Effective ERISA Recovery in Workers’ Comp Settlements

Effective ERISA Recovery in Workers’ Comp SettlementsMembers of the claims management team and workers’ compensation defense attorneys need to understand a number of issues to be effective.  In the area of resolving liens from workers’ compensation claims, it is important to recognize the complex issues associated with ERISA liens.  Failure to do so can result in added time handling a claim, as well as additional and unnecessary expenses.

 

 

What is ERISA?

 

The Employee Retirement Income Security Act (ERISA) was passed into law by Congress in 1974.  ERISA is codified in part at 29 U.S.C. §18, et seq., and establishes minimum standards for pension plans and other employee benefit plans.

 

ERISA claims arise when an employer-sponsored group health plans (GHP) provided by a private medical insurance company under the law pay for medical care and treatment arising from a workers’ compensation claims.  Given the unique nature of a qualifying ERISA plan, their ability to recover is defined by federal law and contractual language – not by state laws that would otherwise be applicable.

 

 

Determine ERISA Application

 

As a general rule, ERISA only applies to Plans created under the Act and “self-funded” by an employer who assumes the financial risk for providing health care benefits to its beneficiaries.  Generally, ERISA does not cover plans established for government agencies, churches or plans used to comply with state workers’ compensation laws, unemployment or disability matters.

 

The unique nature of ERISA Plans places additional burdens on parties to workers’ compensation claims.  The result is often an unwillingness of qualifying Plans to negotiate reduced settlements.  Due to the distinct nature of applicable Plans, federal law allows for them to bring a civil action to recover under 29 U.S.C. §1132(a)(3).

 

 

 

ERISA Plan Language: The Devil in the Details

 

All ERISA Plans have language explaining their rights of recovery in instances where medical benefits were paid on behalf of the claimant in a workers’ compensation and other personal injury claims.  Examples of Plan language with expansive recovery rights include the ability to be reimbursed “in full, and in first priority, for any medical expenses paid by the Plan relating to the injury or illness.”  In these instances, courts have largely ignored equitable arguments such as the “Made Whole Doctrine,” which limit recovery by an interested third party.  Due to the rejection of this and other defenses, ERISA Plans are allowed to recover first, and without the need to compromise.

 

 

Practice Pointers when Dealing with ERISA Plans

 

Federal pre-emption and judicially recognized contract interpretations often make it difficult for attorneys and members of the claims management team to resolve ERISA intervention interests.  Notwithstanding the special position of Plans, there are proactive steps one can take to resolve the claims effectively and efficiently:

 

  • Obtain a copy of the Plan contact and reimbursement language. Sometimes a Plan’s right to reimbursement may be favorable to quick resolution and not ironclad;

 

  • Present the facts of the case in a favorable light to your position. Each workers’ compensation claim is different and unique.  Although ERISA Plans have a “super lien,” they are often willing to take a reduced amount based on emotional appeals;

 

  • Keep the Plan administrator or their attorney posted on the status of a claim and include them on all procedural correspondence such as status conference and settlement negotiations; and

 

  • Although ERISA Plans may, in fact, have superior recovery rights, never be a jerk. Instead be respectful at all times.

 

 

Conclusions

 

The unique nature of ERISA often makes it difficult to settle a workers’ compensation claim.  Identifying the interests of the Plans is essential to deal with them productively.  There are also best practices one can implement to resolve claims and benefit the bottom line of a workers’ compensation program.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

CMS Statement on Opioids and WCMSAs Provides Little Clarity as to Future Review Practices

CMS Statement on Opioids and WCMSAs

In a recent post on its website, the Centers for Medicare and Medicaid Services (CMS) acknowledged the opioid crisis in this country, but provided little clarity as to how it intends to address this crisis in its review and approval of Workers’ Compensation Medicare Set-Asides (WCMSAs).

 

The 12/14/2017 statement provides as follows:

 

CMS understands the concerns regarding the opioid crisis occurring in the United States. We are committed to ensuring the determination of Workers’ Compensation Medicare Set Aside Arrangement (WCMSA) amounts are an adequate projection of claimant’s needs for future medical services and prescription drugs. CMS continually evaluates all policies and procedures related to WCMSA amounts. Any changes that Medicare pursues related to this issue will be reflected in our WCMSA amount review process.

 

More information on the WCMSA process can be found in the WCMSA Reference Guide.

 

We assume the above statement may be, in part, related to the California Workers Compensation Institute (CWCI) study finding nearly 70% of CMS approved MSAs require funding of opioids over an injured worker’s life expectancy (See our article, Opioids in the MSA . . . Challenges and Strategies, where this study is discussed). While we credit CMS’s Office of Financial Management (the CMS department which oversees the WCMSA review program and contractor) with recognizing the opioid crisis, what is left uncertain is what specific actions CMS is to take to address this problem in WCMSAs. Instead, CMS provides a vague statement indicating any changes related to the opioid issue will be reflected in its WCMSA review process and then cites its WCMSA Reference Guide.

 

CMS does not cite to a particular section of the guide, but we assume the following would be the most pertinent:

 

 

Drug Weaning/Tapering

 

Drug weaning commonly occurs with pain medications, such as opioids, especially when claimants’ work injuries improve. The WCRC takes all evidence of drug weaning into account, although in most circumstances the WCRC cannot assume that the weaning process will be successful. Usually, the latest weaned dosage is extrapolated for the life expectancy, but again, they assess all records when making these types of determinations. Where a treating physician believes tapering is possible and in the best interests of the claimant, CMS will consider all evidence in making a WCMSA determination, including medical evidence of current actual tapering.

