Rafael Gonzalez is Vice President of Strategic Solutions at PMSI/Progressive Medical, soon to be known as Helios.

Over the past several years, the Centers for Medicare and Medicaid Services (CMS) have imposed stricter Medicare Set-Aside (MSA) guidelines as part of its ongoing effort to preserve the Medicare trust fund. Combine this change with the rising cost of medical treatment and the outcome is often a noteworthy increase in reserves and settlement values. Because of this, cases are remaining open longer or not settling at all. In fact, research by the Workers' Compensation Research Institute (WCRI) shows that injured workers disabled for longer than six months have less than a 50 percent chance of ever returning to their job. After a year, the chances that they will return to work drop to a mere 10 percent.

Proactive management throughout the life of the claim can be influential in driving down high medical costs and obtaining optimal outcomes for the injured worker. How you approach claim management, however, may depend upon the timeline for settlement. For example, if a claim is 12 – 18 months from settling, there is more time to implement clinical recommendations that affect future pharmacy cost and utilization whereas a claim on the verge of settlement may offer fewer alternatives.

To illustrate this, let us consider Anne, who sustained an industrial injury in 2004 to her lower back, left knee and right ankle. She was ini­tially treated conservatively; then underwent lumbar surgery, two unsuccessful spinal cord stimulator trials, multiple injections and, more recently, median branch blocks that were also unsuccessful. At one point, she was on very high doses of narcotic medications and required an inpatient detoxification program. Diagnoses are lumbar radiculitis and chronic pain syndrome.

Early Identification of Medicare Beneficiaries, Mandatory Insurer Reporting, and Reimbursement of Conditional Payments

When preparing for settlement, the first step is to determine if Anne is either a current or potential Medicare beneficiary. If so, information about her claim must be reported to CMS in the payers' upcoming quarterly report with ongoing updates as key pieces of information change on the claim. Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) establishes Mandatory Insurer Reporting (MIR) as a requirement for group health, liability, no-fault and workers' compensation insurers/plans, also known as Responsible Reporting Entities (RREs), to protect Medicare's interests as a secondary payer. According to MIR requirements, RREs must report certain claims information for Medicare beneficiaries to the Secretary of Health and Human Services, or potentially become liable for fines of up to $1,000 per day per file.

Based on the duration of time away from work, Anne is potentially an eligible beneficiary. As such, the next step is to determine whether Medicare has made any payments conditioned upon reimbursement through settlement, judgment, or award. Prior to settlement, any conditional payments must be verified and satisfied.

Medicare Set Aside Allocations

The goal of establishing a Medicare Set Aside (MSA) is to estimate the total cost of all medical and prescription expenses otherwise reimbursable by Medicare for the claim related conditions during the course of the claimant's life and set aside this amount in settlement funds. In 2006, Medicare began providing prescription drug coverage for Medicare beneficiaries, known as Part D, and as of 2009, workers' compensation settlements must include an allocation for future medication therapy in MSA allocations.

If possible, a best practice is to engage clinical experts such as registered nurses and pharmacists to perform an in-depth evaluation of the claim to determine the likely future therapy plan. This information, considered in conjunction with Medicare regulations, determines what treatment Medicare normally covers, as this is the only treatment for which money must be set aside. A projection based on life expectancy is made for the covered treatment using the applicable state fee schedules and average wholesale pricing for medications. This estimated amount is included in the Medicare Set Aside.

A Better Outcome

While every claim is different, in Anne's case, there was an opportunity to complete a Medication Analysis prior to settlement. This review revealed the that prescribed therapy included costly medications without documented efficacy and evidence to support ongoing utilization. Possible drug-drug interactions were indicated and six medications had more cost-effective alternatives available.

Following a conversation with a specialty matched physician, Anne's treating physician agreed to consider discontinuance and/or conversion of multiple medications. Nurse Progress Monitoring (NPM) followed up with the treat­ing physician's office to verify agreed upon changes to the prescription drug regimen occurred. Fortunately in this case, they were. Additionally, the review identified one medication that was unrelated to the work injury. The claims professional therefore excluded it from the MSA calculation. As a result, the projected cost for Anne's lifetime medical treatment decreased by almost $200,000.

In the end, by considering Medicare requirements in advance of settlement, the payer achieved a better outcome. Future Medicare obligations are satisfied, Anne's medication therapy is more appropriate, and the payer accomplished a compliant, cost-effective settlement.