As most reading this blog are painfully aware, requirements surrounding Medicare Set-Asides (MSAs) often interfere with efforts to settle the medical portion of an open file. Yet, properly managing chronic pain cases can significantly reduce an MSA—whether existing or to-be-determined—and increase the likelihood of medical settlement.

The Medicare Set-Aside

When an injured worker is nearing or over age 65, or likely to file for social security disability, Medicare Secondary Payer laws require a portion of any workers’ compensation settlement to be “set aside” for future medical services that would otherwise be covered by Medicare as it relates to the workers’ compensation injury. There is a formal process by which those endeavoring to settle a case may submit an MSA estimate to Centers for Medicare & Medicaid Services (CMS), and obtain approval before settlement can proceed. This is relevant in those states where settlement of the medical portion of a “typical” case (e.g. one without compensability disputes) is possible.

Because the rules governing MSA calculation often support a worst case interpretation of future medical needs, the MSA is often higher than the likely true case cost. In many instances, even the threat of a high-cost MSA is enough to discourage a payor from seeking settlement.

Common factors that contribute to the magnitude of a Medicare Set Aside include:

• Poly pharmacy: the use of multiple drugs is a common concern on claims that are headed for MSAs.  The cost of a lifetime of pharmacy can be significant.
• Implantable devices:  Devices such as spinal cord stimulators and intrathecal pain pumps can impact an MSA significantly due to the replacement costs and medication refills.
• Surgeries and replacement costs:  It is not uncommon for a physician to render an opinion regarding future surgeries of a client. Even if a specific surgery is not planned, its costs will be allocated in an MSA to protect Medicare’s Interest. Costs can be significant.

Reducing the MSA

There is opportunity to revise the MSA allocation before CMS approval. For example, if prescribing patterns change and an injured worker stops using a medication for 7-8 months, then previously projected medication costs can be excluded or revised. Likewise, if a provider will certify that a proposed intervention is now off the table, that cost (and related costs) can be removed from projections.

Impacting the magnitude of an existing or to-be-developed MSA is a tricky business. In general, in order to exclude costs that have been part of the medical history from an MSA, there must be a track record of durable change in prescribing patterns, or in the nature of the treatments and therapies provided. This means durable change in the trajectory of a case, as opposed to near-term opioid weaning which, all too often, does not last.

Evidence suggests that in order to achieve durable change on a case with a high MSA—or an MSA that threatens to be high—the case must be addressed at three levels:

• Medical: It is a given that underlying medical issues will be addressed thoroughly and properly. This includes confirming the diagnosis is accurate; treatment plans are evidence-based and follow from the diagnosis; and treatments, therapies and medications flow logically from the treatment plan, with a functional restoration outcome in mind.

• Cognitive Behavioral Factors: Unfortunately, addressing medical issues alone is usually not sufficient to bend the trajectory of a case featuring a high MSA; cognitive behavioral factors including  poor coping strategies, dysfunctional thought patterns and readiness to change must also be addressed. A comprehensive treatment plan must also include focus interventions for addressing these cognitive behavioral factors.    

• Social: Family dynamics, social support and secondary gain factors also impact the clinical landscape. These factors must be identified and mitigated in order to engage the injured worker in functional restoration and self-management.

Settling medical on cases burdened by high a MSA can be extremely problematic. But addressing such cases comprehensively—addressing the medical, psychological and social factors underlying the case—can change the trajectory of a case in a way that facilitates settlement. This is a win for everyone.

About the Authors

David Chenok is Paradigm’s Vice President of Product Development and Pain Operations. He focuses on growing Paradigm’s business through enhancing existing offerings, identifying new product and market opportunities and forging strategic partnerships. He brings a broad background in healthcare and health insurance operations, analytics, and strategy to the role.

Jennifer Doherty OTR/L, CLCP, MSCC is a Director of Clinical Services for Pain Operations. In her role as a Director, Jennifer’s goals for every file are excellent clinical outcomes and improvement in claims disposition. She brings her expertise as a former Medicare Set-Aside allocator in identifying cost drivers and assist in posturing the file for settlement where available.