Following an August
Town Hall call that addressed workers’ compensation indemnity-only
settlements, the Centers for Medicare & Medicaid Services (CMS) made
significant policy updates to further clarify total payment obligation to the
claimant (TPOC) calculations. The
changes complicate TPOC reporting in workers’ compensation claims and go
further than the August announcement surrounding “indemnity-only”
settlements.
Key Policy Changes
CMS adjusted TPOC guidance to provide more specific
information by inserting the following new
paragraph into Chapter 3, Section 6.4:
“The computation of the TPOC amount
includes, but is not limited to, all Medicare covered and non-covered medical
expenses related to the claim(s), indemnity (lost wages, property damages,
etc.), attorney fees, set-aside amount (if applicable), payout totals for all
annuities rather than cost or present values, settlement advances, lien
payments (including repayment of Medicare conditional payments), and amounts
forgiven by the carrier/insurer.”
CMS also provided formal guidance for “indemnity-only”
workers’ compensation settlements by adding a number of references to these
settlements, including the following information into Chapter 3, Section 6.5.1:
“In situations where the applicable
workers’ compensation or no-fault law or plan requires the RRE to make
regularly scheduled periodic payments, pursuant to statute, for an
obligation(s) other than medical expenses, or a one-time ‘indemnity-only’
payment or settlement for obligation(s) other than medical expenses is made to
or on behalf of the claimant, the RRE does not report these periodic payments
or one-time settlements as long as the RRE separately assumes/continues to
assume Ongoing Responsibility for Medicals (ORM) and reports this ORM
appropriately.”
Applying the “Amounts
Forgiven” by the Carrier
These adjustments will impact workers’ compensation claims
organizations in multiple ways. Until now, CMS policy described TPOC as
“obligation(s)” payable by the responsible reporting entity “to or on behalf
of” the injured party. Payments to or on
behalf of the injured party would include any direct or indirect payment
associated with the settlement. Some indirect
payments (i.e. attorney fees) were specifically addressed in prior User
Guides. Other direct or indirect payments
(i.e. Medicare Set Asides) were not specifically addressed but were very
clearly and obviously considered as “TPOC.”
The language above is virtually a carbon-copy of the
language defining the review thresholds in Medicare
Set Asides (See WCMSA Reference Guide at page 38). The new policy introduces a new concept,
however, not previously addressed or considered by CMS in Section 111
reporting. CMS now suggests that non-payment to the claimant in the form
of an “amount forgiven” by a carrier should be included as TPOC. CMS provides no example of how and when an
“amount forgiven” should be incorporated into a TPOC report. While “amounts forgiven” have long been part
of CMS’ Medicare Set Aside “review threshold policy,” they have never been
included as part of a TPOC.
Practically speaking, including “amounts forgiven” will
present a number of challenges for claims organizations. First, few claims organizations report “amounts
forgiven” as TPOC. Indeed, many claims
handlers are unaware that “amounts forgiven” should be included in the total
settlement amount for MSA purposes.
Expecting claims organizations to immediately and accurately include
these amounts as part of a TPOC report is perhaps unrealistic. Second, with Section 111 civil monetary
penalties looming, it is critical that
claims data be accurately, completely, and timely reported. Claims organizations should immediately
review training material, confirm whether “amounts forgiven” would be
applicable to their book of claims, and revise and update training as
appropriate. Given that Section 111 reporting is now in its tenth year,
re-training on this specific topic may present a number of challenges.
CMS’ policy around TPOC has always been quite simple. The TPOC amount is the “dollar amount of the total
payment obligation to the claimant.” Throughout
the User Guide, Medicare has always made clear that the TPOC amount included the
full amount of the “obligation” created by the settlement. CMS’ policy changes turn that idea on its
head. An “amount forgiven” by a carrier
in the interest of settlement is not a “obligation,” nor does it result in any
actual payment to the claimant. Requiring employers/carriers to report “amounts
forgiven” will result in instances of artificially inflated TPOC amounts and
possibly improper recovery by CMS.
Amounts forgiven” often represent an employer / carrier’s
unexercised subrogation rights to a claimant’s prior third party settlement. Lien waiver by an employer / carrier benefits
the claimant, but it results in no additional
settlement funds and in fact will mislead CMS into double counting the
claimant’s settlement proceeds. After
all, “amounts forgiven” by a carrier often relate to prior liability
settlements which must also be
reported via Section 111.
Apart from aligning policy with
MSA review thresholds, there’s no clear reason why “amounts forgiven” should be
added to TPOC. “Amounts forgiven” create
no additional recovery opportunity for Medicare (no money is paid for “amounts
forgiven”), falsely depict the claimant’s settlement amount (the “amount
forgiven” pads the settlement amount with amounts that are not paid to anyone), and improperly suggest
double recovery by the claimant (“amounts forgiven” often relate to prior third
party settlements received by the claimant and presumably reported to CMS).
Indemnity-Only Settlements
We wrote about the indemnity-only
settlement clarification in August. As
we explained at that time, workers’ compensation RREs should heed the following
guidance:
The
updated guidance from CMS is that indemnity only settlements should not be
reported provided that “the RRE separately assumes / continues to report
ongoing responsibility for medicals (ORM).”
While this does not materially alter or adjust the prior guidance, it is
an important reminder.
Conclusion
Workers’
compensation claims organizations should carefully analyze their training,
policies, and procedures to align with these policies. While the majority of RREs may have been not
reporting “indemnity only” settlements as TPOC, few RREs are including “amounts
forgiven” as TPOCs because they are not “obligations to the claimant.” Indeed, “amounts forgiven” are almost
precisely the opposite of “obligations to the claimant.” CMS should reverse this guidance.
ECS has the
largest and most experienced team of Section 111 reporting experts in the
country. If you have any questions about the Town Hall call or looming civil
monetary penalties, please reach out to our team to check on your existing
Section 111 reporting process. If you have an obligation to report but have not
yet registered – do not delay. Contact our Mandatory Insurer Reporting Team at
MIRService.Support@examworkscompliance.com or 678-222-5454 to schedule an
evaluation today.
Marty Cassavoy is the Vice President of MSP Compliance at ExamWorks Compliance Solutions. Marty and his team develop solutions to challenges in all areas of Medicare Secondary Payer compliance and across all insurance types. An attorney licensed to practice law in Massachusetts, Marty works out of ExamWorks’ Woburn, Massachusetts office and can be reached at 781-517-8085 or martin.cassavoy@ExamWorksCompliance.com
Scott Huber is the Senior Vice President of Technology at ExamWorks Compliance Solutions. Scott oversees all internal and external technology services for ECS, including the award-winning MIR Service Section 111 Reporting platform. A native Floridian, Scott is a graduate of the University of Florida and works out of ECS headquarters in Lawrenceville, Georgia. Scott can be reached at 678-256-5135 or scott.huber@ExamWorksCompliance.com