For the past several years, we have been successful in obtaining zero dollar MSAs approved by the MSA review contractor. The case, however, had to meet very strict criteria:
- The case was denied;
- There had to be no payments for indemnity;
- There had to be no payments of medical; and
- No prior indemnity settlement;
- Provide some medical records (if so requested by the contractor)
- Signed release from the claimant
If we had those six items and the case met the CMS review thresholds then 100% of the time the zero dollar MSA would get approved. The process was working perfectly.
Over the past week, however, we obtained verbal confirmation from the review contractor that the process is changing. In addition to the above, we are also going to have to provide one of the following:
- A court order indicating that the employer is absolved of further obligation to pay medical.
- A doctor’s note indicating that the claimant didn’t need any further treatment.
- Medical records from the claimant’s private doctors showing that he/she is not treating for the alleged WC injury.
This new requirement will minimize the effectiveness of the zero dollar program if (1) the verbal representations are accurate; and (2) it is implemented as described.
Why? Well quite simply CMS is requiring so much proof that no MSA would be needed. If the employer obtains a court order that states the employer is no longer responsible for future medical treatment or if a doctor states no further treatment is needed, then why do an MSA at all? If either of these items are available to the employer, the responsibility to pay for future medical has been extinguished. Since there is no risk of transferring an future medical expenses to Medicare, then the employer case can close the case or settle without an MSA.
The last item is interesting and it could be used in limited situations. It is possible that there exists a situation where item number three could be used to secure a zero dollar MSA, but it will probably be in limited situations.
The beauty of the current process is that it provided an avenue to obtain a zero dollar MSA where the parties were in a grey area as to whether an MSA needed to be funded or not. The proposed process, however, requires so much proof that the parties probably would never need an MSA to begin with.
Sedgwick will continue to monitor this situation as it continues to develop.
Michael R. Merlino II, ESQ.
SVP of Medicare compliance and structured settlements