Posted on October 1st, 2006 in

As many adjusters, employers and attorneys know the issue of an employer’s/carrier’s obligation to provide future medical care and treatment for a claimant has become a much more difficult issue of late. The increased difficulty does not arise from a change in the Indiana Act or new case law interpreting the Indiana Act. Rather, the new difficulty arises from an aggressive collection program instituted by the federal government to protect Medicare.

Medicare through CMS (Centers for Medicare & Medicaid Services) is asserting that Medicare must remain a secondary payor for medical expenses incurred by injured workers, where there is an obligation under a workers compensation act to provide ongoing medical coverage for an injured worker. That position presents difficult questions in Indiana where there is no absolute obligation under the Indiana Act to provide ongoing medical coverage for an injured worker in every case. The process for obtaining CMS approval of settlement and the factors to be considered are discussed by Christine Hummel in this article. I will attempt to discuss the process or options that can be considered for resolving claims before the Board that involve a potential Medicare Set Aside (MSA) issue.

There are essentially three options for the resolution of a workers compensation claim. Those options are: 1. hearing; 2. settlement by open stipulation or agreement to compensation; or 3. settlement by stipulation of compromise pursuant to section 15 of the Act. Each option will be discussed separately as well as the conditions or circumstances that might justify the use of a particular alternative.


As there is no absolute obligation under the Indiana Act to provide ongoing medical care and treatment to a claimant after they reach maximum medical improvement you may always litigate that issue. CMS has accepted decisions by the appropriate state authority, in this case the Board, that state law does not require ongoing medical care and treatment for a claimant. In those instances Medicare does not have an interest to be protected because absent a finding by the Board in favor of the claimant that ongoing medical treatment is required and related to the accident the employer bears no primary liability and Medicare would be the primary payor for future medical. The Board has been accepting stipulations for hearing and medical evidence in lieu of testimony as a method of determining this question. Obviously, there needs to be medical evidence negating the need for future medical treatment or a lack of evidence that future treatment is necessary for there to be a basis for the Hearing Member’s decision.


Claims can always be resolved by an agreement to compensation or open stipulation of settlement. This settlement option leaves open the question of ongoing medical care or treatment. Under the Act claimants have a statutory period of time, now two years from the date for which compensation was last paid, to file and application for adjustment of claim for change of condition and seek additional benefits and compensation, including ongoing medical treatment. The advantage of a settlement by agreement to compensation or stipulation that allows the claimant to retain the right to file an application for change of condition is the limitation on the period of time for which there is an exposure. Once the statutory time period expires for the claimant to file an application for change of condition the employer/carrier is no longer primarily liable for medical expenses the claimant may incur related to accident and there is no Medicare interest to protect.

Thus, under the appropriate factual circumstances where the open period for filing an application for change of condition will expire in a short period of time you may wish to accept the risk of an application for change of condition to forego the expense of a Medicare set aside allocation. You must remember, whether using an agreement to compensation or a stipulation of open settlement, to include the dates for which compensation is being paid (that includes compensation for Temporary Total Disability and Permanent Partial Impairment). You will likely want to run the compensation for Permanent Partial Impairment as being paid from the date of injury forward to reduce the time period for an application for change of condition by as much as possible.


The settlement of claims by stipulation of compromise settlement remains an option. The difficulty with this option posed by CMS is the necessity and cost of considering and protecting any interest that Medicare may have in the settlement of these claims. A stipulation of Compromise Settlement pursuant to Section 15 of the Act is full and final and cuts off any claims the claimant may have for change of condition or ongoing medical care and treatment. As a consequence in many, perhaps most, if not all cases some consideration of Medicare’s interest must occur. Specific factual situations will be discussed below.


This is a type of claim often settled by stipulation of compromise. Until recently CMS did not consider the probability of success of disputed claims when discussing MSA issues. That has apparently changed and it is now possible to obtain a zero sum MSA or reduced sum MSA on a disputed claim that has been denied from the outset and is being settled by the parties on a stipulation of compromise. We still must follow appropriate procedures with respect to CMS approval where applicable, for a discussion of that process please consider Christine Hummel’s discussion of these points. The Stipulation of Compromise Settlement filed with the Board should still include a provision that Medicare’s interest, to the extent it has any, related to potential or actual medical expenses, has been considered and resolved by a zero sum MSA or, funded at some level by a self administered or third party administered MSA or that there is no interest to protect based upon statutory or medical opinion. It is still possible to rely on medical opinion of a treating physician, that no future medical care or treatment is related to a work accident or anticipated in the future; however you cannot rely on peer review reports, second opinion or independent medical evaluations for this purpose.


A number of issues arise with respect to claims that are initially accepted and then disputes arise as to benefits or compensation due, including but not limited to ongoing medical care. One of the steps that can be taken now in all accepted cases involves the information we request from the authorized treating physician at the conclusion of a claim. In addition to asking the authorized treating physician to offer an opinion whether the claimant has reached maximum medical improvement and assessing an impairment rating you should ask the physician to state whether any additional medical care or treatment is anticipated or reasonable in the foreseeable future. A negative answer to this question by the authorized attending physician supports a provision in any settlement agreement that Medicare has no interest to protect and no MSA is required. You cannot rely upon the opinion of peer review evaluations, second opinions or independent medical evaluations for this purpose. Obviously, reports obtained by claimants, or their counsel from a physician stating that ongoing medical care or treatment is necessary raises a dispute on this issue and renders it difficult and inadvisable to ignore the Medicare/MSA issue.