 

Based upon the Tower MSA CMS Reconciliation Module, which reviews all MSA determinations for the purpose of identifying trends in CMS WCMSA allocation practices, CMS consistently disregards any active weaning or tapering process or scheduled reduction to future medication use and instead takes the latest dosage found in the medical records and/or prescription history and extrapolates it over the claimant’s life expectancy.

 

The question then is whether this December 2017 statement signals a departure by CMS from these past practices to a policy which will now give more weight to a weaning or tapering schedule from the treating physician which translates into limitations on the allocation of opioids in the WCMSA. We will take a wait and see approach in this regard.

 

It should be understood though that even were CMS to limit the allocation of opioids in the WCMSA, this in no way prevents the claimant from using the WCMSA funds for filling opioid prescriptions in excess of what is allocated. The reason being is CMS rules for administering a WCMSA allow for the funds in the account to be used for any Medicare-covered injury-related treatment or medication. As such, with a valid prescription, there is nothing to stop a claimant from converting funds allocated to a surgery to pay for medications, including opioids. It will remain then in the hands of the claimant’s medical provider to wean the claimant off opioids and other medications not intended for long-term use.

 

 

Practical Implications

 

As always, we will monitor CMS WCMSA determinations for signs of any changes to their allocating practices for prescription medications, especially in regard to opioids. However, we have to assume that until we see any changes, CMS will continue to follow its policy of taking the most recent medication dosage and frequency and pricing it out over the claimant’s life expectancy.

 

What this means then is opioid misuse must be addressed prior to submission of a WCMSA to CMS with any actual elimination of opioids documented in the medical records prior to submission of the MSA. Tower MSA is committed to working with our clients on reduction and elimination of opioids prior to CMS submission. Our Pre-MSA triage service is uniquely designed to identify such MSA cost-drivers and recommend intervention strategies, including escalating the matter to our Internal Pharm. D. for direct contact with the treating physician. Resulting reductions in opioid use limit MSA costs to the employer and provide for a healthier injured worker over his or her lifetime.

 

 

 

Author Dan Anders, Chief Compliance Officer, Tower MSA Partners. Dan oversees the Medicare Secondary Payer (MSP) compliance program. In this position, he is responsible for ensuring the integrity and quality of the MSA program and other MSP compliance services and products. Based upon his more than a decade of experience in working with employers, insurers, TPAs, attorneys and claimants, Dan provides education and consultation to Tower MSA clients on all aspects of MSP compliance. Contact: (847) 946-2880 or daniel.anders@towermsa.com

Case Study: 61.4% Savings on MSAs with Integrated Opioid Approach

The workers’ compensation industry’s efforts to reduce unnecessary opioid use doesn’t seem to have caught on with all sectors yet. A new report shows that in California, federal government approvals of funds for opioids in Medicare Set-Aside (MSA) agreements greatly exceed the recommended levels in evidence-based medical guidelines.

 

It’s a sobering report that experts say places the affected injured workers at increased risk of opioid-related dependence and addiction. The authors suggest public policy changes are needed to the government’s approval process for the MSAs. In the meantime, there are actions payers can take to rein in the costs — and risks — of overuse of these medications and still obtain government approval.

 

 

Opioids and MSAs

 

An MSA is a financial agreement in which injured workers who are or soon will be covered by Medicare are given funds to settle their workers’ compensation claims. Included are allotments to cover estimated future medical expenses.

 

MSAs are not required to be submitted for approval by Medicare; however, they offer claims administrators a degree of protection against future liability if the funds run out too soon and Medicare becomes the primary payer. Having an approved MSA means the government is less likely to seek repayment.

 

The California Workers Compensation Institute analyzed nearly 8,000 California MSAs that had been approved by Medicare in 2015 and 2016.  They focused on dollars earmarked for opioids and found “that nearly 70 percent of federally mandated and approved California workers’ compensation MSA settlements for injured workers require funding for decades of opioid use, often at dangerously high levels and in conjunction with other high-risk drugs. Such a requirement exceeds federal and state clinical guidelines and places patients at high levels of risk.”

 

For comparison, the authors looked at stats from a case-matched control group of 71,771 closed workers’ compensation permanent disability (PD) claims with the same types of injuries.

 

Here’s what they found:

 

  • 69.4 percent of the MSAs included allocations for opioids, compared to 59.1 percent of the PD claims.
  • 27.7 percent of the approved medications in the MSAs were for opioids.
  • The average amount set aside for opioids in the MSAs was $33,113, or 32.7 percent of the total prescription drug allocation.
  • The average daily morphine equivalent dose (MED) was 54.7, and more than 10 percent of the MSAs with opioids had an estimated MED level of more than 90 per day. Medical guidelines, including the official California Workers’ Compensation Medical Treatment Utilization Guidelines (MTUG), the standard of care for the state’s injured workers, recommend no more than 50 MEDs without concerted efforts to wean the patient to lower levels.
  • In terms of opioid strength, the cumulative morphine milligram equivalents (MMEs) in the MSAs was 45 times the cumulative MMEs in the PD claims; and opioid levels for the top 5 injury categories in the MSAs ranged from 33 to 78 times those of the PD claims.
  • The time period allotted for opioid use averaged 20.9 years.

