signed if there is a written agreement. If court

approval is required, it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement, it is the date the payment (or first payment if there will be multiple payments) is issued.

Total Payment Obligation to Claimant (TPOC) Date

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TPOC Reporting Thresholds

Insurance/ Plan Type

Must Report Threshold

No Fault October 1, 2010 and subsequent any settlement amount

There is no de minimis dollar threshold for reporting no-fault TPOCs

Liability (including self insurance)

October 1, 2011 and subsequent any settlement amount that exceeds the cumulative TPOC amount threshold established by CMS

Greater than $100,000 from Oct 1, 2011 to March 31, 2012 as of Jan 1, 2012

Greater than $50,000 from April 1, 2012 to June 30, 2012 as of July 1, 2012

Greater than $25,000 from July 1, 2012 to Sept 30, 2012 as of Oct 1, 2012

Greater than $5,000 from Oct 1, 2012 to Sept 30, 2013 as of Jan 1, 2013


Greater than $1,000 from Oct 1, 2014 or after as of Jan 1, 2015

Workers’ Compensation

October 1, 2010 and subsequent any settlement amount that exceeds the cumulative TPOC amount threshold established by CMS



Greater than $300 from Oct 1, 2014 or after as of Jan 1, 2015

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• RREs must report settlements, judgments, awards or other payments regardless of whether or not there is an admission or determination of liability.

• Where there is a settlement, judgment, award or other payment with no establishment/acceptance of responsibility for ongoing medicals, if the individual is not a Medicare beneficiary, the RRE is not required to report.

TPOC Reporting Requirements

Conditional Payments Resolution Best Practices Pre-Settlement Commercial Repayment Center Conditional Payment Resolution

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• As of October 2015, if the RRE has accepted ORM, the Commercial Repayment Center (CRC) will identify conditional payments related to the claim made by Medicare.

• A Conditional Payment Notice (CPN) will then be issued to the applicable plan and its agent as documented in the RRE TIN file.

• If the applicable plan’s primary payment responsibility does not terminate and the CRC identifies additional conditional payments, further CPNs may be issued for these additional conditional payments.

CRC Conditional Payment Notice

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• May dispute medical claims identified on the CPN before a formal request for repayment, or demand, is issued

• Have 30 days from the date of the CPN to submit the dispute

• Send documentation to support the dispute to the CRC

CRC Dispute for Applicable Plans

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• If one or more conditional payments remain following the dispute response period, a demand letter, or initial determination, is issued. This is the CRC’s first request for payment.

• The Applicable Plan will have 60 days within which to make payment without being charged any interest.

• Payments made after the 60 days will be charged interest from the date of the demand/determination letter.

CRC Demand/Determination

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• If the Applicable Plan disagrees with the CRC’s demand/determination, may appeal same.

• Once the demand is issued, recovery agents will need to submit signed Letter of Authority (LOA) to continue working with the CRC on behalf of the applicable plan.

CRC Demand/Determination

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• Applicable plans may pay/appeal the amount or existence of the debt, in part or in full.

• Applicable plans can initiate the formal appeal process by requesting redetermination.

• Redetermination request must be filed within 120 days of the date of the demand/determination.

• If dissatisfied with the CRC’s redetermination, applicable plans may request reconsideration within 180 days of the date of the redetermination.

• Formal appeals process available thereafter also includes a request for a hearing by an Administrative Law Judge, request for review by the Medicare Appeals Council and United States federal court action.

CRC Appeals Process

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• Interest accrues monthly from the date of the demand/determination letter and is assessed if the debt is not resolved within 60 days.

• If no appeal is filed, and the debt continues to be unresolved for 120 days, the CRC will issue a Notice of Intent to Refer (NITR) letter.

• If the debt remains unpaid, Department of Treasury (DOT) may refer debt to IRS for payment. IRS has authority to intercept or offset any payments owed to the debtor in collection of amount due to DOT.

Referral to U.S. Treasury and U.S. Justice

Conditional Payments Resolution Best Practices Post Settlement Benefits Coordination & Recovery Center (BCRC) Conditional Payment Resolution

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• Claimant/claimant’s counsel, as well as Defendant/Employer/Carrier/TPA , can call in or fax information about the claim.

• After the MSP occurrence is posted, the BCRC sends the beneficiary a Rights and Responsibilities (RAR) letter.

• The attorney/representative/agent will receive a copy of the RAR and the conditional Payment Letter (CPL) from the BCRC if they have submitted a Consent to Release form.

