Coping with MSP in Ohio

By John A. Annarino, Ohio

“What’s that?” and “I hope it is not terminal” were the likely responses to any mention of MSP (Medicare Secondary Payer Act) in the workers’ compensation arena in Ohio in the not-too-distant past. Now, the mere mention of the three letters often results in not an interrogative, but an expletive. At the very least, there will be heard a collective groan from those of us who are in the trenches of the workers’ compensation practice. It remains to be seen whether or not the “condition” of MSP is terminal.

A November 2000 article in The Ohio Lawyer, a publication of the Ohio State Bar Association, probably served as the greatest impetus to bring MSP into this state’s spotlight. To this point we had assumed the federal government had absolutely no interest in Ohio workers’ compensation matters.

The relevant U.S. Code provision is not particularly complex – Medicare will not make payment “with respect to any item or service to the extent that…payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” [42 USC Sec. 1395y (b)(2)(A)(ii)] With this language Congress has made it clear that any coordination of benefits between the federal government and a state’s workers’ compensation program is one-way – if a medical bill could be paid under workers’ compensation, it will not be paid by Medicare, with exceptions not relevant here. The position is most succinctly stated in numerous places under virtually every topic on the CMS (formerly HCFA) website:

Payment under Medicare may not be made for any item or service when payment has been made or can reasonably be expected to be made for such item or service under a Workers’ Compensation (WC) law or plan of the United States or any State. If it is determined that Medicare has paid for any item or services that can be or could have been paid for under WC, the Medicare payment constitutes an overpayment.
www.hcfa.gov/medicare/cob/providers/pro_wc.htm

The Code of Federal Regulations specifically addresses recovery by Medicare of “conditional payments,” and payments made in settled cases. In view of the strict timeframes in which a claim must be adjudicated in Ohio, it is unlikely Medicare will make a conditional payment as a result of delay. Additionally, Ohio’s reimbursement to service providers is typically greater than that of the federal government, further minimizing the likelihood Medicare will be making conditional payments in Ohio.

Of far greater concern is the emphasis Medicare appears to be placing on settlements. The regulations specifically address a “shift” of the medical costs of a workers’ compensation settlement to Medicare, and contemplate that insurers and beneficiaries may conspire to maximize indemnity benefits, leaving Medicare to hold the medical “bag.” To minimize the shenanigans of workers’ compensation participants, the regulations go so far as to permit Medicare the opportunity to ignore the settlement, or, if Medicare is not satisfied with the parties’ allocation of settlement amounts to future benefits, provide Medicare with a formula to make its own calculation of future medical costs in the settlement amount.

For each of the past several years, Ohio has expended approximately $150 million to settle nearly 25,000 claims. To address Medicare’s interests in this area, representatives from the Ohio Bureau of Workers’ Compensation held a meeting for claimant and employer representatives, including trade associations and self-insuring employers. Representatives from the Office of the Attorney General and the Industrial Commission of Ohio were also present. We learned that a few claimant representatives had received inquiries from Medicare Intermediaries, and some had begun to draft correspondence requesting Medicare’s approval of proposed settlements. Not one representative indicated having received such approval; to the contrary, most reported receiving no return correspondence whatsoever, even after a period of several months. A few indicated multiple receipts of the same inquiry. Employer representatives reported no dealings with Medicare on settlements or other workers’ compensation matters.

While it is exceedingly rare that representatives from such diverse and adversarial groups can agree on anything, we were “of one mind” on two points: first, all agreed that the state’s settlement practices were a valuable aspect of and benefit to the Ohio workers’ compensation system; and second, medical bills that should be paid under Ohio workers’ compensation laws, would be paid in the respective Ohio claims. The challenge was to determine a methodology for satisfying Medicare’s interests, without jeopardizing Ohio’s administrative settlement process.