 

“A more coordinated effort and better balance are needed between workers’ compensation programs and workers’ compensation MSAs in order to assure the long-term health and safety of injured workers as they progress through both systems,” the authors wrote.

 

 

Another Way

 

The exorbitant allotments for opioids in approved MSAs may be the average in California currently, but they don’t need to be the norm. There are a variety of strategies payers can use — even before they get to the settlement phase of a claim.

 

  • Physician peer review. A physician reviews the injured worker’s medical history and treatment and may uncover an opportunity to provide the same or better care using fewer, less strong and/or shorter time spans for opioids. A treating physician is likely more comfortable speaking with a peer who has looked into the records.
  • Early intervention. Payers can take a proactive approach to prevent injured workers from overuse of opioids by flagging at-risk claims and intervening.
  • Pharmacy benefit managers (PBMs). PBMs study data, medical records, lab results, etc., and manage patient care. They can also provide counsel and education to stakeholders involved in a claim, such as an adjuster, physicians, and nurse case managers.
  • Integrated approach. Discussions in which stakeholders review metrics can help keep claims on track. Third-party administrators, PBMs, MSA companies and others should be included.
  • Managing expectations. Injured workers in chronic pain, which comprises the bulk of those agreeing to settle their claims, often seek a cure to be pain-free. By educating them and their physicians these patients can understand that the pain can’t be eliminated but it can be managed.

 

 

Case Study (Provided by Tower MSA Partners) 61.4% Savings

As part of its business model, Tower uses a Triage service to identify challenging issues before an MSA is developed and provides recommendations to address them. The company’s clinical experts analyze the injured worker’s medical issues; they examine the recommended treatment plan to ensure it adheres to evidence-based medicine, and evaluate the need for the future medical care. An internal pharmacist contacts the treating physician to discuss the claim and make recommendations. Once that is completed, the company finalizes and sends the MSA for approval.

 

The goal is to limit pharmacy to medications appropriate for the long term and reduce the duration and strength of opioids where possible when the drugs are included in MSAs.

 

Using this integrated approach has led to the following results:

 

  • 7 percent of MSAs approved by the government include $0.0 for pharmaceuticals.
  • 6 percent of approved MSAs include opioids.
  • 4 percent MSA savings.

 

 

Conclusion

 

The opioid epidemic has been declared a public health emergency by the administration. The workers’ compensation industry has made tremendous strides in the effort to prevent opioid-related problems and wean injured workers off the drugs. The approaches that have been shown to be successful should be also be utilized when MSAs are involved.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Using Benefit Offsets to Reduce Work Comp Costs

Reducing costs in your workers’ compensation program includes understanding the concept of offsets against workers’ compensation benefits.  This is something that often does not occur.  When it does, however, the result is program paying benefits that otherwise should not be paid.  A review of your workers’ compensation program to identify and implement applicable offsets can result in immediate savings to your program.

 

 

Understanding the Concept of Benefit Offsets

 

The ability to offset workers’ compensation benefits against collateral sources has its origins in the belief that someone suffering a personal injury should not reap a windfall.  In many jurisdictions, these same offsets are available under a workers’ compensation act for indemnity benefits an employee may be receiving from a government program.  These benefits include:

 

  • Social Security Disability (SSDI) benefits;
  • Social Security Disability (SSDI)Reverse Offsets
  • Prior Injury offsets;
  • Retirement annuities from public employee organizations; and
  • Various pension benefits received from a labor union health and welfare funds.

 

 

Application of the Offset Process

 

Statute or case law often define allowable offsets.  In some jurisdictions, the law explicitly prohibits these offsets.  It is important to understand the law in your state before you seek to reduce the amount being paid in workers’ compensation indemnity benefits.

 

 

Social Security Disability Benefit Offsets

 

A seriously injured employee can collect both workers’ compensation benefits and Social Security Disability benefits (SSD) if the Social Security Disability requirements are met. To prevent employees from collecting excessive workers’ compensation benefits and SSD benefits, state laws define the maximum benefit wage the employee can receive. In most states, the amount of Social Security Disability is offset by the workers’ compensation indemnity paid.

 

Example: An injured employee is collecting permanent partial disability (PPD) at the rate of $300 per week, or $1,300 per month (four and one-third weeks). The employee applies for Social Security Disability (SSD) and is approved. Based on prior earnings, the employee is eligible to collect $1,500 per month from the Social Security Administration (SSA).

 

With the workers’ compensation offset, SSA pays the employee $200 per month ($1,500 SSD minus $1,300 PPD). When the employee’s PPD is exhausted, the SSD will revert back to $1,500/month.

 

 

Social Security Reverse Offsets

 

A few states have a reverse offset, allowing the workers’ compensation carrier to take a credit for the amount paid in SSD benefits. Be sure your adjuster knows if the state allows a reverse offset for workers’ compensation indemnity benefits paid to an employee who is also collecting SSD.

 

In the previous example, with a reverse offset, the carrier would pay no PPD, as the SSD is greater than the PPD.

 

Example – A reverse offset: An employee collects $1,300 a month in PPD and is approved for $1,000 per month in SSD. The employee is paid $300 per month ($1,300 minus $1,000) by the workers’ compensation carrier. When PPD is exhausted, the employee then collects a $1,000 in SSD per month.

