How To Pay For Medical Marijuana

Transcription

1 Emerging Issues in Workers Compensation: Medical Marijuana Lori Lovgren Division Executive State Relations

2 Federal Law on Marijuana On a federal level, it s illegal to possess marijuana for any reason; it was legal for medicinal purposes until 1970 when the Controlled Substances Act was introduced, classifying marijuana as a Schedule I drug Schedule I drugs have a high potential for abuse and are not currently accepted for medical use in the United States Why was medical marijuana categorized as Schedule I drug? Insufficient clinical trials to show benefits outweighed risks Marijuana does not have well defined and measurable ingredients consistent from unit to unit (marijuana compounds differ from plant to plant) 2

3 State Law on Marijuana Legal in 20 jurisdictions (plus the District of Columbia) for medicinal use; California was the first in 1996; Illinois and New Hampshire are the most recent in 2013 Most states require patient registry/proof of residency Most states limit amount of marijuana by the ounce or number of plants Growing number of states considering legislation (19 in 2013) Legal in 2 states for recreational use Washington and Colorado 3

4 AK Medical Marijuana Laws WA OR NV ID UT MT WY ND SD NE MN IA WI IL IN MI OH PA NY MD VT NH NJ MA CT DE ME RI CA CO KS MO KY WV VA DC AZ NM OK AR TN SC NC TX MS AL GA Legal Medical Use HI LA FL Legal Recreational and Medical Use No Laws 4

5 What Challenges Does This Present in the Workplace? No states allow employees to use in the workplace or require employers to allow its use on the job An employee who can legally use medical marijuana while off duty may still face consequences (i.e., possible termination) for arriving at work with detectible amounts of marijuana in his/her system (marijuana ingredient THC could be in the system of a user as long as three months) Many patients experience lingering side effects which may impact performance of regular work duties Some states have introduced legislation preventing employee termination for off duty medical marijuana use Some states have laws that employee cannot be terminated for off duty legal activities 5

6 How is Marijuana Used To Treat Injured Workers? Scientists have confirmed that the cannabis plant contains active ingredients with therapeutic potential for relieving pain, controlling nausea, stimulating appetite, and decreasing ocular pressure. Could be used for injured worker pain relief but it is not typically recommended as the first choice of drugs to address pain; some say at best, it would be third or fourth choice. However, others argue it s cheaper and less addictive than drugs like Oxycontin. Some argue there is no strong evidence that it is effective at improving function. Some point out that the side effects and behavioral effects make it counterproductive to the treatment of pain for injured workers. According to the National Institute on Drug Abuse, marijuana has the potential to cause or exacerbate problems in daily life, including increased absences, tardiness, accidents, workers compensation claims and job turnover. 6

7 What Challenges Does This Present in Workers Compensation Insurance? Increasingly, insurers are receiving requests to pay for medical marijuana Absence of National Drug Code creates reimbursement issues Potentially, employers and insurance companies who pay for medical marijuana could become liable for additional injuries caused by drug intoxication Given federal issues, state courts may be reluctant to approve medical marijuana treatment for work-related injuries Some states are proposing legislation/regulation that medical marijuana treatment is not covered in the workers compensation system 7

8 Possible Applicable Classifications Growing and Cultivating Code 0079 Farm Berry or Vineyard & Drivers Code 0035 Farm Florist & Drivers Testing Code 4511 Analytical Laboratories or Assaying. Sales Code 8045/8047 Store Drug Retail/Wholesale 9

9 Final Thoughts Medical marijuana is an emerging issue that will continue to receive more attention among workers compensation stakeholders in the coming years With 20 states plus DC now allowing medical marijuana, it appears there is a critical mass of popular support; but a myriad of workers compensation issues still need to be addressed 9

10 Workers Compensation and Medicare Set Asides Spider-web windows on set-aside heroes Standing lost in a landscape of tears. Jethro Tull Raji Chadarevian Manager and Associate Actuary 10

11 Workers Compensation Medical Payments Increased Importance 11

12 Anatomy of MSAs What Do They Cover? 65 or older Medicare Eligible (Class I) WC Settlement > $25,000 ESRD Social Security beneficiary for more than 2 years Likely Medicare Recipient Within 30 Months (Class II) WC Settlement > $250, or older Applied for Social Security Note: WC settlement is the total settlement amount for the claim, including both indemnity and medical benefits 12

13 Medicare Secondary Payer Legislative History Inception of Medicare program (MSP applies Only to WC) 1980 Congress enacts Medicare Secondary Payer Act 2001 GAO Audit The Patel Memorandum circulated by the CMS Enforcement begins Part D Prescription Drug Memorandum 13

14 Medicare Secondary Payer Legislative History The substantive memoranda issued by CMS are best classified as interpretive rule making efforts. With a substantive, interpretive rule, there is no requirement to comply with the public notice and comment procedures outlined in the Administrative Procedures Act Increased lower dollar threshold for Medicare beneficiaries from $10K to $25K 2009 CMS prescription drug update and pricing methodology Note: CMS is the Centers for Medicare & Medicaid Services; the SMART Act is H.R New provider to review and approve MSAs Medicare Advantage Plans could recover 2013 The SMART Act is enacted 14

15 Anatomy of MSAs Possible Scenario Contemplate settlement CMS response Estimate future medical (may include vendor) Claimant acceptance of settlement amount Includes state court approval, when applicable MSA submission Include conditional payment investigation/determination Contract with vendor to complete MSA Settlement result Acceptance of CMS MSA amount results in settlement CMS widely different estimate results settlement of medical being foregone 15

16 Vendors costs typically vary from $1,500 to $6,000 depending on case complexity, service etc. 2-year history of medical treatment is reviewed. Lifetime expectation of such treatment is typical Not clear what medical fee schedule is utilized No regard for submitter s discounts or Medicare deductibles Survey says On average, about 50% of costs are Rx Average MSA Anatomy of MSAs How are they Estimated? Unknown Varies a lot Can be anywhere from $25K to hundreds of thousands 16

17 Anatomy of MSAs Money Flow and Transactions Typically paid in lump sum to injured worker Worker must set up separate account and administer, with annual reports to CMS When funds are used up, Medicare kicks in No provision for attorney fees - those are taken out of the indemnity portion Structured settlements Varies a lot by carrier Some have reversionary clause to carrier Potentially less attractive due to low interest rates Approximately 85% to 95% of MSAs are self-administered Administered trust in some cases costs borne by insurer 17

18 MSAs and Settlement Practices States that Allow Medical Settlement AK VT ME WA CA OR NV ID UT MT WY CO ND SD NE KS MN IA MO MI WI IL MI IN KY OH WV NY PA VA NC NJ DE MA MD DC CT NH RI HI AZ NM OK AR MS TN AL GA SC TX LA FL Green = Yes Blue= No Orange = under certain conditions 18

19 MSAs and Settlement Practices Practitioner Perspective Turnaround time previously in excess of 6 months The impact of time delays on other benefits provided Estimated treatment modality and cost of pain management No formal process for determination of benefits or appeals Estimated treatment modality and cost of prescription drugs Some Concerns Resolution of conditional payment for services not related to injury 19

20 Cost Implications MSAs are of increasingly greater importance with sizably greater amounts resulting from prescription drug considerations If recent history is an indication Fiscal Year Amounts Approved Number Submitted 2008 $905,202,448 20, $1,125,261,415 24, $1,443,739,397 26, $1,102,662,414 28, / % 42% Source: GAO Report (March 2012) 20

21 A Few Thoughts Aging workforce and aging claims Many concerns for MSAs Implications on claim settlements and costs Hard to predict future medical New laws and regulations 21

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