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Is Legislation the Solution to Reduce
the CMS Delay in Approving Medicare
Set-Asides?

By Steve Chapman and Gregg Chapman, Esq.
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Steve Chapman and Gregg Chapman, Esq. specialize in structured settlements of workers’ compensation cases. In this article they discuss how to remedy the unreasonable delay in approving MSAs.

For more information on structured settlements and the structure broker’s role, see:
 
 
The amount of time it takes the Centers for Medicare & Medicaid Services (CMS) to review a Medicare Set-Aside (MSA) has been a source of anger and frustration since the first memo outlining the program was released in 2001. In many instances, obtaining CMS approval of a MSA is the only thing preventing final settlement of a workers’ compensation claim. At its worst, applicants have been made to wait a year before CMS responded. Only then, if the review was favorable, would the settlement funds finally be paid out. There has long been a debate as to what can be done to reduce this unreasonable delay. We will examine if legislation to reform the Medicare Secondary Payer (MSP) Act is the solution, or if other avenues can provide the change needed.
 
At its worst, applicants have been made to wait a year before CMS responded.
This issue of CMS’ extended delays has again become a hot topic due to the fact that since the beginning of 2011, the average turnaround time for getting a response on a submitted MSA has been approximately 5 to 6 months. This is much too long to wait and results in hardship on the applicant. For most of 2010, the review took approximately 6 weeks to 3 months. While not ideal, it was a more manageable amount of time. This type of fluctuation in review time is nothing new, but after 10 years of reviewing MSAs, one would expect CMS to have achieved its stated goal. As you might not be aware, the second CMS memo released on April 22, 2003, stated the following: “6) What is the expected time frame for the regional offices (ROs) to review and make their decisions regarding proposed WC settlements? Answer: ROs seek to review and make a decision regarding proposed WC settlements within 45 to 60 days, from the time that all necessary/required documentation has been submitted.”

 
After 10 years of reviewing MSAs, one would expect CMS to have achieved its stated goal of reviewing proposed MSAs within 45 to 60 days.
 
A brief history of the review process in Medicare’s Regional Office #9, which oversees California, shows that little progress has been made to permanently achieve the stated goal of a 45 to 60 day review process. The best time to get CMS approval of a MSA was in 2001 right after the first memo went into effect. At that time, CMS had existing office employees review the MSAs. The approved MSA would be returned in a week. By 2002, CMS had an employee with a medical background review the submissions. The turnaround time quickly grew to a year. By 2004, CMS decided to outsource the review process to the Workers’ Compensation Review Center - Joint Venture (WCRC-JV). This outside contractor was comprised of doctors, nurses, attorneys and claims analysts. While there was some improvement in the overall turnaround time, there was also great fluctuation through the years, resulting in anywhere from 3 to 9 month waiting periods. Just when it looked like a solution had been found that led to the relatively short review periods in 2010, here we are again in 2011 waiting half a year.
 
Just when it looked like a solution had been found that led to the relatively short review periods in 2010, here we are again in 2011 waiting half a year.
 

Legislation to amend the MSP and require a specific turnaround time for review of MSAs is the solution that has been most often discussed and attempted over the years. In 2007, Rep. John Tanner (D-TN) introduced Bill H.R. 2549 entitled “‘Medicare Secondary Payer and Workers’ Compensation Settlement Act of 2007.” Unfortunately, this bill never made it out of committee. Rep Tanner introduced a similar Bill H.R. 2641 again in 2009. The following were some of the major components of that Bill:

  • It established “qualified” set-asides. A set-aside is “qualified” if it reasonably takes into account the payment obligation, based on the injury, the claimant’s age and life expectancy, necessity for future medical care, and the state WC law.
  • If a qualified set-aside was submitted, it was deemed approved unless notice of disapproval with explanation was received from CMS within 60 days.
  • Establishes an appeal process that can be used by the submitter following a denial: reconsideration by the Secretary, appeal to ALJ, and then appeal to federal district court.
  • Defined settlements that are exempt from the MSP Act.
  • Creates optional direct payment of set-aside funds to Medicare
  • Reinstates the process whereby a set-aside can be reduced or terminated after 5 years.

Despite a coalition of attorneys representing injured workers, employers, insurance carriers, defense attorneys, and other interested parties supporting this bill, it also died in committee.
 
Two bills died in committee despite support from a coalition of the major players involved in settlements.
 
Unfortunately for MSA reform, it appears that many of the supporters and lobbyists who had fought for the above mentioned changes have shifted their attention to the Mandatory Insurer Reporting (MIR) and conditional payment sections of the MSP Act. This is not surprising since the penalties associated with the MIR can cost an insurer $1,000 a day. However, it does mean there is no longer as much emphasis on getting the needed MSA reforms including the proposed 60 day rule where a MSA submission is deemed approved if CMS does not respond by then.
 
Supporters and lobbyists have shifted their focus to mandatory reporting and conditional payment
 
Another option that could rectify the current MSA review problem would be a direct meeting with CMS. Industry organizations including the National Alliance of Medicare Set-Aside Professionals (NAMSAP) and the Medicare Advocacy Recovery Coalition (MARC) have met with the CMS at their headquarters in Baltimore with varying degrees of success. Perhaps a meeting with the single focus of working together to find a way for CMS to abide by their own stated goal of a 45 -60 day review timeline might bear positive results.

A third alternative would be the filing of a lawsuit. There are attorneys that think this could be the most productive solution available. With the proper test case and a favorable judgment, the delays and frustration associated with MSA reviews could be a thing of the past.
 
A meeting or a lawsuit might rectify the current MSA review problem.
 
 
The bottom line is that it is in the interest of all parties to a settlement that something be done to eliminate the unreasonable delay the CMS is now taking to review submitted MSAs. Whether the answer lies in new legislation, direct meetings with CMS or the filing of a lawsuit, the current state of affairs cannot be allowed to continue. The uncertainty created when the parties do not know whether they will be waiting 6 weeks or 9 months is not conducive to settlement.
 
The bottom line is that it is in the interest of all parties to a settlement to eliminate CMS’ unreasonable delays in reviewing MSAs.
 
Steve Chapman strives to remain current on all issues affecting the settlement of the case, including Medicare set-aside allocations, life care plans, medical cost trends, Long Term Disability, and Social Security issues.

To contact Steve Chapman:
Steven F. Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Cell: 310-480-5742
Email: SettleMan@aol.com
 
 
Gregg Chapman has been a member of the State Bar of California for twenty years. Over the last eight years, he has worked for two of the largest national MSA vendors in various positions including General Counsel, National Sales Manager and Director of MSA Education. He has provided hundreds of presentations on all topics regarding Medicare Set-Asides to the insurance industry and attorney associations across the country.

To contact Gregg Chapman:
Gregg Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Email: greggchap@aol.com