 

 

Prior Injury Offsets

 

Another deduction sometimes overlooked is the pre-existing permanent partial disability rating the employee has from a prior injury, often at a different employer.

 

Example: The employee suffered a back injury fifteen years ago while working for another company. The back claim was settled with the prior workers’ compensation carrier, based on a 10% permanency rating.

 

A year ago, the same worker suffers a back injury while working for your company. The treating physician and the IME doctor both give the employee a 25% permanency rating, which includes the pre-existing condition.

 

Most states allow you to deduct the prior permanency. This allows the adjuster to settle the claim for the value of a 15% rating (25% minus the prior 10% rating).

 

 

Other Factors to Consider

 

There are various issues to consider when applying an offset against applicable benefits.  It is important to consider the rules and requirements when seeking to take advantage of this compensation structure.  Important considerations include:

 

  • Offsets are often only allowed to be taken for the actual amounts an employee or their dependents receive and not the amounts they may be entitled to receive. This situation is common when an employee voluntarily decides to receive a reduced collateral benefit.

 

  • Employers and insurers can often offset the amount the employee was receiving prior to the work injury. The rationale for this is rooted in the understanding an employee’s earning capacity changes following an injury.  This change in income impacts their collateral benefits.

 

  • Benefits can be recategorized in order to achieve the offset threshold amount. This often occurs when temporary total disability benefits are recategorized to permanent total disability benefits.  Most jurisdictions that allow this find it permissible to do this on a retroactive basis.

 

Conclusions

 

It is common for workers’ compensation programs to overlook collateral source offsets.  This is a costly error that can easily be corrected and result in immediate savings to many programs.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Move Workers’ Comp Claims to Settlement with Empathy

An injured worker with an open claim for 15 years finally agreed to settle, and it all came down to an extra $2,000 – $3,000 for a much wanted trip to Alaska. This real claim is very common in our industry and points to a glaring deficiency: a total lack of empathy for the injured worker.

 

Companies often have many cases that have been on the books for months or even years. Adjusters may have approached the injured workers to see if they’d like to settle and learned, as much as the claimant doesn’t like the workers’ compensation system, he has no interest in closing the case.

 

There are myriad reasons for not settling a claim, but there is no way to know the real reason unless someone asks. That’s where a professional administrator can make a huge impact.

 

 

Reasons Claims Stay Open

 

Workers’ compensation claims are not like fine wine; they don’t improve with age. So keeping a claim open indefinitely doesn’t make good business sense, and it’s often not in the best interest of the injured worker, either.

 

The many reasons injured workers don’t want to settle their claims include:

 

  • Disagreement on total value.
  • Advice from attorneys, family members or friends not to settle.
  • Concern they will run out of money.
  • Fearful of going it on their own — even if they don’t like having to deal with a claims adjuster or having medical treatment denied.
  • Don’t know how to ensure they are complying with various laws and regulations, such as Medicare.

 

And perhaps the biggest reason — they are afraid of change. Much as they may abhor dealing with the workers’ compensation system, the alternative seems worse. As the saying goes, ‘better the devil you know than the devil you don’t.’

 

So how can companies best address these legacy claims? Possibly with a neutral third party.

 

 

Professional Administrators

 

The claim noted above settled when a professional administrator became involved and, more importantly, spent some time getting to know the injured worker. He met with the worker and learned that he and his wife had dreamed of going to Alaska but were never able to because of his injuries and the fear they would not have enough money in the future. He then went to the carrier to see if additional monies could be added to the most recently proposed settlement. When he told the couple that the insurer had agreed to an additional $2,000 to $3,000, the injured worker and his wife broke down in tears and agreed to the settlement.

 

Showing empathy for an injured worker is key to getting an agreement. Injured workers need to be heard and understood. Those with long-term claims have had their lives turned upside down. Someone willing to listen and grasp their needs can have a major impact on moving the claim toward closure.

 

The presence of the professional administrator added several other positive elements to the scenario.

 

  • Advocacy. He explained exactly how the settlement would address the injured worker’s future needs. A professional administrator acts as an advocate for the employee throughout his life, helping to direct him to medical providers and dealing with the settlement money. That addresses one of the main concerns of employees reluctant to settle — the idea that someone will still be there to guide them through the process.

 

  • Neutral party. Professional administrators secure substantial discounts through their medical networks, which is also how they are paid. The fact that it is a neutral party adds another element of comfort for the injured worker.

 

  • No more denials. Also, he explained to the injured worker that he would no longer face denials for requested medical treatment, once the settlement was completed.

 

Experienced professional administrators are able to think outside the box.

 

 

Summary

 

Injured workers are in a situation they did not seek nor expect, and are typically fearful of having no money for future medical issues, and to take care of their families.

 

Having an advocate who is a neutral party can understand their needs and coordinate a successful settlement to help them get on with their lives and get their claims closed.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

The Art – 7 Considerations When Using a Structured Settlement

They say the only certainties in life are death and taxes; but annuities can also be included on the short list. Among investments, annuities are one of the few that are virtually guaranteed.

 

That fact bodes well for injured workers concerned about their immediate and long-term financial needs. Well-designed structured settlements that are funded through annuities are tax-free, guaranteed, and incur no risk.

 

Workers’ compensation stakeholders who utilize them can ensure injured workers and their families are fully protected. The key is to find partners who have a deep understanding of these financial vehicles and the insight to identify the true needs of those affected.