Benefits Coordination Recovery Center (BCRC) Rights and Responsibilities Letter

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Issued within 65 days of the issuance of the RAR Letter

BCRC Conditional Payment Letter and Payment Summary Form

Conditional Payment Letter

Explains how to dispute any unrelated claims and includes the BCRC’s best estimate of the amount Medicare should be reimbursed

Payment Summary Form

Lists all items or services that Medicare has paid conditionally which the BCRC has identified as being related to the pending claim

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• Beneficiary/representative/agent may dispute any unrelated payments by providing supporting documentation to the BCRC.

• Beneficiary representative will need to provide an Appointment of Representative form signed by the Medicare beneficiary.

• The BCRC will adjust the conditional payment amount to account for any claims it agrees are not related to what has been claimed/released.

• If BCRC determines that the documentation provided at the time of the dispute is not sufficient, the dispute will be denied.

• Beneficiary/representative/agent may dispute payments until settlement, judgment, award or payment.

BCRC Dispute

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• Beneficiary/representative/agent should notify the BCRC.

• The information must clearly identify:

– Date of settlement

– Settlement amount, and

– Amount of any attorney's fees and other procurement costs.

• The BCRC will identify any new, related claims that have been paid since the last time the CPL was issued up to and including the settlement/judgment/award date.

• BCRC will issue a recovery demand letter advising the Medicare beneficiary of the amount of money owed to the Medicare program.

Settlement, Judgment, Award or Payment

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• Interest the determination or demand accrues from the date of the demand letter, but is only assessed if the debt is not repaid or otherwise resolved within 60 days of the recovery demand letter.

• Interest is due and payable for each full 30-day period the debt remains unresolved.

• Unless successfully challenged, the only way to avoid interest is to repay the demanded amount within the specified time frame and if still disagree, request waiver/appeal.

• If the waiver/appeal is granted, the payer will receive a refund.

BCRC Recovery Demand Letter

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The beneficiary/representative/agent has the right to appeal Medicare’s demand.

BCRC Appeal Process

Appeal Must be filed

Redetermination no later than 120 days from the date of BCRC’s determination

Reconsideration no later 180 days from the date of the Redetermination

Hearing by Administrative Law Judge (ALJ)

within 60 days from the date of the Reconsideration

Medicare Appeals Council (MAC)

within 60 days of from the date of the ALJ’s decision

U.S. District Court within 60 days from date of MAC’s decision

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• Outstanding debts of more than 60 calendar days after the demand letter date will be considered delinquent.

• A Notice of Intent to Refer letter (NITR) is sent to the debtor to notify them of the delinquency.

• The delinquency is referred to the Department of Treasury (DOT) Offset Program for further collection activities.

• CMS may also refer debts to the Department of Justice (DOJ) for legal action if the required payment or a properly documented defense has not been provided.

• The NITR provides 60 calendar days for a response to be sent to the BCRC before the debt is referred to DOT.

Referral to U.S. Treasury and U.S. Justice

Workers’ Compensation Medicare Set Aside Best Practices

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A financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services and prescription medications related to the workers’ compensation injury, illness or disease that are covered and otherwise reimbursable by Medicare.

Workers’ Compensation Medicare Set Aside Allocation (WCMSA)

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If Medicare’s interests are not considered, the Centers for Medicare and Medicaid Services:

• Has a priority right of recovery against any entity that received any portion of a third-party payment either directly or indirectly.

• Has a subrogation right with respect to any such third-party payment.

• May refuse to pay for future medical expenses related to the workers’ compensation claim until the entire settlement is exhausted.

Workers’ Compensation Medicare Set Aside Allocation (WCMSA)

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• Claimant’s life expectancy

– Rated age must be presented on company letterhead for each insurance company (or companies) that made the rating and for each settlement broker that obtained them from the insurance company

– If more than one rated age is submitted, CMS will use the median of all rated ages submitted

• Future medical and medication recommendations related to the workers’ compensation injury, illness or disease

– The claimant’s condition and future medical care must be documented in written evaluations, reports and/or letters from a physician(s)

– Prescription medications must be included even if the claimant is not yet a Medicare Part D beneficiary

• Appropriate pricing for medical services

Factors Which Help Determine the WCMSA Amount

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• May be funded as a lump sum or through a structured annuity

• If annuitized, CMS requires that the WCMSA

– seeded with two years of medical and prescription expenses, along with any recommended major medical procedures

– the remainder of the WCMSA spread out over claimant’s life expectancy

• If funds for a structured WCMSA are not exhausted during a given period, then excess funds must be carried forward to the next period.