You can and should, under appropriate circumstances, include provisions for the protection of Medicare’s interest in a Stipulation of Compromise. Where an MSA is necessary, or arguably necessary, you can obtain projections of ongoing medical expenses and the current cost of funding those future obligations. It is highly recommended, and may be deemed necessary by CMS, that you include as an exhibit to any Stipulation the MSA projection as part of the terms of settlement. The Stipulation once approved by the Board must be submitted to CMS, under certain guidelines, including the Award approving the Stipulation for final review and approval by CMS. The CMS guidelines for review and approval are discussed by Christine Hummel in this article as well. Under the Indiana Act the occasions where an MSA is truly needed should be limited to those occasions where the ongoing medical needs of a claimant are extraordinary or necessary to maintain their condition or prevent their condition or impairment from deteriorating. Unfortunately, when resolving disputed claims by a Stipulation of Compromise, given the current standards applied by CMS and the evolving standards of the Indiana Act as interpreted by our Courts you must consider the MSA provision in most if not all disputed claims where there is no finding by the authorized treating physician that future medical care or treatment is not anticipated or that finding is disputed by the plaintiff, with support of a medical opinion.

You can resolve portions of disputed claims by a Stipulation of Compromise Settlement and “carve out” the ongoing medical treatment dispute for separate determination. The issue of ongoing medical treatment can be submitted to the Board for hearing or by written submission in lieu of hearing. An Award by the Hearing Member that there is no obligation to provide ongoing medical care relieves the employer/carrier of the obligation to protect Medicare’s interest and no MSA is required. Conversely, an award by the Hearing Member that ongoing medical care is the obligation of the employer will require the preparation and approval of an MSA or maintaining an open file and providing an authorized physician and monitoring as long as required by the Award and the time limits of the Act. Medicare’s interests are adjudicated and/or protected by either outcome.

One final thought concerns the timing of discussion of any MSA issues. It is much easier to handle any potential or actual MSA issue if it is discussed as part of the settlement of the claim. It can be very difficult to agree upon a resolution if the parties agree to some value of settlement and later discover that an MSA must be considered. The costs of an MSA can be high and if the parties have not agreed which of them will be responsible for funding or obtaining approval of the MSA a claim that was once thought to be settled may suddenly be in dispute. Hearing Members have uniformly stated that an agreement to settle workers compensation claim is not enforceable until approved by the Board. Thus, it is in our interest to discuss all issues and potential issues of settlement and cost of settlement at the outset and have a clear agreement on all terms and costs including MSA issues as part of the settlement to reduce the risk of settlement agreements that are not enforceable.

The choice of method for resolution of a workers’ compensation claim which includes a Medicare set aside issue can be difficult and depends not only upon the facts of the case and the medical records, but also the level of risk or the amount of liability and potential liability a party is willing to accept. Therefore, you should always consult with your attorney and MSA consultant regarding your options and obligations prior to settlement of a claim. It is always easier to find a method of resolving an issue before it becomes a problem than after that occurs.

For additional information regarding resolution of claims with MSA issues, please contact Michael Schoening at 317-485-0043 or

Posted on September 1st, 2006 in

Medicare Set Asides (MSAs) can be the turning point on which settlement negotiations succeed or fail. Recent changes issued by the federal government have had significant impacts upon the way MSA issues are addressed by parties to a settlement, and have subsequently added to the confusion already surrounding the need to account for Medicare. This article will discuss some of the more significant changes and provide a practical basis by which some of the MSA issues can be resolved.

The Necessity for a Medicare Set Aside

On July 11, 2005 the Centers for Medicare and Medicaid Services (CMS) issued a Memorandum addressing the issue of when an MSA is required in a settlement. The memo stated that no “Safe Harbor” thresholds exist which would allow the parties to a settlement to avoid complying with the Medicare Secondary Payor Statute. The memo further stated that Medicare is “always secondary to workers’ compensation and other insurance such as no-fault and liability insurance. Accordingly, all beneficiaries and claimants must consider and protect Medicare’s interest when settling any workers’ compensation case.”

The impact of this memo was to close a common loophole derived from previous memos utilized by the workers’ compensation industry to avoid having to allocate any settlement funds toward an MSA. Prior to July 2005, a procedure known as the “two-part test” was used to determine the necessity of an MSA. This memo effectively redefined the two-part test and eliminated it as a practical consideration for MSA necessity. The thrust of the July 2005 memo makes it clear that CMS requires consideration of their interests in all workers’ compensation settlements.

Items of Inclusion in a Medicare Set Aside Allocation

The memorandums issued by CMS specifically indicate that the MSA must include all medical treatment related to the work injury that would otherwise be covered by the Medicare program. Typical included treatments in most workers’ compensation claims include office visits, diagnostic testing, physical therapy, replacement of durable medical equipment, and prescription medications. In addition, the MSA must include all items projected to occur in the future that have not yet happened.

The parties to the settlement cannot avoid payment for an anticipated surgery or other invasive treatment option simply by settling the claim before the item occurs. The emphasis of the MSA directly concerns those medically necessary treatments that are expected to occur in the future. Therefore, settling a claim to avoid payment for the anticipated treatment frustrates the purpose of the MSA and fails to adequately protect Medicare’s interests in the settlement.