 

 

When & Why Structured Settlement

 

Structured settlements are available to injured workers to settle their claims. They are an alternative to taking a set amount of cash in one lump sum.

 

While structured settlements have been around for decades, there are many misconceptions.  They may not be appropriate for every injured worker, they are certainly worth considering on every settlement case.

 

One reason injured workers may opt for a lump sum over a steady income stream is the belief they can get a better rate of return and end up with more money on their own. Unfortunately, there are ample studies showing that just isn’t true. The longer time goes on, the more people who have chosen a lump sum say they have less money than expected and not enough for living expenses. Along with the tax-free status is the time value of money. In the end, it adds up to being able to meet financial obligations long term with money paid out through a structured settlement.

 

Having the income stream from a structured settlement funded through an annuity — as most are — assures there are no associated taxes, which makes a significant difference compared to normal investments. To get the same net rate of return from a typical investment compared to a tax-free annuity would often require putting the money in a high-risk vehicle with a steady, high interest rate, something that is very difficult and rare.

 

One survey of 1,000 people presented them with a hypothetical scenario and asked whether they would prefer a lump sum payment or a structured settlement. The majority chose a single payment and cited financial independence, paying off a large loan, and flexibility as their reasons.

 

The fact is, changes in laws and regulations since the 1970s have made structured settlements very flexible, along with guaranteed elements. Structured settlements today come in all sorts of shapes and sizes, depending on a person’s needs. For example, many people, take a sizable amount of cash up front to pay medical bills and/or debts, then have the rest paid out in certain increments at over time. While the bases of structured settlements are the same, it’s important to understand current and future needs to get the right formula.

 

 

The Art – 7 Considerations When Using a Structured Settlement

 

Structured settlements need to be constructed differently for each injured worker, depending on his needs. There is no ‘cookie-cutter’ settlement. Each requires a basic life care plan with future needs and expenses included.

 

One or more annuities may be included in a structured settlement. These should be purchased from high-rated insurance companies to ensure financial strength.

 

Among the factors that may be included in are the following:

 

  1. Immediate expenses. Many structured settlements include upfront cash to cover such things as medical expenses, ongoing debts/loans, and attorneys’ fees.
  2. Monthly payouts. A typical structured settlement would also include a set amount per month for a specified number of years, and include a cost-of-living adjustment. For example, the amount could cover mortgage and other associated payments for 20 years.
  3. College education. If the injured worker has children, money would likely be included for college education. In addition to a monthly expenditure, a structured settlement could include, for example, an annual payment of $15,000 for a certain four-year period.
  4. Retirement funding. Some structured settlements also include a lump sum payment at the anticipated retirement year to supplement Social Security. Alternatively, a monthly amount on top of that previously established could kick in with retirement, to help pay for travel and purchases for grandchildren.
  5. Non-life contingent payments. Structured settlements can also allow for designated beneficiaries to continue receiving the future payments tax-free in the event of the injured worker’s premature death.
  6. Public Benefits. Even a small settlement can disqualify an injured worker from public benefit programs like Supplemental Security Income and Medicaid. A special needs trust funded with a structured settlement can help maintain eligibility and protect the employee’s long-term security.
  7. MSA. Medicare’s interests must be considered when someone settles past, present or future medical expenses to avoid jeopardizing these benefits or expose the injured worker to fines or penalties. In some cases, a Medicare Set-aside may be needed.

 

Summary

 

Injured workers and payers looking to close claims may find the best value for all sides through a structured settlement rather than a lump sum payment. When an experienced structured settlement expert is involved and the employee’s current and future needs are included, all stakeholders can see a win-win.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Don’t Plan to Fail: Best Practices for Addressing Medicare Advantage Plan Reimbursement

Benjamin Franklin must have been contemplating Medicare Advantage Plan reimbursement when he uttered one of his famous lines: “If you fail to plan, you are planning to fail.” Over the past few years Medicare Advantage plans have increasingly been seeking reimbursement for payments made stemming from workers’ compensation, liability and no-fault claims, otherwise known in Medicare circles as Non-Group Health Plans (NGHPs). Despite these increasing efforts, many NGHPs have not planned how they should respond to such reimbursement claims.

 

With the goal of working with our clients to educate and assist with proper planning, earlier this month, Tower MSA was privileged to have Brian Bargender, Subrogation & Other Payer Liability Business Consultant for Humana, participate in a webinar to discuss reimbursement rights of Medicare Advantage plans, and best practices for investigating and responding to reimbursement claims. For those who were unable to attend, or would like a refresher, we are pleased to provide below a summary of Mr. Bargender’s presentation along with some final thoughts and takeaways.

 

 

Medicare Advantage Plan Background

 

Part C Medicare Advantage plans (MA plans) are alternative delivery mechanisms for traditional Medicare benefits (Parts A and B) provided by private companies under contract with CMS. Medicare beneficiaries have the option of choosing one of these Medicare Advantage plans during annual or special enrollments periods. The three largest MA plan sponsors (representing almost half of the available plans) are UnitedHealthcare, Humana and Aetna. As of 2017, one-third of Medicare beneficiaries are enrolled in MA plans.

 

 

Medicare Advantage Plan Recovery Rights

 

Pursuant to CMS direction, MA plans must enforce the Medicare Secondary Payer Act (MSP) and will be audited by CMS for compliance with the Act. Consequently, these plans are obligated to coordinate benefits such that MA Plan coverage is denied when a primary payer is covering treatment and when the MA plan pays, but later learns of primary payer responsibility, seek reimbursement for payments made relating to the particular workers’ compensation, liability or no-fault claim.

