Update on Workers Compensation Issues by Douglas J. Holmes, President UWC Strategic Services on Unemployment & Workers Compensation June, 2013
Federal Impacts on WC HR 1982 MSP Workers Compensation Settlement Agreements Act of 2013 Reintroduced by Reichert (R-WA) and Thompson (D-CA). Same as HR 5284 but deletes conditional payment language because the issues were addressed last year in general for MSPs. HR1845 Strengthening Medicare and Repaying Taxpayers Act (SMART) Enacted at the end of 2012. Notice of proposed rule making to implement, including thresholds for MSP reporting pending. CMS Advance Notice of Proposed Rule Making (CMS 6047) sought comments on use of set-asides for liability. Overwhelming opposition from primary stakeholders. CMS response to GAO report 2
Federal Impacts on WC WC/SSDI relationship still under study by GAO -WC/SSDI reverse offset still at risk. Impact of Patient Protection and Affordable Care Act (PPACA) on Health Information Reporting. Continued examination of cost cutting in Federal Employees Compensation Act (FECA). President s FY 2014 budget proposal Changes to Defense Base Act proposed in President s budget and by Rep. Cummings TRIA extension reauthorization HR 508 Grimm (R-NY) Reintro of S 669 Isakson (R-GA) Longshore Act Reform on hold. NIOSH Initiative May raise issues with OSHA and WC Abuse of Opiods and State of Washington Guidelines 3
MSP WC Settlement Agreements Act of 2013 HR 1982(Reichert R-WA and Thompson D-CA). Statutory Exclusions from MSP for certain settlements. Total settlement amounts of $25,000 or less. Not eligible for Medicare and Unlikely to become eligible within 30 months. No future medical. No limit on future medical. Definition of total settlement amount matches CMS definition. Secretary of HHS could increase above $25,000. 4
MSP WC Settlement Agreements Act of 2013 Total Settlement Amount for threshold purposes includes monetary wage replacement benefits, attorney fees, all future medical expenses, repayment of Medicare conditional payments, payout totals for annuities to fund expenses and any previously settled portion of the WC claim. Included to avoid scoring issue from Congressional Budget Office (CBO) and create bright line exemption from MSP. Define qualified set-aside and procedures for submission of set-asides for review. CMS Future Medical Amounts in compromised settlements reduced with total settlement amount 5
MSP WC Settlement Agreements Act of 2013 Future medical not to exceed amounts under workers compensation fee schedules or law CMS must approve or disapprove an MSA submission within 60 days of submission If disapproved, submitter may request reconsideration within 60 days Further appeal to ALJ and Federal Court 6
MSP WC Settlement Agreements Act of 2013 Optional direct payment of Medicare Set-aside amount to CMS. Optional Safe Harbor on agreement of the parties to pay 15% of total settlement amount directly to CMS and discharge Medicare s interest for total settlements of $250,000 or less. Total Settlement Amount for the safe harbor includes items as set forth in the definition for the threshold excluding conditional payment recovery amounts and previously settled portions of the claim; and including only the cost (but not the payout amount) of any annuities. 7
MSP WC Settlement Agreements Act of 2013 The Safe Harbor percentage will be reviewed over the first three years in effect by the CMS Actuary. If the Safe Harbor causes a significant negative financial impact on Medicare the Secretary of HHS shall adopt rules to reduce the impact and modify the percentage. Actuarial review designed to address cost issues and enable streamlining of process while generating additional up front revenue for Medicare and address scoring issues with CBO. 8
MSP WC Settlement Agreements Act of 2013 Coalition building co-sponsors in the House (Reichert, Schock, Tiberi, Roskam, Buchanan, Thompson, Braley, Larson (Neal, Loebsack). All Ways and Means and most E&C members being visited. CBO score is key again; working with House Ways and Means Staff possible inclusion with SGR (Doc Fix) or extenders bill at the end of the year. Senator Nelson (D-FLA) possible sponsor on the Senate side. Working on Republican co-sponsor; Burr (R-NC) 9