Means exist by which specific items of inclusion in an MSA may be removed, thereby lowering the overall total of the MSA. One method concerns a reluctant claimant to a specific recommended treatment. If the claimant is reluctant to proceed with the recommended treatment, and due to this reluctance the parties do not want to include funding for the treatment, then the parties may attempt to justify removal by obtaining sufficient written evidence to support their decision. Individually, any of the following items all help to support this assertion, though the argument may have greater support if more can be acquired:

1. A letter written and signed by the claimant clearly stating that they do not intend to proceed with the treatment now or in the future,
2. A statement from the treating physician that the claimant is no longer a good candidate for the recommended procedure,
3. A statement from the treating physician confirming that the claimant has informed the physician of their choice not to proceed with the treatment option, that the choice to not proceed with the recommend treatment or procedure is a valid medical treatment choice, and that based on these statements from the claimant the physician will treat claimant conservatively or symptomatically from this point forward.

Use of this method of reducing the MSA carries important considerations. CMS has verbally stated that any letter from the claimant will be treated as merely a “factor” in CMS’s decision as to the adequacy of the MSA, and may not be given persuasive weight. CMS will however give more weight to a claimant’s statement if the claimant is of advanced age and if the procedure is considered “high risk.” For example, a statement from an eighty-year old male stating he does not wish to proceed with a triple-level lumbar fusion is likely to be given more persuasive weight than a letter from a thirty-five year old male stating he does not wish to proceed with total knee replacement procedure.

CMS’ position regarding claimant statements is that the claimant may change their mind regarding the treatment, and should they do so nothing legally prevents them from having the treatment, thereby prematurely depleting the MSA funds. Some parties attempt to add weight to the claimant statement by including in the settlement documents language specifically prohibiting the claimant from ever proceeding with the treatment. In general, from a federal perspective, merely having this statement in the settlement documents is not adequate to bar claimant from proceeding, therefore the settlement language alone is not enough justification to exclude the treatment from the MSA.

An additional consideration regarding the use of treatment statements concerns the authors of the statements. Claimant statements have already been discussed. The strength of physician statements hinges on the physician’s relationship to the claimant. CMS tends to give far greater weight to statements from the authorized treating physician than it does to an Independent Medical Evaluator (IME) or a physician obtained for a “second opinion.” For example, if an IME physician states that the claimant is not a good candidate for a fusion surgery, but the treating physician states that the claimant is an excellent candidate, it is likely that CMS will give greater persuasive weight to the treating physician’s opinion and thereby require the MSA to include funding for the surgery. It is believed CMS takes this position because a treating physician has a greater familiarity with the specific medical needs of the claimant.

Consideration of the CMS Review Thresholds

No federal regulation, statute, or case law exists mandating that an MSA allocation be submitted to CMS for review and approval. Although CMS strongly encourages submission of a proposed set aside for approval, the July 2005 memo installed limitations upon when such approval may be requested. These limitations are now known as the “workload review thresholds.”

CMS defines two workload review threshold tests: one for Medicare-eligible persons and another for those not eligible at the time of settlement. If the claimant is eligible for Medicare at the time of settlement the only qualification is that the total value of the settlement must exceed $25,000.00.

If the claimant is not yet eligible for Medicare the qualifications are as follows; both parts of this test must be satisfied before CMS will review the proposal:

1. A reasonable expectation that the claimant will be eligible for Medicare within the next thirty months; AND
2. The total value of the settlement must exceed $250,000.00.

When computing the total value of the settlement for either threshold test, the following variables must be included in the calculation: reimbursement of any potential Medicare lien, attorney fees and costs (although not defined, it is presumed to be the claimant’s attorney), the total payouts (not the purchase price) of any annuity regardless if the stream of payments is intended to reimburse the claimant for wages or medical expenses, and any past workers’ compensation settlement funds previously paid on the claim.

Regarding the reasonable expectation of Medicare eligibility within thirty months, the following are examples of what constitutes a reasonable expectation:

1. The claimant is presently 62.5 years old,
2. The claimant is currently applying for Social Security Disability benefits,
3. The claimant is currently appealing a denial of their application for Social Security benefits.

Avoiding the Necessity for an MSA

It is important to remember that the July 11, 2005 CMS memo clearly states that there “is no safe harbor” that would allow the parties to exclude an MSA from their settlement. In practice, however, two situations exist by which the MSA requirement may be circumvented. Use of these situations is commonly referred to as utilizing a “zero-dollar” MSA.

The first situation is when the claimant has been fully discharged from treatment for the work related injury. The April 22, 2003 CMS Memo indicates that if the claimant has been fully discharged from treatment by the treating physician and the settlement does not intend to compensate the claimant for future medical expenses, then no MSA is required. However, the statement from the treating physician must be a clear and unambiguous discharge from all future care associated with the work injury. If the discharge statement indicates that the claimant should return as needed or if their symptoms return, this is not considered by CMS a full discharge from care and a nominal MSA should be established to account for the possibility that claimant may require additional medical care in the future.

The second situation is when a claim has been fully disputed or the claim is now denied by the carrier after an investigation revealed a defect in the claimant’s claim to workers compensation benefits. Disputed or denied claims are always a little tricky and even in the best of circumstances CMS may still require a nominal MSA to ensure the Medicare program is protected. If CMS disagrees with the proposed $0.00 MSA allocation, CMS will allocate an MSA it feels is reasonable. Unless CMS makes an egregious error in interpreting either the legal or medical evidence presented, the parties typically have very little recourse to request reconsideration and may be compelled to settle the claim inclusive of the MSA recommended by CMS. If a zero-dollar allocation is being considered by the parties, it is good practice to always send this proposal to CMS for review.