 

MA plans right to reimbursement, including double damages, from NGHPs under the MSP Act has been acknowledged in at least two significant federal appellate court decisions:

 

  • In re: Avandia, 685 F.3d 353 (3d Cir. 2012)
  • Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016)

 

 

Medicare Advantage Plan MSP Enforcement Challenges

 

Despite CMS’s direction to MA plans regarding enforcement of the MSP Act, including coordination of benefits, the data available to the MA plans to perform this task is inconsistent and error prone. Consequently, MA plans have taken one of three approaches to MSP enforcement:

 

Inactive: Minimal effort
Reactive: Relying upon member and medical provider reporting of primary plans
Proactive: Claim screening and investigation

 

As Mr. Bargender explained, Humana is taking the proactive approach. Nonetheless, the challenges faced by Humana in identifying coordination of benefits situations has proven difficult as a result of gaps in medical provider and Medicare beneficiary self-reporting and data provided by CMS which is “too little, too late, often wrong.” Additional challenges faced by MA plans are incomplete direction from CMS and non-cooperation of Medicare beneficiaries and plaintiff attorneys to MA plan reimbursement claims. As such, Humana utilizes a multi-faceted approach of member questionnaires, public records, such as accident reports and workers’ compensation claims, and non-public records, such as data relayed by CMS, to determine possible MSP coordination of benefits and reimbursement opportunities.

 

 

Best Practices for Non-Group Health Plans and MA Plan Reimbursement

 

Humana’s proactive approach then has the ultimate goal of reimbursement for charges related to the claimed injury. Mr. Bargender shared the following basic precautions to be taken by NGHPs:

 

  • Train front-line staff on MSP basics – including MA & Part D
  • Assume older & disabled claimants have some form of Medicare
  • Be proactive when told claimants don’t have original Medicare
  • Watch for other payer info in medical records
  • Watch for notices from other payers
  • No-fault and accepted work-comp claims
  • Pay treating providers directly for outstanding medical bills
  • Be suspicious of billing gaps (other payer?)

 

And when it comes to Liability and disputed or denied workers’ compensation claims:

 

Find out who paid for medicals

  • Providers rarely wait for settlements
  • CMS “no payment” letters aren’t the last word
  • Request benefit ID card(s)
  • Ask to see other payer “no payment” letters
  • Medicare/Medicaid dual beneficiaries? …assume Part D paid Rx

 

Address MSP repayment before agreeing to settlement

  • Determine amount before settlement is finalized
  • Don’t assume plaintiff will reimburse MA plan or unpaid providers
  • What does settlement indemnification language actually accomplish?

 

In terms of negotiating and resolving MA plan claims for reimbursement, Mr. Bargender offered as follows:

 

Most MA plans are open to working with primary payers.

 

Focus on these:

  • Rationale for denying beneficiary’s underlying claim, not MA/Part D rights
  • Limits exhausted, treatment not allowed/capped, etc.
  • What’s related (was it in the demand or release?)
  • Errors in plan’s payment ledger
  • Extenuating circumstances

 

Not on these:

  • Reasonableness of amounts paid by MA
  • Claim filing time limits vs. MSP statute of limitations
  • Contract language” in the MA Evidence of Coverage document

 


Final Thoughts and Takeaways

 

In working with Mr. Bargender and the subrogation team at Humana, we have found them very helpful in promptly identifying specific reimbursement claim information where the claimant was enrolled in a Humana Medicare Advantage plan. Further, they are open to understanding the particular liability issues and bases for settlement, something not typically found with the Medicare conditional payment recovery contractors.

 

The primary takeaway from Mr. Bargender’s presentation is NGHPs must be proactive in identifying whether a Medicare eligible claimant is enrolled in a MA plan, and, if so, investigate whether the plan is seeking reimbursement for payments made related to the claim. As there exists no central database accessible to NGHPs in which to identify the MA plan a claimant is enrolled, the claims handler must be proactive in inquiring of the claimant whether they are enrolled in such a plan.

 

Tower MSA Partners will work with our clients to assist in identifying whether a claimant may be enrolled in a MA plan, identify the name of the plan and investigate whether such plan is seeking reimbursement stemming from the claim. We stand ready to assist you through general consultation on ensuring your MSP compliance program appropriately addresses MA plans or consultation on MA plan recovery* in a specific claim.

 

*While we did not delve into Part D Prescription Drug plans in this article, such plans arguably have similar reimbursement rights as Part C Medicare Advantage plans. NGHPs should also be aware of the potential for reimbursement claims from these plans.

 

 

 

Author Dan Anders, Chief Compliance Officer, Tower MSA Partners. Dan oversees the Medicare Secondary Payer (MSP) compliance program. In this position, he is responsible for ensuring the integrity and quality of the MSA program and other MSP compliance services and products. Based upon his more than a decade of experience in working with employers, insurers, TPAs, attorneys and claimants, Dan provides education and consultation to Tower MSA clients on all aspects of MSP compliance. Contact: (847) 946-2880 or daniel.anders@towermsa.com

Medicaid Recovery Rights – What You Need to Know

It’s been characterized as “almost unintelligible to the uninitiated,”  and it’s about to further complicate things in the workers’ compensation system. As of October 1, state Medicaid programs are allowed to assert a full recovery against all amounts paid to a claimant.