An Ohio “delegation” consisting of agency representatives, as well as representatives from the Ohio Academy of Trial Lawyers and the Ohio State Bar Association, accepted CMS’s invitation to attend a meeting with its representatives in Baltimore. Our goal was to persuade Medicare representatives that Ohio intended to be in full compliance with MSP.

At that meeting we learned an extremely important aspect of Medicare’s approach to the MSP is the role of the Coordination of Benefits Contractor, GHI, whose representatives played a large part in the presentation. GHI is not really involved on the enforcement side of Medicare; rather, it is in the business of collecting data. Indeed, the focus of GHI’s inquiry centered on retrieval of workers’ compensation settlement data by Social Security number and diagnostic code. GHI and Medicare had no experience with Ohio workers’ compensation. While their representatives discussed obtaining the data necessary to “contact the underwriter” and “negotiate” reimbursement of a bill paid by Medicare, we were trying to explain that we were the underwriter, and there was no negotiation necessary – if the bill was properly payable under Ohio workers’ compensation laws, it would be paid.

Much of our approach was to convince the Medicare representatives that we had no intention of shifting costs from the state program to the federal government. We brought with us revised settlement forms to which we added language apportioning the settlement amount among indemnity, medical treatment and prescription drug categories, a practice that is not required under Ohio law, but is assumed by Medicare. We also included on our settlement documents specific instructions advising the parties that Medicare will not pay for medical bills for which the settlement amount contemplates future payment. We suggested a “pilot” program in which we would forward a random selection of settlements to Medicare to ensure that Ohio’s actions reasonably accommodated Medicare’s interests. The Medicare representatives appeared generally pleased with our efforts, and suggested that Ohio was far down the list of states with which it should be concerned. We were promised a follow-up communication.

The follow-up communication came in the form of a conference call, with a rather surprising new direction by Medicare. To this point our discussions had focused exclusively on settlements; now Medicare was requesting Social Security numbers, diagnostic codes and additional data on all open claims. Again, the Ohio delegation attempted to persuade the Medicare representatives that we intended to comply fully with MSP, but that Medicare should be reasonable in its approach, and that reviewing all files from eternity past was not reasonable. At another follow-up meeting in November 2001, Medicare representatives traveled to Columbus. We proposed Medicare consider a review of a meaningful population of claims defined by the following:

• claims in which the medical costs were of a sufficient amount to trigger Medicare’s interest, and
• claims in which the injured worker was at least 65, or
• claims in which the injured worker had been receiving workers’ compensation indemnity benefits for more than two years.

While the Medicare representatives agreed to review our request, they also requested we review the electronic methodology available to forward to them a number of requested data elements, most notably, diagnostic codes and Social Security numbers.

Subsequent to the December meeting the Ohio Attorney General advised against releasing Social Security numbers for injured workers, without specific authorization. After receiving that decision, Medicare representatives hinted at a possible arrangement in which Medicare would contact OBWC with the Social Security number of the injured worker in whose claim(s) Medicare was interested. This proposal appeared to be unbelievably simple, effective and reasonable. If Medicare has reason to believe it is paying bills in a specific claim that it should not be paying, let us know! It avoids the problems with releasing Social Security numbers, it avoids countless wasted hours in human and technological resources, and it does not gum-up the settlement process. Moreover, such arrangement would permit a reasonable investigation of not only settled claims, but could serve as a model for investigating potential conditional payments in other workers’ compensation claims. If this kind of arrangement could be instituted on a “go-forward” basis, it seemed like the greatest potential for the “win-win” situation for both the state of Ohio and the federal government.

Unfortunately, we recently received word from the Medicare representatives that our discussions have been put “on hold.” Apparently, Medicare has decided to pursue its data matching efforts on a larger scale, and to seek workers’ compensation data through some kind of national database. Let us hope, at the very least, that Medicare’s search parameters will consider more than diagnostic codes and Social Security numbers. Let us also hope that Medicare will continue to review its own programs and provide the states with reasonable and certain guidelines, which in turn will maximize the states’ compliance with MSP with minimal invasion into the states’ workers’ compensation programs.

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