This article has only briefly addressed the many potential issues surrounding Medicare Set Aside allocations. For additional information regarding MSA issues please contact Christine Hummel at (603) 758-1410 or

Posted on May 1st, 2006 in

HB1307 was passed by the House and signed by the Governor as a comprehensive update of the Indiana Workers Compensation Act in 2006. Several important changes were made to the Act in this Bill.

MILLEDGE Language has been added to I.C. 22-2-2-2 which establishes that plaintiff bears the burden of proof and the burden cannot be shifted to the employer. That language reads as follows: “The burden of proof is on the employee. The proof by the employee of an element of a claim does not create a presumption in favor of the employee with regard to another element of the claim.
It is hoped this will address the consequences of the decision of the Supreme Court of Indiana in Milledge v. the Oaks which created a situation where the burden shifted to the employer to prove the employee’s injuries were the result of a idiopathic cause (unexplained or pre-existing condition peculiar to the injured worker) where the injury occurred while the employee was engaged in activities that were deemed to be a neutral risk not specific to their job duties (Milledge was walking across the company parking lot at the time of her injury).

The statute of limitations for filing an application for adjustment of claim for change of condition has been changed. The provisions of I.C. 22-3-3-37 have been modified so that an application for adjustment of claim for change of condition must be filed within two years of the last date for which compensation was paid the injured worker. This new language simplifies the statute of limitations for these claims.

Similar changes were made to provisions of the Occupational Disease Act.

Changes were made to the method of calculation of the assessment to carriers and self insured employers for the contribution to the second injury fund.

Several new board members have been appointed to replace current board members. Diane Emswiller has been appointed to replace Terry Coriden, responsible for the Marion County docket. Krysten Lester has been appointed to replace William Howell, responsible for the South Eastern docket. The effective dates of these appointments is not known to the author.

The maximum Average Weekly Wage rate and consequently the Temporary Total Disability Compensation rates have been increased. These changes become effective with injuries on or after July 1, 2006. The new rates are:

7/1/06 900.00 600.00
7/1/07 930.00 620.00
7/1/08 954.00 636.00
7/1/09 975.00 650.00

The maximum total compensation that may be paid on a claim has also increased effective July 1, 2006.

7/1/06 300,000.00
7/1/07 310,000.00
7/1/08 318,000.00
7/1/09 325,000.00

The compensation rates for Permanent Partial Impairment have been increased as well. These rates are effective July 1, 2007:

7/1/07 1-10 1,340.00 13,400.00
11-35 1,545.00 38,625.00
36-50 2,475.00 37,125.00
51-100 3,150.00 157,500.00
7/1/08 1-10 1,365.00 13,650.00
11-35 1,570.00 39,250.00
36-50 2,525.00 37,875.00
51-100 3,200.00 160,000.00
7/1/09 1-10 1,380.00 13,800.00
11-35 1,585.00 39,625.00
36-50 2,600.00 39,000.00
51-100 3,300.00 165,000.00
7/1/09 1-10 1,400.00 14,000.00
11-35 1,600.00 40,000.00
36-50 2,700.00 40,500.00
51-100 3,500.00 175,000.00


A new section has been added to the act codifying attorneys fees for those attorneys representing injured workers. Those attorneys fees shall be:
1. a minimum of $200.00;
2. twenty percent (20%) of the first fifty thousand dollars ($50,000.00) recovered;
3. fifteen percent (15%) of the any and all recovery in excess of fifty thousand dollars ($50,000.00);
4. ten percent (10%) of the value of unpaid, out of pocket and future medical expenses.

Michael Schoening
Nation Schoening Moll, P.C.
721 East Broadway
Fortville IN 46040

Posted on April 1st, 2006 in

De Quervain’s Tenosynovitis is one of the many common disorders often reported to occur as a result of “Cumulative Trauma.” Most prevalent in women (4 : 1 ratio), the incidence is highest in the age category of 35 to 55 year olds.

Etiology: Activities that result in forceful, repetitive or sustained thumb abduction (hitch hiker) with ulnar deviation (little finger moving towards the outside portion of the forearm) are often associated with development of DeQuervain’s symptoms. Activities that are most commonly performed in the workplace that result in this movement include: opening of jars, wide grasp such as with pliers, thumb pipetting or lifting in a manner similar to picking up a child under their arms. While acute trauma, such as a sudden forceful pull to the thumb, can result in De Quervain’s symptoms, incidence is very low.

Symptoms: Symptom most commonly presents as pain on the thumb side of the wrist. In more advanced cases, swelling and/or triggering (catching) can occur with thumb movement. Clinically, De Quervain’s is often diagnosed via a positive (+) Finkelstein’s test.

Pathology: Pain is a result of inflamed tendons of the thumb (APL and EPB) irritating the sheath (first dorsal compartment) through which they pass. As the irritation progresses, the sheath will thicken and as a result, the tendons are unable to glide smoothly.

Treatment: Initial treatment should focus on the reduction of inflammation via thumb immobilization and anti-inflammatories. Spica splints are often provided by an occupational therapist to prevent excessive thumb extension/abduction. Therapy should focus on modalities for inflammation such as iontophoresis, and manual mobilization to reduce the risk of excessive scarring and adhesions during the healing phase.