 

We can most likely expect states to ramp up their reimbursement efforts for affected workers’ compensation claims. It means if you haven’t paid much attention to Medicaid’s secondary payer recovery rights, it’s time to start.

 

 

Medicaid

 

Similar to Medicare, Medicaid provides healthcare to certain Americans. But unlike Medicare, Medicaid involves both the federal and state governments — think workers’ compensation with some federal oversight.

 

Here are some of the specifics of Medicaid:

 

  • Expansion. It was created by Congress to provide healthcare to the disabled and those living in poverty, but was expanded under the Patient Protection and Affordable Care Act. Just about anyone under 65 who has a household income under 133 percent of the federal poverty level is now eligible.
  • Quasi-federal/state program. States administer eligibility and claims processing functions, while the federal Centers for Medicare & Medicaid Services (CMS) oversees state compliance with federal Medicaid rules.
  • Voluntary. The voluntary program allows states to determine how to address the needs of their own populations; but they must adhere to rules established by CMS in order to receive some federal funding for the program.
  • Needs based. Unlike Medicare, which is an entitlement program generally available to anyone over 65 and/or disabled, Medicaid is based on a person’s income level.

 

 

Secondary payer

 

Like Medicare, Medicaid is designed to be the payer of last resort and its interests are supposed to be considered in settlements. However, court decisions over the years have limited reimbursement to only the amount designated for medical care, something not typically identified in workers’ compensation claims. That’s made it more difficult for states to go after settlement money. Until now.

 

The October 1 change allows Medicaid programs to go after the entire settlement of program beneficiaries. Just as Medicare has the right to recover conditional payments made from settlement amounts, Medicaid will likewise impact claims resolution. In fact, one of the federal government’s Medicaid requirements has been for states to seek reimbursement from third party sources. The October 1 change simplified that process — at least, for Medicaid agencies.

 

 

Workers’ Compensation

 

Because Medicaid programs are administered by states, every jurisdiction has a different set of laws and regulations — similar to workers’ compensation; and Medicaid recovery rules also vary from state to state. That fact complicates the situation for employers that operate in multiple states, as they try to determine Medicaid’s rights of recovery.

 

What the change will mean for workers’ compensation is something of a mystery at this point, at least in terms of the specific steps to consider Medicaid’s interests in settlements. Many questions need to be answered, such as reporting requirements, compliance and repayment.

 

One issue that further complicates things is the fact that recovery for Medicare and Medicaid are not mutually exclusive; each must be considered at settlement. Estimates are that roughly 20 percent of Medicare beneficiaries also collect benefits from Medicaid programs.

 

In anticipation of the rule change, states began the process of implementing strategies to identify Medicaid beneficiaries who receive workers’ compensation. Many state Medicaid agencies have implemented reporting requirements through data exchange programs and registries.

 

Rhode Island, for example, established the Medical Assistance Intercept System and requires all insurers operating in the state to participate. The program electronically matches Medicaid recipients with liability and workers’ compensation insurance claims. It is designed to intercept payments of $500 or more for reimbursement to the state’s Medicaid program.

 

 

What to Do

 

  1. Proactively monitor developments. Watch for CMS guidance, for example to understand how best to comply with reporting requirements and compliance.
  2. Understand state laws. It’s important to stay abreast of Medicaid recovery statutes and case law in each jurisdiction in which you do business, since each one has a unique system.
  3. Identify Medicaid beneficiaries and those who will be, among your claimants, and report them to your state’s Medicaid agency.
  4. Don’t forget Medicare. The rule change for Medicaid has no bearing on Medicare, so procedures for considering its interests should remain the same.
  5. Carefully read any correspondence you receive from CMS and/or state Medicaid agencies.
  6. Adopt best practices. Work with your attorney(s), carrier and claims managers to develop a plan to consider Medicaid’s interests in claims.

 

 

Conclusion

 

Medicaid has always been a payer of last resort when other sources of funding are involved. The change in language as of October 1 will likely lead states to become more aggressive in seeking recovery in claims involving Medicaid beneficiaries. It’s important to stay up to date on the very latest developments to ensure you are in full compliance.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Price Out Future Prescription Cost In Real-Time to Settle More Workers’ Comp Claims

One of the biggest barriers to settling a long-term claim is the fear of running out of money. Injured workers are often reluctant to finalize a claim because they don’t think they’ll have enough money for all their needs — especially for their future medical treatments.

 

But a growing trend in the workers’ compensation system addresses that concern. It happens when a professional administrator becomes involved and can accurately demonstrate real-time savings for prescription drug costs, rather than suggesting a vague range of prices. In fact, plaintiff’s attorneys are even warming up to the idea.

 

 

Transparent Drug Prices

 

Pricing out prescription savings is becoming a key tactic to settling workers’ compensation claims.  Here’s how it works:

 

  • A Medicare Set-Aside or medical cost projection is offered as part of an overall settlement for the injured worker.
  • A professional administrator determines the discounted price of each prescription the injured worker is taking. While the costs are based on today’s current rates, they can sometimes be locked in for a period of time.
  • The injured worker sees the actual discounted pricing of his medications during the settlement process.

 

The professional can determine its discounted prices of prescriptions with the National Drug Code, a list of medications the injured worker is taking, and any recent MSAs and care plans within the past year. Some professional administrators are able to offer drug prices that are 40 percent below the price the injured worker would otherwise pay.

