News

CMS Implements Rule Change to Long-Standing Legal Zero MSA Policy; New Document Submission Required; Recommended Procedural Options

Thursday, October 27, 2016

ExamWorks Clinical Solutions (ECS) was advised by the Centers for Medicare and Medicaid Services (CMS) that a Legal Zero MSA (“no liability” or “Zero allocation” MSA) based solely upon the employer or carrier’s complete denial of the claim will not be approved. Such a denial is typically evidenced by a claim payment history documenting no payments for medical treatment and indemnity and a letter from the adjuster or defense attorney confirming such a denial.

CMS never published the Legal Zero MSA policy in its official CMS WCMSA Reference Guide, but it was exercised regularly such that if evidence of a complete denial of the claim was presented, the settlement would be recognized as a strict compromise. CMS would issue a determination letter stating no MSA is necessary.

The employer or carrier’s claim denial, on its own, is no longer sufficient for CMS to approve the Legal Zero MSA. CMS now requires submission of one of two documents to support the Legal Zero MSA:

  • Court ruling regarding the compensability of the claim; or,
  • Treatment records which demonstrate/indicate that no further treatment for the alleged industrial condition(s) will be required.

CMS Provided No Advisory Prior to the Change Effecting in Process MSAs

Unfortunately, CMS provided no advanced notice of this rule change such that we presently have MSAs in process for which this change is now applicable. ECS has contacted the CMS Central Office in Baltimore to state our concerns that this change to a long-standing rule regarding approval of Legal Zero MSAs should have been provided in advance and posted on the CMS website. ECS is also asserting to CMS that this rule change is unnecessary or at least should be modified to allow for Legal Zero MSAs where the employer or carrier has followed state statutes in administratively denying the claim. CMS has advised that the CMS WCMSA Reference Guide will be updated in November with official guidance in regard to this change.

We are advising our clients who have a pending Legal Zero MSA submission or a Legal Zero MSA already submitted that the MSA is unlikely to be approved at $0 unless a court ruling regarding the compensability of the claim or treatment records which demonstrate that no further treatment for the alleged industrial condition(s) can be provided.

Recommended Procedural Options

Accordingly, the following are the options for MSAs that have been submitted to CMS or are in the process of being submitted to CMS:

  • Option 1: Provide CMS with either a court ruling after a hearing on the merits of the case upholding the denial of the claim or treatment records which demonstrate that no further treatment for the alleged industrial condition(s) will be required. The anticipated result is CMS agreeing to a $0 MSA.
  • Option 2: Advise CMS there are no court rulings regarding the compensability of the claim and no treatment records which demonstrate no further treatment for the alleged industrial condition(s). The anticipated result is CMS rejecting a $0 MSA and assigning a certain dollar amount for future medical care.
  • Option 3: Keeping in mind that the CMS MSA review and approval process is voluntary, do not submit the MSA to CMS and proceed to finalize settlement based upon this matter being a strict compromise settlement as defined by the Medicare Secondary Payer Act and corresponding regulations.

ECS Preliminary Opinion and Procedure Implications

While our opinion remains that a Legal Zero MSA remains appropriate in most completely denied claims, based upon this rule change, CMS review of such an MSA will not be available without a court ruling upholding he denial of the claim or a medical report from the treating physician confirming there is no current or further treatment for the alleged condition.

Please keep in mind that CMS’s standard for a court ruling is that it must result from a “hearing on the merits” of the case or issue. In other words, any type of agreed order or finding will likely not be honored by CMS.   ECS withholds a final opinion regarding recommendations for handling of completely denied claim until we see the official policy statement in the anticipated updated WCMSA Reference Guide, but presently, ECS recommends either Option 1 or Option 3 be chosen depending upon the particular circumstances of the claim.

If Option 3 is chosen we recommend an ECS prepared Legal Zero MSA report (if a report has not already been prepared) confirming the claim is completely denied and represents a strict compromise settlement of all disputed issues. Further, the settlement terms should confirm the complete denial of the claim and on that basis the parties have chosen not to submit the settlement through the CMS MSA review process.

Further consultation in regard to this CMS rule change and your options is available with an ECS MSP Compliance attorney.