Prevention: With job tasks that require repetitive hand movements, particular attention should be given to the hand positioning. Tasks should be completed with hands kept in neutral position, avoiding wide grasp and repetitive triggering with the thumb or fingers. “Ergonomically” designed tools may reduce risk due to the design “encouraging” use in a safe upper extremity posture.

Posted on March 1st, 2006 in

“Space-age Technology” is a term that comes to mind when discussing the Game Ready System. The same technology used in NASA spacesuits has been adapted and refined by scientists and doctors to bring you the ultimate in cooling and compression. The wraps were ergonomically designed to fit the ankle, knee, hip, back, shoulder and wrist. Aside from being very comfortable the wraps surround the affected area for complete coverage.

The Game Ready System is simple and safe to operate because it only uses ice and water. There is a hose attached to the wrap which allows the cold water to cycle around the damaged area picking up the heat and dropping it off in the reservoir to be cooled. The water is continuously cycling through the reservoir to remain cold. Your patients’ pain scores will drop dramatically. Meanwhile the intermittent compression will perform its “squeeze” and “release” actions to reduce swelling and speed recovery time.

Game Ready is the leader in the class of cooling/vasopneumatic devices. “Seventy-five pro teams, including 25 NFL clubs use it, as do 137 schools and more than 400 individual athletes.”(1) Patients and clinicians alike enjoy using the Game Ready system because it is easy to operate and the results are almost immediate. It is not only for your athlete but anyone experiencing pain and/or swelling could certainly benefit from using Game Ready. Patient compliance will sky rocket as will your business once word travels around about the Game Ready ACCELERATED RECOVERY SYSTEM.

1. Anderson K. Totally Cool. Sports Illustrated. 2005; November.

Posted on February 1st, 2006 in

Direct electronic data interchange (EDI) transfer of claims is something we are beginning to take for granted in the health benefits arena.  EDI, however, is an untapped resource in the workers’ compensation arena that could revolutionize the ability to more effectively utilize PPO networks.  In a direct EDI setting the workers’ compensation claims manager receives and records the provider bill, then extracts and posts key claim information on an Internet FTP site.  The managed care organization is then able to download the claim information, reprice the claim and return it to the organization’s FTP site in an encrypted, secured manner, generally within 24 hours.  This process provides the workers’ compensation managers more flexibility in their use of PPO networks, which has resulted in significant increases in cost savings.

The effect of HIPPA: The first viable option available to payors and providers wishing to transfer claim data electronically were the national clearinghouses.  These remain the best resources for many providers submitting claims to payors as the multiple site connections can reach into the thousands.  Payor to PPO/MCO arrangements, however are more direct in nature and less numerous.  This provided an opportunity for direct electronic claim transfer thereby eliminating the expense of the clearinghouse.  However, even with the growing Internet as a communication platform, the market place lacked a common language with which to communicate.

It was not long ago that the health benefits industry was faced with the federally mandated Health Insurance Portability and Accountability Act (a.k.a. HIPPA) that required, among other things, a standard format for EDI claims transfer.  Although the HIPPA “standard” has room for a degree of interpretation, it did create a fairly uniform platform that allowed claims administrators and PPO’s a format that was much more uniform and defined.  Familiarity with the common HIPPA format (or ANSI 837) promoted the ability for organizations on different systems to communicate claims transfer.  This transfer was further assisted by the use of FTP or file transfer protocol sites via the Internet.  The cumulative effect has been to create a situation where direct claims transfer is now fairly commonplace and can be achieved without significant programming resources.

So why have we not seen the workers’ compensation industry embrace direct EDI? The issue revolves primarily around the claims and management systems utilized by many of the workers’ compensation managers.  Workers’ compensation claims systems are primarily “liability” claim systems.  For instance, these systems view a “claim” as an incident of injury as opposed to an individual provider “bill”.  Such claim may include other forms of compensation than direct medical treatment.  One result of this is that the liability claims systems simply do not have the flexibility that health claims systems have in their ability to interface with managed care networks and pricing.  Health claims systems made the transition to allow fairly flexible interface with internally and externally repriced managed care claims some years ago.  The liability claims systems utilized by workers’ compensation administrators are generally not this flexible.  Certainly there are exceptions to this, however these systems often require a programming effort to literally build a program module to administer and load each specific managed care arrangement with which they interface.

What are the advantages of direct EDI transfer to workers compensation administrators?  Primarily, direct EDI transfer allows the workers’ compensation management organization the ability to significantly decrease their administrative costs, increase accuracy, and allows the flexibility to utilize multiple networks in order to maximize cost savings in specific geographic areas.  Administratively, there is a very direct savings in both programming time and system maintenance.  Workers’ compensation management organizations have reported the need for up to 120 hours of programmer time to implement a load a new PPO network option.  Updates can easily run to over 1000 field changes per month for a single state PPO.  These costs can be reduced or completely eliminated by an EDI claims transfer as it places the repricing function back at the PPO.  Repricing at the PPO also increases accuracy.  The intricacies of any given PPO’s fee structures and provider arrangements are best understood and administered by that PPO.  This reduces the amount of claim corrections and subsequently reduces customer service issues with the payor client and providers.

Most significantly, however, the EDI process provides the workers’ compensation industry a new degree of flexibility with their PPO options.  Currently the workers’ compensation administrators and managers are tied into network arrangements that may not be the best fit for them in all of their market places, but the administrative cost of “building” a module for a new PPO vendor is cost prohibitive.  Direct EDI transfer of claims allows the claims administrator the freedom to select from a variety of PPO options on a national, regional or local basis that best fit their client’s needs and maximize cost savings.