 

Consider this example:

 

  • An injured worker’s MSA projected lifetime prescription cost is $100,000.
  • During the settlement process the professional administrator is able to show the injured worker that, through its platform, the injured worker’s drug prices would actually be $40,000, providing the injured worker with the extra $60,000 for any needed surgeries, or to leave to his heirs.
  • Working with a credible professional administrator ensures the injured worker remains compliant with Medicare guidelines. In the rare event that the worker exhausts his funds, Medicare would become the primary payer going forward.

 

Settlement Tactic

 

Getting long-term workers’ compensation claims off the books is often an elusive goal, due to the fears and concerns of injured workers. Providing real-time, transparent prices for current medications is a strategy that is increasingly leading more injured workers to settlement agreements.

 

Attorneys for injured workers are also becoming savvy to the idea. They say it is much easier to approach their clients about settlements when they can see substantial savings.

 

What makes the idea compelling is that it shows the injured worker exactly what he would be paying for his medications if he was working with the professional administrator. Many injured workers are frustrated, overwhelmed and confused about how much money they will need going forward. While they may not like dealing with the workers’ compensation system, they find some comfort knowing that at least most of their medical needs will be met and someone is there to help them navigate the system.

 

An appropriately developed settlement with a professional administrator involved can address both needs. The worker gets the money he needs — spelled out in a clear, concise manner, and the professional administrator guides him through the process going forward. In addition to medication costs, some professional administrators also have discounts for home healthcare, skilled facilities, and durable medical equipment services.

 

 

Conclusion

 

Using a professional administrator as part of the settlement process provides a level of comfort for all participants, and helps ensure the injured worker will have enough money for the rest of his life.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

7 Ways Structured Settlements Are Advantageous — Regardless of Interest Rates

Interest rates continue to be at historically low levels. Even with recent hikes by the Federal Reserve, other factors playing into the equation are holding down rates. While that’s great for those buying property, it raises questions for injured workers setting up or dependent on a pre-established income stream — such as a structured settlement. The good news is, it really doesn’t matter.

 

Structured settlements are not investments like other products and, therefore, are not subject to the whims of Wall Street. They are guaranteed due to their underlying financial instrument – typically an annuity from a life insurance company. The structured annuity is guaranteed regardless of what happens in the market. As long as a highly rated insurance company is involved, there are strict regulations to ensure sufficient reserves are set aside for every annuity the company issues.

 

A deeper understanding of structured settlements sheds more light on how they work and why the interest rate environment is really not a factor.

 

 

What is a Structured Settlement

 

First created in Canada, structured settlements came into this country in the 1970s exclusively for injured workers. Initially they were used on large, catastrophic injury cases; although now as many as half of structured settlements are often less than $50,000. Federal and state governments have passed myriad laws and changes to the tax codes over the years to make structured settlements more attractive.

 

Instead of taking the money received from a workers’ compensation settlement or personal injury lawsuit in one lump sum, some or all the money is put into a structured settlement for future needs and goals. A set amount of the money is distributed at preset intervals — monthly, quarterly, annually or whatever is agreed upon by all parties. It can be doled out over a finite period of time or for the person’s entire lifetime. The settlement may even include a portion for beneficiaries upon the injured worker’s death.

 

A typical structured settlement includes upfront cash for immediate needs, such as attorney fees or medical expenses. The remainder is then put into one or more annuities issued by a life insurance company, which makes the periodic payments to the injured worker.

 

 

Advantages

 

Structured settlements include many inherent features that make them more appealing than lump sum settlements. Research continually shows that a majority of people who receive a single sum of money end up spending most or all of it too soon.

 

Among the additional benefits of structured settlements are:

 

  1. Guarantees.  The payments to the injured worker from interest-earning annuities are backed by insurance companies, which are highly regulated.
  2. Tax Free.  The injured worker receives a 100 percent lifetime exclusion from income, dividend and capital gains taxes.
  3. No Fees.  Structured settlements do not include management fees.
  4. No risk. Because of their structures and guarantees, the injured worker receives the money as scheduled — regardless of current interest rates. Also, they are not managed as other investment products are, so are not in danger of ending due to poor investment results.
  5. Eligibility. Benefits from federal and private health care plans are protected.
  6. Customization. Working with an experienced, reputable company with appropriate knowledge and financial tools means the settlement can be designed to fit the specific needs and desires of the injured worker involved.
  7. Higher returns. One of the biggest advantages of structured settlements stems from their status as tax free. That translates to returns that are higher than those seen in low- to moderate-risk investments. To match or get a better return than what an underlying annuity provides would require taking on higher risk and more uncertainty.

 

For example, in order for an injured party to earn the 6 percent return rate of the structured settlement, he would have to earn an additional 3.23 percent on the cash investment at the 35 percent tax bracket (9.23 percent less 6.0 percent), an additional 2.33 percent at the 28 percent bracket and 2.0 percent more in the 25 percent income tax bracket. In addition to the added interest, the self-investor would have to subtract any local and state taxes, as well as the related brokerage or investment fees.

 

 

Conclusion

 

Getting long term workers’ compensation claims off the books and ensuring the injured worker’s needs are taken care of can be done relatively easily through a structured settlement. Those with the appropriate expertise in developing them create a win-win for all parties involved in the settlement.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

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