In Greek mythology, Daedalus built the Labyrinth for King Minos of Knossos to contain the awful half bull/half man Minotaur. Theseus eventually killed the Minotaur, but only found his way out of the Labyrinth because Ariadne had given him a magic thread to mark his way in and out of the maze. I'm beginning to think that American health care makes the Labyrinth look like an easy walk across Boston Common on a sunny day. And, so far at least, no one seems to have found the magic thread.
Workers' compensation medical care is now getting whipsawed by two powerful and unstoppable forces: the Medicare Secondary Payer Statute (MSP) and the inexorable aging of the baby boomer generation.
We've written about these two looming catastrophes in the past. Seventy-eight million baby boomers are hard to ignore, and the MSP issue is starting to remind me of the 1958 horror movie, The Blob , wherein a gelatinous creature grew gargantuan by eating everything in its path. Two things have already occurred in the new year that bode well for continued growth of the MSP Blob.
The insurance industry goes a-begging
Last week the American Insurance Association, the National Association of Mutual Insurance Companies and the Self-Insurance Institute of America wrote to the Department of Health and Human Services Secretary Kathleen Sibelius asking her to delay the 1 April 2010 implementation of MSP mandatory reporting requirements. You can find the reporting requirements here.
The new regs lay a heavy burden on the comp insurance industry, referred to in the regs as Responsible Reporting Entities (RREs). (Such unfortunate acronyms bring me back, alas, to my days in the military.) RREs must report to the Centers for Medicare and Medicaid Services (CMS) any workers' compensation claims that involve ongoing medical payments, with the exception of most medical only claims. In their letter, the organizations list five reasons they believe an implementation delay is necessary. The first items are all about process: security protection, a lack of guidance from the CMS and an insufficient period for testing the proposed reporting procedures. The fifth reason, which is really the first reason, is the economic big stick which, when deadlines are missed, will slap fines of up to $1,000 per day per claim upside the heads of RREs. Ouch!
There's a lot more to it, and we'll be writing more about it in the coming months, but for now it's enough to know that the insurance industry is on its collective knees asking for a delay in the implementation of reporting requirements that have already been delayed and extended once.
Inedible Maryland Crabcake?
The second thing affecting MSP that happened in the new year may or may not turn out to be a big deal. On 4 January 2010, the Maryland Workers' Compensation Commission issued emergency regulations that require CMS approval for all workers' compensation settlements, not just the ones that meet the review thresholds in the CMS User Guide, version 2.0. The commission is requiring CMS review of virtually every claim up for settlement.
The new procedures require that every settlement pass through CMS before the Commission will approve it. Here is an excerpt from Maryland's emergency regulations:
A settlement that falls within the Medicare thresholds must be approved by CMS before it will be approved by the Commission.
A settlement the falls outside the Medicare thresholds may be approved by the Commission provided that the settlement agreement:
1. Contains a statement confirming that the interests of Medicare have been considered in reaching the settlement; and
2. Identifies the amount of the proposed settlement:a. Apportioned to future medical expenses;orb. Set-aside for future medical expenses through a formal set-aside allocation3. The apportionment of the amount of the settlement associated with future medical expenses shall be supported by medical evidence such as a medical opinion or evaluation.
While it remains to be seen if the Commission's action will significantly delay settlements or increase costs in Maryland, it's reasonable to assume that it will. As any workers' compensation professional knows, the longer a claim stays open, the more it costs. As a result, the Maryland approach to Medicare set asides is not a good candidate for replication in other states.
A Magic Thread
As I write this, I'm about to leave for San Antonio for the 2010 Health and Productivity Forum, sponsored by the Integrated Benefits Institute and the National Business Coalition on Health. I'll be participating in a panel discussion organized and led by Broadspire's Gary Anderberg, one of the smartest people I know. Our panel will be addressing workers' compensation medical care and costs and the effect health care reform may have on both. I sure hope that Gary has brought a few spools of Ariadne's thread. We're going to need some magic to guide us through this formidable labyrinth.