An example of direct EDI at work: 

The ASU Group (Recovery Unlimited) is a workers’ compensation management organization providing medical management, PPO management (bill review), and recovery services to the workers’ compensation payor community.  In early 2004, ASU contracted with a workers’ compensation carrier that had network needs in Indiana.  The decision was made to implement the connection with the network as a direct EDI claims transfer.  In addition to the advantages listed above, this was a major benefit simply in claim handling.  As in many situations the provider bill was often submitted to the employer first, went to the carrier, then was forwarded to the bill review agency (ASU).  Interjecting another step in the process would have complicated the process and caused a customer service delay.

The completion of the direct EDI claims transfer was tested and implemented in under 30 days resulting in: 1) the reduction of a step in the physical claim process, 2) reduction of overall administrative expense, 3) reduction in claim processing time, and 4) increased cost savings by accessing a local network that provides greater provider access.

The business of cost savings in the medical arena moves very quickly to adopt technology but it sometimes takes some time to move into all areas of our market place.  The opportunities presented by direct EDI claim transfer can work to revolutionize the relationship between workers’ compensation managers and PPO’s.  Increasing the flexibility to use appropriate network choices and decreasing administration efforts result in material and quantifiable cost savings.  Carriers and employers who are self-funded for their workers’ compensation should consider the question of whether they are really accessing the best PPO networks to maximize their savings or simply utilizing what is “hard-wired” into their claims systems.  Technology has provided us better options.

For more information about this article of Indiana Health Network please contact Bruce Smiley at 317.284.7642 or via e mail at   You can also visit their website at

Posted on November 1st, 2005 in

Over the past few years, a new role has emerged for the certified athletic trainer (ATC). Athletic trainers have traditionally cared for active people of all ages and levels of sport, amature and professional. Now, the skills and education of the ATC are being utilized by physicians in a clinical setting.

Many physicians feel that the ATC is a perfect fit as a physician extender for several reasons: All certified athletic trainers must have a bachelor’s or master’s degree from an accredited college or university. These academic programs are accredited through an independent process instituted by The Commission on Accreditation of Allied Health Education Programs (CAAHEP). Athletic training programs also require content areas of study such as acute care of injury and illness, exercise physiology, pathology, therapeutic modalities, therapeutic exercise and rehabilitation, human physiology/kinesiology, risk management, medical ethical and legal issues to name only a few. ATCs must also pass a national certifying exam and obtain state licensure to practice under the direction of physicians. Furthermore, ATCs are recognized by the American Medical Society (AMA) as allied healthcare providers.

In 2000, the AMA granted Current Procedural Terminology (CPT) codes for athletic training evaluation and reevaluation (97005, 97006). These codes became effective in 2002. The ATC is also able to bill for “physical medicine codes” such as 97110 (therapeutic exercise per 15 minutes) and 97116 (gait/crutch training) as incident to physician services. It is important to note that these are not billed as “physical therapy” services. Licensed physical therapists are the only individuals allowed to bill for “physical therapy” services. While a degree in physical therapy is different than a degree in athletic training, the knowledge base, in regard to orthopaedic injury care and rehabilitation, is essentially the same. In fact, the education of the ATC is focused primarily on orthopaedic injury prevention, recognition, assessment, treatment and rehabilitation. Physical therapists receive a broader scope of training in rehabilitation of pediatric, stroke and neurologically impaired patients as well as wound care.

The responsibilities of the ATC as a physician extender may include the following: injury assessment, injury prevention and patient education, patient scheduling, surgical assistant, communicating with other health care entities, and the rehabilitation of injuries. In many cases, the ATC can simply bridge the gap between the patient’s office visit and formal physical therapy, allowing the patient to begin the rehabilitation process immediately.

This model also has several other benefits such as better patient education, reduction in wait time for rehab and it provides cost effective outcome oriented health care for orthopaedic patients. In addition, since the rehabilitation is performed in the physician’s clinic, patients may often feel more accountable, thereby increasing compliance.

This new role for the ATC simply provides another option for workers compensation patients and is quickly gaining acceptance by other third party payers.

Posted on October 1st, 2005 in

Dupuytren’s disease is a benign process characterized by the progressive thickening and contracture of the fascial bands of the palm and digits. This thickened fascia, typically described as nodules and cords, may lead to the contracture of the digits predominantly at the MP and PIP joints. The cellular and molecular mechanisms of contracture are now better understood however the cause is yet to be completely determined. Dupuytren himself first attributed the cause to a person’s occupation since he saw the disease in heavy laborers and coachmen. There is now no clear evidence that occupation or lifestyle, including smoking and alcoholism, play a role in the development of Dupuytren’s disease. Most epidemiologic studies point towards genetics with the disease having increased prevalence in Northern European populations and those with Northern European ancestry. Environmental factors may play a role as suggested by recent studies that show increased rates of the disease in Indian patients living in England while the rate of the disease in India is very low.

