Medicare Set Aside Changes Regarding Prescription Medications

Medicare, Prescription Drugs, and the MSA

On May 14, 2010 CMS Central Office published some important changes about the way Medicare will view prescription drugs in MSAs. Before we discuss the impact of these changes on future settlements, it is appropriate to mention numerous companies, and groups, acting in concert on behalf of the industry, are responsible for driving this significant and logical change.


CMS Part D: Medicare Prescription Coverage

One of the most significant changes is Medicare’s statement saying they will no longer support off-label use of drugs in MSA calculations. This decision impacts certain high cost drugs inappropriately prescribed by physicians for a long time.


While a positive effect on settlements will be seen, as the cost of these drugs will be accepted by the WCRC as “non-covered” and outside of the MSA costs, the decision also requires the  selection of an MSA vendor with a trained and knowledgeable staff of pharmacists with a serious  understanding of and ability to navigate the FDA guidelines and multiple drug compendia referenced by CMS to take full advantage of the reductions.


A team of pharmacy experts analyzed off-label usage of drugs in workers’ compensation claims and discovered the 10 most commonly prescribed drugs used for non-FDA or compendia accepted conditions are: Actiq, Cymbalta, Gabapentin, Gabitril, Lamictal, Lidoderm, Neurontin, Provigil, Seroquel, and Trazadone.


The short list is only an example of some of the more common drugs used for off-label conditions. Being on the off-label list, does not mean these drugs will never be seen in an MSA projection when the medical condition is appropriate.


CMS Operating Rules

The new CMS Operating Rules, released on 4/22/10, indicate a Brand to Generic substitution will not generally be accepted in the MSA if all evidence indicates a Brand has historically been prescribed.


Please note, a substantial number of states have statutes requiring or allowing Brand to Generic substitution except in cases where the drug is prescribed “Dispense as Written” (DAW). It’s important to be fully informed on all these statutes and/or seek legal counsel who will employ a legal argument to reduce the MSA and will supply irrefutable legal citations to support Prescription Drug Review positions.


Prescription Drug Reviews

Prescription Drug Reviews (PDR) must continue to work in harmony with clinical, pharmaceutical, and legal staff to mitigate the Part D component by making medically or legally indicated changes based on contra-indications, duplication of drugs, over-utilization, and lifetime impact.


PDR must be supported by the most up-to-date medical and legal evidence. It is gratifying to learn that after a year of struggling with drugs, the WCRC has added pharmacists and pain management specialists to their internal staff.


These new experts are a welcome addition because they understand and will accept clinical and pharmaceutical standards for coordination of future care. Statistical evidence shows an increased acceptance of drug reviews over the last 60 days and it appears that CMS is moving towards following their published review policies on Part D.


Reconsideration of Previous Denied Allocations

A most encouraging sign Medicare seriously and fully takes to heart these changes is the fact Medicare agrees it is proper for MSA rejected under the old, flawed rules can be resubmitted for reconsideration under the new rules.


In the future, these changes allow for a quick first pass approval without the need for the lengthy reconsideration procedures plaguing the industry since June of 2009.


CMS Memo: Rated Ages

In addition to addressing off-label Rx, CMS has indicated that submitters must certify “that all rated ages obtained on the claimant, at any time during that individual claimant’s lifetime, have been included as part of the submission to CMS.”


While this is a poorly worded certification given the reality of what rated ages are and how long they are valid, we understand the intent. CMS does not want insurers or submitters hiding rated ages to misrepresent the life expectancy.


Those responsible for driving these significant and logical changes, as noted above, are in the process of reviewing the language and practices for securing rated ages from and for clients and we will provide CMS the language they require in our submissions to meet this new standard. (workersxzcompxzkit)



Since the memorandum’s publication May 21, 2010, there have been many confusing exchanges on how to implement these rules in MSAs. In reality the rules are quite simple to follow if your vendor has the appropriate multi-disciplinary experts involved in the MSA process.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.


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