MSP WC Settlement Agreements Act of 2013 HR 1982 supporters include California Self-Insurers Association (CSIA) American Insurance Association (AIA) National Council of Self Insurers (NCSI) Property Casualty Insurers Association of America (PCI) UWC - Strategic Services on Unemployment & Workers Compensation (UWC) Washington Self-Insurers Association (WSIA) American Association for Justice (AAJ) American Bar Association (ABA) Workers Injury Law and Advocacy Group (WILG) The Self Insurance Institute of America The North Carolina Chamber The Kansas Chamber Washington Retail Association LUBA Workers Comp 10
MSP WC Settlement Agreements Act of 2013 CMS pushback includes New Contractor is eliminating backlog New Reference Guide provides clarification Items likely to score include 1) $25,000 threshold exemption, 2) reduced CMS share in compromised claims, 3) Safe Harbor 15% of total settlement payment up to $250,000 4) increased administrative cost of appeals. 11
MSP WC Settlement Agreements Act of 2013 Responses include 1) CMS already prohibits submissions of total settlements of $25,000 or less and future medical amounts are small 2) Compromised reduction amounts are reasonable and failure to recognize increases litigation and reduces payments to CMS 3) the three year review and adjustment of the 15% safe harbor assures revenue neutrality over 10 year budget period 4) Optional direct payment provisions will increase revenue to Medicare and reduce administrative cost. 12
TRIA Reauthorization Reintroduced by Grimm (R-NY) and Maloney (D-NY) for 5 year extension HR 508 44 co-sponsors with bi-partisan support Coalition to Insure Against Terrorism Current authorization ends 12-31-2014 Should not wait, but committee Chair Henserling and conservatives not particularly comfortable with government subsidy Looking for ways to move the bill UWC following and available to help 13
National Institute of Occupational Safety and WC NIOSH created Center for Workers Compensation Studies (CWCS) in 2013 to organize workers compensation data and conduct analysis WC research independent from insurance industry and NCCI CWCS to use WC data to prevent and reduce the severity of workplace injuries and illnesses. Relationship between OSHA and WC reporting could be revisited. 14
Opiod Abuse and State of Washington Guidelines Findings on Opiod abuse compelling State of Washington California Ohio UWC raised issue for national awareness with National Academy of Social Insurance in 2011 State of Washington Guidelines Effective to be used July 1, 2013 Issue for continued discussion with OWCP and other states. 15
State of Washington Opiod Guidelines Use of Opiods must result in clinically meaningful improvement in function Chronic opiod therapy (COT) should not be prescribed in the presence of current substance use disorder (excluding nicotine) and cautiously if there is past substance use disorder Use of chronic opiod therapy requires regular monitoring and documentation, assessing clinically meaningful improvement in function Random urine drug tests 16
Strengthening Medicare and Repaying Taxpayers Act (SMART) of 2012 Implementation of SMART Act required in 2013, but lagging by CMS. Issues include Determination of Section 111 reporting threshold amounts required by November 15, 2014 Revision of imposition of penalties for failure to report Definition of alternatives to SSNs for reporting Limitation on government taking action against entities to enforce.
Strengthening Medicare and Repaying Taxpayers Act (SMART) of 2012 Is HHS/CMS authority to promulgate rules sufficient to assure finality? Does appeal by RREs cover all parties that may need to appeal CP amounts that are connected to WC settlements? Appeal regulations due by October 8, 2013. Will CMS meet the timelines?