Surgery currently is the only treatment for Dupuytren’s disease and is indicated for progressive contracture of the fingers, although collagenase injections are currently in FDA trials. The goal of surgery is to straighten the fingers, however, this often requires prolonged postoperative nighttime splinting and hand therapy. Surgical treatment typically involves complete excision of the diseased tissue or “cords”. Severe contracture may require that the palmar incision remain open and allowed to heal secondarily over three to four weeks. In other instances, skin grafting may be necessary. Severe contracture often cannot be completely corrected and recurrence may be as high as fifty percent in some instances. Patients generally do not require daytime splinting and may return to work once the incisions have healed well, about 2 weeks post-op. Return to heavy labor may be postponed 4-6 weeks until grip strength returns. Recurrence is higher in those patients with onset before forty years of age and with Dupuytren’s diathesis (concurrent presence of foot nodules and Peyronie’s disease.) Non-painful nodules without contracture may be monitored while hand surgery consultation may be required at the first sign of a fixed flexion contracture.

Dr. Scott P. Olvey is a board eligible orthopaedic surgeon with the Center for Orthopaedic Surgery and Sports Medicine. He is fellowship trained in disorders of the upper extremity including: hand, wrist, elbow and total shoulder replacement.

The Center for Orthopaedic Surgery & Sports Medicine
8141 S. Emerson Ave., Suite. A
Indianapolis, IN. 46237

Phone: 317-888-PAIN
Fax: 317-888-1591

Posted on September 1st, 2005 in

This terminology and acronym has become the latest “buzz-word” in the insurance/legal industry and is fast becoming a key ingredient to bringing a claim to settlement and conclusion. This process is currently common practice in the Worker’s Compensation and Liability arenas, and could move into other areas of insurance coverage as it is assimilated into each carrier’s routine.

What is a Medicare Set Aside Allocation?

A MSA as a simple concept, is an accurate projection of the lifetime future medical costs associated with a claim, that are anticipated to be Medicare covered services. It is a cost projection that goes the additional step to include a separate description and “allocation” of those services that would traditionally be covered by Medicare if there was not another funding source available. Those costs are “set side” from the “allocation” for the reimbursement of qualifying future medical expenditures in an effort to protect Medicare’s interest.

How did this concept evolve?

In an effort to conserve Federal dollars and protect the Social Security and Medicare funds, the concept of the Medicare Secondary Payer (MSP) legislation was introduced around 1980, although it did not come to the forefront until 1995. The core concept of this legislation proposed that Medicare would always remain the “secondary payer” if a “primary payer” existed, regardless of the status of the claim with the primary payer. This statute was adopted to protect Medicare’s interests by curtailing the common practice of shifting the burden of the cost of future care to Medicare, in the event of a claims settlement. The statute applies to liability cases and benefits available under the Federal Black Lung and LongShore programs, but the majority of the focus lies with Worker’s Compensation benefits, as they represent the largest percentage of claims. In May 2001, after a lengthy study, a report was submitted to Congress to confirm the potential loss of billions of dollars if the statute was not enforced. At that point the Center for Medicare and Medicaid Services (CMS) was created within the HCFA structure, to focus on coordination of benefits from primary payer sources. According to the Policy enacted 7/11/01, CMS requires that Worker’s Compensation carriers proposing settlements that include dollars allocated for future medical expenses obtain prior approval of the MSA from their regional CMS office.

Who is involved?

Medicare Set Aside Allocations require input from the providers, injured worker, plaintiff and defense councils and the carrier, to provide the most accurate and up to date information to compile the MSA. Provision of current data allows the consultant to offer the most valid future care projections and the most accurate representation of an appropriate set aside allocation to protect Medicare’s interests. Once an allocation is complete, it is submitted to CMS for approval.

How do you determine if a claim requires an MSA?

In the CMS policy memorandum of 2001, and subsequent revisions, there are two categories of settlements that require MSA consideration:

Class 1 – the settlement involves an injured party that is already a Medicare recipient, regardless of the dollar amount of the settlement. This would include the older injured worker who is Medicare eligible based on age, as well as the younger Medicare recipient based on SSDI eligibility.

Class 2 – this designation is a “two-pronged” test:
the injured party must have reasonable expectation of becoming a Medicare recipient within the next 30 months i.e.: they have applied for SSDI or they have been denied and are appealing the decision or they are 62 ½ years old or they have end stage renal disease, but are not yet on Medicare

AND – the TOTAL settlement value (indemnity, medical and attorney fees) is greater than $250,000.

What if the injured worker doesn’t want to “set-aside” part of their settlement?

This process and policy is based on legislation that is now being enforced through the efforts of the regional CMS offices. It is no longer a voluntary process, it is mandated, if the claims’ settlement falls into one of the categories noted above. All the parties involved can be held liable if the set aside allocation does not adequately cover Medicare allowable future medical expenses and can be fined or held responsible to provide additional funding. The lack of a proper MSA can also jeopardize the recipient’s future Medicare eligibility, should CMS determine that appropriate allocation arrangements were not included in the original settlement. Therefore, it is no longer negotiable to eliminate the need for a MSA; it must be included in the settlement. The approval process through CMS currently takes five to nine months, depending on the Region of submission. As a result, some carriers have elected to proceed with the settlement without prior of approval of the MSA by CMS, with the understanding that additional funds will be allocated, should the original MSA not meet CMS approval. Proper and accurate documentation is crucial!!!!!!! If then, complete information is available to formulate and submit an appropriate MSA it is unusual for CMS to reject the proposed MSA after the fact.

