Medicare's Workers' Comp Policies Intersect the Opioid Crisis


By Marty Cassavoy VP Medicare Secondary Payer Services

Last week the California Workers’ Compensation Institute (CWCI) published a fascinating study on the intersection between the opioid crisis and Medicare Set Aside (MSA) review and approval. The CWCI data clarifies what many in the Medicare Secondary Payer compliance community have long known; the Medicare Set Aside review program inflates future medical care costs in a way that bears little relation to the actual needs of individual patients. Where opioids are concerned, the differences can be quite remarkable.

The CWCI report, which was a couple of years in the making, followed roughly 8,000 Medicare-approved MSAs involving California workers’ compensation applicants. On the surface, the findings are not surprising, but the depth of the problem is more than a little chilling. The CWCI found that morphine milligram equivalents in approved Medicare Set Asides were 45 times the cumulative MMEs for a “control group of permanent disability claims with similar injuries.” For the most prevalent workers’ compensation injuries, opioid MME levels ranged from 33 to 78 times those of the control group.

Needless to say, the study should be required reading for anyone settling claims not only in the State of California, but countrywide. The study provides a great snapshot of the way claims payers settle claims and the cost-additive impact that CMS’ review policy can have on claims resolution. It is worth noting that the CWCI report provides data to support what many in the MSP compliance community have been saying for the better part of the last decade – CMS’ review methodology is flawed, particularly when it comes to prescription medication. This issue has been raised before, with no substantive changes from Medicare regardless of who rang the alarm, whether it be industry leaders, individual companies or the industry’s trade organization – NAMSAP.

The CWCI reports findings are fueled by CMS’ general adherence to a “lifetime allocation” philosophy.  In short, CMS’ MSA review methodology insists that an individual’s future medical care will continue relatively uninterrupted for the remainder of his or her life.  With few exceptions, that philosophy essentially forces CMS’ reviewers to project future medical care regardless of the potentially deleterious impact that it could have on a person’s quality of life or (quite possibly) their death. The review methodology applies across the board, and typically includes opioids.

What can claims payers do about it?

Since CMS has decided that it does not want to change its policy, or has at least not viewed it as an issue worth addressing proactively, insurers and self-insureds (in California and across the country) are left to develop their own internal guidance around this critical issue. As many claims payers have found, the key to successful cost-mitigation (and, ultimately, risk mitigation) in this area involves early identification and clinical intervention. Here are three components to limit the impact of prescription drugs in Medicare Set Asides.

  1. Clinical approach to MSAs coupled with strategies to change behavior is a must. It’s critical to employ a clinical review of every MSA that goes beyond merely identifying future medical and prescription drug costs. It’s one thing to identify treatments that may be costly, unnecessary or dangerous in a particular case. Merely identifying those cost multipliers that may contribute to reduced quality of life is not enough. Merely redirecting injured workers to choose a less-expensive alternative prescription is penny-wise but pound foolish, as it simply reinforces are pharmacological solution to a broader problem. A comprehensive strategy must be employed to work with the patient, the physician, and employer to ensure that modified treatment is pursued that is in the best interest of the patient.


  1. Consistently-applied claims handling protocols should be applied regardless of Medicare compliance objectives. All of the early-warning programming, case-management and early interventions are useless if they are not pursued zealously and with consistent objectives. Create a medical panel for first response to work injuries comprised of providers who understand the dangers of opioids; providers who will, if short term usage is appropriate, implement narcotic treatment plans with the injured worker and family that have targeted script end dates and target alternative treatment methods for long-term pain management. If the injured worker is treating outside a panel, immediately engage the treating provider in implementing a narcotic treatment plan focused on short-term narcotic usage. Case Managers trained in overseeing plan implementation and alternative pain management options is vital to maximizing program success. Finally, it is important to be open to treatment alternatives.


  1. MSA Submission is not mandatory. It’s important to remind people that submission of an MSA for review and approval is not As a policy Medicare recommends that it review and approve MSA proposals in conjunction with settlement. However, there is no law or policy that requires claims payers to pursue this option. Claims payers would be wise to pursue an evidence-based future medical allocation that protects all parties by incorporating professional administration and structured settlements, even as it avoids CMS’ “one-size-fits –all” approach to MSAs. This is especially true in situations where Medicare’s review methodology makes little or no clinical sense.

The opioid epidemic has claimed hundreds of thousands of lives this century. CMS should be part of the solution, not (albeit unintentionally) contributing to the problem. The CWCI report is important, as it puts numbers behind a problem that the MSP compliance community has been talking about for years.  It’s too soon to tell if the report will have any impact on the way that CMS actually reviews Medicare Set Asides. Even if changes result from this report, they are likely several months or even years away. Until that time, claims payers need to have a game plan to handle these issues.

There are no silver bullets for this problem. It takes a highly coordinated team of experts to be able to identify the problem, propose a solution, and actually follow through to implement the necessary changes in behavior that reinforce healthy behaviors and – ultimately – reduce risk (and claim costs).

Our Clinical Services and Mitigation Services not only identify problems, develop solutions, and work with the injured worker and provider to forge a path that reduce costs, but also ultimately improves the individual’s quality of life. ExamWorks Clinical Solutions has been working with its clients to attack these issues since day one by every means available, and we will work with our clients to develop custom-built solutions to address these critical problems. Contact Marty Cassavoy at or 781-517-8085 to learn more about how ExamWorks’ program can help you meet your goals.