On July 18, 2018, Care Bridge International issued a White Paper entitled Medicare Set-Asides: What is the True Cost of Future Medical Care? Care Bridge International questioned the need to have the Workers Compensation Medicare Set-Aside Arrangement (MSA) reviewed by The Centers for Medicare and Medicaid Services (CMS) prior to settling a workers’ compensation claim. The use of the MSA has become common practice in workers’ compensation in the last 15 years since the creation of the WCMSA. Based on their analysis, Care Bridge International has concluded workers’ compensation payers are paying excessively inflated amounts to close out the future medical treatment of an injured worker’s claim.
The main reason noted for the inflated amount is the impact of medications in the MSA. Approximately 68% of the MSA’s contain opioids and these medications are calculated for the life expectancy of an injured worker, which averages 24 years. The evidence showed injured workers on Medicare tapered their use of opioid medications over time. By the 5th year following the approval of the MSA, total medication spending was 64% of the level forecasted in the MSA and other medical spending was 55% of the forecasted amount in the MSA. Another issue noted by the authors is the pricing mechanism used by CMS in reviewing prescription drugs. CMS uses the average wholesale price published in the Redbook® rather than the official medical fee schedule, which significantly inflates the cost of future medical treatment.
The authors estimate that 90% plus of claims subject to the Medicare Secondary Payer Act can be forecasted and settled without CMS submission with minimal to no risk. The authors recommend obtaining an MSA using evidence-based forecasting. The 10% of the claims they do recommend submitting a MSA to CMS for approval are those of a catastrophic/complex nature requiring a professional life care planning evaluation and forecast.
What Does This Mean For You?
If you are submitting your MSA to CMS for approval, you could be paying a very high premium to close out the future medical treatment. In some instances, clients have paid double what the future medical treatment would cost if it was calculated using evidence based forecasting. Prior to sending an MSA to CMS, review it very carefully to determine if it is priced reasonably. If not, you may consider a non-submit MSA that protects Medicare’s interest by using evidence based forecasting.
Mark Riggenbach, Esq.
Amanda Rocha, Esq.
Central Coast Office