Richard Hess Jr RN CCM, CNLCP and Lynn Karfomenos RN CCM CNLCP are the managing partners of Hess, Karfomenos & Associates LLC, an Indiana based firm providing a continuum of highly refined specialty services to the Worker’s Compensation and Group Health Insurance Markets as well as to Plaintiff and Defense Law Firms not only in Indiana, but also nationwide. The firm’s services package includes; Life Care Planning, Medicare Set Aside Allocations, Medical Case Management and Medical-Legal Review and Analysis. Nationally recognized in the fields of Medical Case Management and Life Care Planning, Ms. Karfomenos and Mr. Hess are currently serving nominated terms of office on the Certification Board of the American Association of Nurse Life Care Planners

Posted on June 1st, 2005 in

The subject of nurse case managers has been a subject that is of great interest to the Worker’s Compensation Board of Indiana. Many questions have been raised with respect to the duties, responsibilities, and the scope of the nurse case manager’s participation in a worker’s compensation claim. We recently completed a Board-sponsored seminar for attorneys across the state on the issue of nurse case managers. We will set forth below the law with respect to the discoverability of nurse case manager reports and the basis responsibilities of nurse case managers as they fit into the Indiana worker’s compensation system.

The Code of Ethics for nurses is available on the American Nursing Association web site ( Under the Nurses Code of Ethics, a nurse’s primary commitment is to the patient. There is a core value of respect for human dignity, which requires that the nurse should honor dignity in every patient encounter. The Code also addresses the changes involving health care financing, and potential conflicts between economic interests and professional integrity. The Code states that it is ethically incumbent upon the nurse to be sensitive to the potential effects of financial cutbacks and conflicts which may put a patient at risk of substandard health care.

Nurse case managers also have a legal duty to injured employees. That extends beyond the ethical considerations noted above. A nurse case manager’s failure to properly coordinate and communicate under certain circumstances could create an unreasonable risk of harm and give rise to a duty to the injured worker. Campbell v. Eckman/Freeman & Associates, 670 N.E. 2d 925 (Ind. Ct. App. 1996).

It is recognized that nurse case managers are often put in a difficult situation. There is a certain connection with many injured workers, and a sincere effort to see them recover from their injuries. There is also the added responsibility of moving the claim to a reasonable conclusion in the face of certain claimants who expect to be made completely whole as they were pre-accident. Sometimes this can be a difficult balancing test. However, as a general rule, it is recommended that the nurse case manager provide the medical information and that the employer or insurance company provide the decision making process with respect to the information provided.

It is understood that nurse case managers are frequently placed in the difficult position of managing a claim, managing difficult claimants, and the expectations of employers. Added to this is the mistrust that some claimants and Plaintiff’s attorneys bring to the process. For that reason, it is recommended that nurse case managers proceed to conduct the management of the case as objectively as possible in all reports and actions. For instance, we frequently hear Plaintiff’s attorneys complaining that nurse case managers seem to have an inappropriate relationship with doctors’ offices, and are permitted to roam freely in the hallways and communicate with staff members not necessarily involved in that case. This causes claimants to believe that the system is stacked against them. It is recommended that appropriate sensitivity should be maintained with the idea that the injured workers do not necessarily have a familiarity with the worker’s compensation process.

Disputes often arise concerning the discoverability of nurse case manager reports. The Worker’s Compensation Board incorporates by reference the provisions of Trial Rule 26 through Trial Rule 37, which are the trial rules pertaining to discovery. 631 IAC 1-1-3. Discovery is guided by the general provisions of Indiana Trial Rule 26. Trial Rule 26(B)(1) provides:

Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, which it relates to the claim or defense of the party seeking discovery or the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissable at trial if the information sought appears reasonable calculated to lead to the discovery of admissible evidence.

“The discovery rules are designed to allow a liberal discovery process, the purposes of which are to provide parties with information essential to litigation of the issues, to eliminate surprise, and to promote settlement.” National Engineering & Contracting Co., Inc., v. C & P Engineering & Manufacturing Co., Inc., 676 N.E. 2d 372 (Ind. Ct. App. 1997).
The work product privilege is provided for by Trial Rule 26(B)(3), which provides:
[A] party may obtain discovery of documents. . .prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representative (including his attorney, consultant, surety, indemnitor, insurer or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of his case and that he is unable without undue hardship to obtain the substantial equivalent of the material by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of any attorney or other representative of a party concerning the litigation.

In the context of an insurance claims file, “a document generated or obtained by an insurer is entitled to the protection from discovery found in TR 26(B)(3) if the document can fairly be said to have been prepared or obtained because of the prospect of litigation and not, even though litigation may already be a prospect, because it was generated as part of the company’s regular
operating procedure.” Demoss v. Dobson, 540 N.E. 2d 655 (Ind. Ct. App. 1989).
The Worker’s Compensation Act specifically states in I.C. 22-3-36, “No fact communicated to, or otherwise learned by, any physician or surgeon who may have attended or examined the employee, or who may have been present at any examination, shall be privileged . . .” Although this section only refers specifically to physicians and surgeons, it logically extends to nurses as well.

As noted in the above research materials, all parties involved should expect that the nurse case managers’ notes will be subject to review by the Plaintiff and Plaintiff’s attorney. We frequently see reference to cost-saving measures in connection with the case manager’s work or certain personal items placed in regarding an assessment of the injured worker that is separate from the medical evidence and documentation. It is recommended that the reports remain strictly medical in nature with respect to the treatment and the treatment plan, and that any other communication be made preferably with adjusters to the extent that it is necessary. Any cost-saving documentation should be placed in another format.