• If CMS receives verification of exhaustion of both the structured amount for the period and any available roll-over funds, then Medicare will pay for additional medical expenses incurred during the period.

WCMSA Funding

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• While there are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process.

• CMS requests that parties comply with established policies and procedures and will only review proposals that meet the following criteria:

– The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; 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 $250,000.00

• It is recommended to obtain CMS approval for the proposed WCMSA prior to settlement.

WCMSA Approval

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A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

• The claimant has applied for Social Security Disability Benefits

• The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision

• The claimant is in the process of appealing a denial of or re-filing for Social Security Disability benefits

• The claimant is 62 years and 6 months old or older

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

Reasonable Expectation of Medicare Enrollment

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• Validate demographics and contact information.

• Verify the total settlement amount (TSA) is clear and that the review threshold is met.

• Verify that dates of injury and conditions being settled are clear.

• Verify the proposed set-aside amounts.

• Verify jurisdiction and calculation method.

• Verify payout method: lump sum versus annuity.

WCMSA Submission Review

• Calculate life expectancy using standard age or median rated age.

• Verify that treatment records, payment records, and pharmacy records are up-to-date, complete and valid.

• Review records and submitter’s proposed plan. Price the appropriate future medical and pharmacy services.

• Provide an explanation in the decision rationale for counter higher or counter lower determinations.

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• Are based on whether the medication is used for a condition related to the workers’ compensation claim, is considered a Part D or Part B drug, and is used for a medically accepted indication.

• The WCRC reviewers must see prescription drug and medical treatment payment records/histories dated within six months of the date of submission or reopening.

WCMSA Prescriptions

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• For pharmacy records, the WCRC prefers the following:

– First, the prescription claim records directly from the workers’ compensation insurer.

– Second, Pharmacy Benefit Manager (PBM) prescription claim records or third party administrator (TPA) pharmacy records.

– Third, individual pharmacy claim records. However, if claimant has gone to multiple pharmacies, WCTC will develop for further records.

• The WCRC continues to price Part D drugs based on AWP based on brand or generic drug pricing. AWP pricing is pulled from a proprietary source, Truven Health Analytics’ Red Book database.

WCMSA Prescriptions

Poll Question # 3

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The five most frequent reasons for development requests by the WCRC: 1. Insufficient or out-of-date medical records 2. Insufficient payment histories, usually because the records do not provide a

breakdown for medical, indemnity or expenses categories 3. Failure to address draft or final settlement agreements and court rulings in

the cover letter or elsewhere in the submission 4. Documents referred to in the file are not provided. This usually occurs with

court rulings or settlement documents 5. Submissions refer to state statutes or regulations without providing sufficient

documentation or notice of which statutes or regulations apply to which payments

WCMSA Redevelopment Requests

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• If CMS makes a WCMSA determination different than originally proposed, there is no formal appeals process. However, the parties may:

– Provide the appropriate Regional Office (RO) with additional documentation to justify the original proposal amount

– Submit a request for re-review if:

1) You believe CMS’ determination contains obvious mistakes (e.g., a mathematical error or failure to recognize medical records already submitted showing a surgery, priced by CMS, that has already occurred); or

2) You believe you have additional evidence, not previously considered by CMS, which was dated prior to the submission date of the original proposal and which warrants a change in CMS’ determination

• If the WCMSA is not approved on re-review and the case is settled, CMS will not recognize the settlement. Medicare will not pay for the medical expenses related to the claim until WC settlement funds expended for services otherwise reimbursable by Medicare exhaust the entire settlement.

WCMSA Re-Review

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• Once a WCMSA is established and funded, it must be administered by:

– the claimant

– the claimant’s representative payee, appointed guardian or conservator

– by a professional administrator

• The administrator must establish the WCMSA account, deposit funds in an interest bearing account separate from any other account, pay workers’ compensation claim related Medicare-covered services from the WCMSA account, and provide CMS with a reporting of the expenditures from the WCMSA.

• If a claimant dies before the WCMSA is completely exhausted, the RO and the BCRC will ensure that all claims have been paid. After Medicare’s interests have been protected, any amount left over in the WCMSA may be disbursed pursuant to state law.

WCMSA Administration

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