Government Accountability Office (GAO) Study of MSP Issues There is no process or policy manual describing the WCMSA policy. The WCMSA-related memorandums are accessible on the CMS website, but they are poorly organized. CMS has challenges with contractor performance related to timeliness of MSP recovery and MSA reviews. CMS has challenges related to timing of demand amounts, cost effectiveness, recovery efforts, and amounts demanded from liability settlements. 19
Government Accountability Office (GAO) Study of MSP Issues CMS Response CMS has challenges in guidance and communication related to the MSP process, Medicare set-aside arrangements, and beneficiary rights and responsibilities. Many areas are in need of improvement. CMS argues that it addressed all of these areas by Hiring a new contractor Publishing a compiled reference guide Improving the web site 20
Federal Standards for State Workers Compensation John Burton continues to advocate through NASI UWC monitoring for reintroduction of Baca bill (HR 623) 21
Social Security Disability Insurance Under Scrutiny SSA continues to seek workers compensation information from state agencies to cross-match and more effectively determine SSDI/WC offset. John Burton has proposed that reverse offsets in place in 15 states no longer be recognized by SSA in determining the SSDI/WC offset amount. Rep. Johnson conducting series of hearings on SSDI reform. Cost reduction needs could raise the issue of offsets. Discussion of possible privatization of SSDI; AEI and Brookings symposiums setting the stage for reform 22 along the lines of the state WC system.
Patient Protection and Affordable Care Act PPACA requires that HHS solicit comments on whether there could be greater uniformity in financial and administrative activities and items. The HHS view is that there should be greater uniformity and planning to move the ICD 10 reporting for health care providers. Section 111 reporting likely to follow suit in requiring ICD 10 reporting. Consideration of including WC medical information in the national health Information data base may be next. Application of HIPAA to WC medical info remains 10 an issue.
Patient Protection and Affordable Care Act UWC filed comments and the insurance industry filed comments that 1) workers compensation medical information should not be subject to HIPAA; and 2) HHS should learn from its experience with Section 111 reporting for Medicare and the difficulty of requiring ICD-9 and ICD-10 codes or other reporting standards that may not fit with workers compensation. HHS determinations with respect to health information reporting and the application of HIPAA are pending. 10
CMS Advance Notice of Proposed Rulemaking Focus on liability claims but impacts WC. CMS proposed expansion of MSP to individuals. Broad opposition of commenters to expansion of MSAs to liability claims. Recognition of need to reform current WC MSA process Defer to state fee schedules and WC law Administrative appeals provision needed Increase speed and accuracy of determinations Eliminate unnecessary submissions 10
Longshore and FECA Reform Interest in Longshore Act Reform on hold, although Senator Isakson will reintroduce S 669 if Longshore coalition asks. Reforms would include many addressed in state workers compensation reforms (e.g. choice of physicians, evidence based medicine, compensation rates, utilization reviews, etc.). S 669 would eliminate dual jurisdiction issues as a matter of federal law instead of relying on state by state law changes (Virginia recently addressed). Legislation passed by the Senate to reform the Federal Employees Compensation Act (FECA) stalled in the House due to strings added for the Administration and organized labor. President s 2014 budget proposal includes some of the FECA reforms with projected $500 million in savings. 10
FECA Reform President s 2014 Proposal Convert future retirement-age beneficiaries to a retirement annuity-level benefit Impose an up-front waiting period for benefits for all beneficiaries Permit DOL to recapture compensation costs from responsible third parties Give DOL additional tools to reduce improper payments Make other changes to improve the program Reforms would generate $500 million in savings over 10 years. 10
Legislative/Policy Outlook for HHS/CMS will proceed with rulemaking to expand its discretion to assert its interest in WC settlements. Increased coordination of CMS collection efforts with Section 111 reporting information and less flexibility in modifying future medical amounts that are potentially recoverable. Increased costs for state workers compensation agencies and parties to settlements. Fewer settlements due to cost and risk. 2013 Increased use of case law precedent in the absence of clear statutory guidance to address state/federal conflicts of law. 10
Legislative/Policy Outlook for 2013 and 2014 Review of ways to reduce cost and/or increase revenue for SSDI and Medicare Increased calls for uniformity in maintenance of health information will put pressure on WC payers to report more detail to a national data base and raise confidentiality (HIPAA) concerns as well as definitional issues with ICD -9 and ICD-10 reporting. It remains to be seen how willing federal agencies will be to work with business in the design of reporting and the relationship between federal and state law. ACA implementation will create new cost pressures on the delivery of medical services to a broader population. Without expanded resources, the availability and quality of health care for workers covered under WC law will be impacted, particularly in states with capacity issues. 10