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

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

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

To illustrate this, let us consider Anne, who sustained anindustrial injury in 2004 to her lower back, left knee and rightankle. She was ini­tially treated conservatively; then underwentlumbar surgery, two unsuccessful spinal cord stimulator trials,multiple injections and, more recently, median branch blocks thatwere also unsuccessful. At one point, she was on very high doses ofnarcotic medications and required an inpatient detoxificationprogram. Diagnoses are lumbar radiculitis and chronic painsyndrome.

Early Identification of Medicare Beneficiaries,Mandatory Insurer Reporting, and Reimbursement of ConditionalPayments

When preparing for settlement, the first step is to determine ifAnne 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 ofinformation change on the claim. Section 111 of the Medicare,Medicaid and SCHIP Extension Act of 2007 (MMSEA) establishesMandatory Insurer Reporting (MIR) as a requirement for grouphealth, liability, no-fault and workers' compensationinsurers/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 claimsinformation for Medicare beneficiaries to the Secretary of Healthand 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 ispotentially an eligible beneficiary. As such, the next step is todetermine whether Medicare has made any payments conditioned uponreimbursement through settlement, judgment, or award. Prior tosettlement, any conditional payments must be verified andsatisfied.

Medicare Set Aside Allocations

The goal of establishing a Medicare Set Aside (MSA) is toestimate the total cost of all medical and prescription expensesotherwise reimbursable by Medicare for the claim related conditionsduring the course of the claimant's life and set aside this amountin settlement funds. In 2006, Medicare began providing prescriptiondrug coverage for Medicare beneficiaries, known as Part D, and asof 2009, workers' compensation settlements must include anallocation for future medication therapy in MSA allocations.

If possible, a best practice is to engage clinical experts suchas registered nurses and pharmacists to perform an in-depthevaluation of the claim to determine the likely future therapyplan. This information, considered in conjunction with Medicareregulations, determines what treatment Medicare normally covers, asthis is the only treatment for which money must be set aside. Aprojection based on life expectancy is made for the coveredtreatment using the applicable state fee schedules and averagewholesale pricing for medications. This estimated amount isincluded in the Medicare Set Aside.

A Better Outcome

While every claim is different, in Anne's case, there was anopportunity to complete a Medication Analysis prior to settlement.This review revealed the that prescribed therapy included costlymedications without documented efficacy and evidence to supportongoing utilization. Possible drug-drug interactions were indicatedand six medications had more cost-effective alternativesavailable.

Following a conversation with a specialty matched physician,Anne's treating physician agreed to consider discontinuance and/orconversion of multiple medications. Nurse Progress Monitoring (NPM)followed up with the treat­ing physician's office to verify agreedupon changes to the prescription drug regimen occurred. Fortunatelyin this case, they were. Additionally, the review identified onemedication that was unrelated to the work injury. The claimsprofessional therefore excluded it from the MSA calculation. As aresult, the projected cost for Anne's lifetime medical treatmentdecreased by almost $200,000.

In the end, by considering Medicare requirements in advance ofsettlement, the payer achieved a better outcome. Future Medicareobligations are satisfied, Anne's medication therapy is moreappropriate, and the payer accomplished a compliant, cost-effectivesettlement.