Mitigating Medicare Set-Aside Costs: The Power of Non-Submit MSAs and Clinical Intervention

In the evolving landscape of Medicare Secondary Payer (MSP) compliance, Medicare Set-Asides (MSAs) remain a critical but often costly component. While designed to protect Medicare’s interests, traditional MSAs frequently overstate future medical needs, driving up settlement values and prolonging negotiations.

A more strategic, flexible, and proactive approach should be considered while acknowledging that there is no “one size fits all” method that works for all cases. A combined strategy uses indemnified, evidence-based non-submit MSAs alongside targeted clinical mitigation achieved through physician engagement in cases where CMS submission is expected. This approach provides flexibility to control costs while ensuring future care reflects actual medical needs.

Why MSAs Are Often Overstated

Standard MSA projections are typically built on historical utilization and treating physician opinion and recommendations, not necessarily on medically sound guidelines and standards of care. This can result in:

·         Lifetime projection of treatments not clinically indicated

·         Continued inclusion of high-cost medications (e.g., opioids, brand-name drugs)

·         Overly frequent provider visits and therapies

·         Allocation of costly surgeries which are unlikely to occur

·         Inclusion of therapies (i.e. injections) that lacked benefit but were not formally ruled out or discontinued

For carriers, self-insureds, third party administrators (TPAs), and defense counsel, these inflated projections directly impact indemnity exposure and settlement strategy.

Leveraging Non-Submit MSAs for Strategic Flexibility

Non-submit MSAs offer flexibility in applying evidence-based guidelines and claimant-specific criteria when allocating future medical care rather than taking a worst-case scenario or stagnant approach to the MSA. The key advantages are:

·         Avoiding CMS processing delays

·         Eliminating rigid CMS allocation methodologies and the potential for a counter high determination

·         Provide greater control over claim resolution timing

When properly documented, non-submit MSAs remain a compliant and defensible option while enabling cost containment. When backed by indemnification, they also mitigate risk and provide additional protection to stakeholders while maintaining alignment with regulatory expectations.

Clinical Mitigation Can Drive Meaningful Reductions

For parties who prefer to use CMS’ voluntary review program, we have found that the most significant cost reductions occur when treating physicians are proactively engaged to validate, modify, or optimize future treatment plans. This process starts at the time the file is reviewed for MSA related exposure. The first step in the process should be diligent identification of unclear treatment recommendations, unbeneficial therapies, excessive treatments, non-evidence-based treatments or those that are highly unlikely to occur, and lower cost medications alternatives. Once identified, communication with treating providers should outline any clinical concerns, request a review of the recommendations against evidence-based guidelines to confirm medical necessity and reasonableness, or seek clarification of treatment. Confirmation of the physician’s opinion and any changes to treatment plans should be documented in writing. This approach facilitates a more reasonable and clinically accurate forecast versus relying on treatment history alone, which could include outdated recommendations and/or unsuccessful treatments.

When properly executed, clinical mitigation can drive significant reductions. Common savings areas include:

·         Pharmacy Costs- switching from brand to generic medications or eliminating unnecessary prescriptions can reduce lifetime medication costs. CMS does not properly account for prescription warnings or guidelines for how long a medication should be utilized. If the medication is prescribed today, it is continued at the same dosage and frequency for life. This approach does not properly consider safety concerns as a person ages or contraindications for long-term use for some medications.

·         Frequency of Care- adjusting physical therapy, injections, or office visits based on evidence-based guidelines and medical necessity as the individual progresses. For example, if a claimant sees a pain management physician monthly, CMS allocates that care for the entire life expectancy. Absent a catastrophic injury, most individuals will not see their physician monthly over their entire lifetime and treatment will eventually taper off.

·         Durable Medical Equipment (DME)- clarifying whether ongoing needs exists prevents unnecessary lifetime replacements. For example, if a claimant was noted to be using a cane, brace and wheelchair, it may be beneficial to verify what assistive devices are actually needed on an ongoing basis rather than assuming all of them should be included in the MSA. Additionally, it is common for post-operative DME to be prescribed, but they may not be needed long term.

·         Life Expectancy Treatment Assumptions- aligning treatment duration with actual physician intent instead of default lifetime assumptions. CMS follows strict rules regarding when joint replacements and spinal cord stimulators need to be replaced that are not based on manufacturer recommendations, claimant specific circumstances or whether it would be feasible for surgery to occur in the last few years of life expectancy.

Case Study: Impact of Proactive Mitigation

Claim Overview

·         Claimant: 68-year-old female

·         Alleged Injury: Left knee pain, lumbar radiculopathy, and back pain

·         Claim Duration: 13 years

·         Treatment included twice-monthly pain management visits, long term use of multiple medications, periodic physical therapy/diagnostic testing, labs and left knee steroid injections were recommended

·         Initial MSA (Standard Approach): $331,990

Clinical review identified several red flags:

·         Twice-monthly pain management visits were not supported

·         Lower cost formulations identified for medications

·         Diagnostic and test results did not support left knee steroid injections

Outreach to the treating physician to address the above issues resulted in the following:

·         Transitioned gabapentin 300 mg tablets to capsules (the capsules are significantly less costly than the tablets per Redbook AWP which is what CMS utilizes for pricing medications) ($183,514 saved)

·         Left knee steroid injections were ruled out as a recommendation due to lack of sustained benefit ($3,288 saved)

·         Office visits were reevaluated and reduced from twice-monthly to quarterly ($33,367 saved)

With all updates documented in writing and incorporated into the allocation, the result was an updated Standard MSA in the amount of $111,821 ($220,169 saved in total) allowing for settlement of the claim with a more accurate and appropriate future medical forecast.

Conclusion

In a landscape where every dollar and every decision matters, working with a vendor who offers both the flexibility of non-submit evidence-based indemnified MSAs with proactive physician engagement embedded into the standard MSA process where CMS submission occurs is crucial. Carriers, self-insureds, TPAs, and defense attorneys can significantly reduce settlement costs while promoting better medical outcomes for injured individuals. In today’s cost-conscious and compliance-driven environment, this integrated approach is a necessity. To learn more about how Sanderson Firm can assist with your specific claim needs, contact us.