LowerWC.com interviews industry experts on important and sometimes complex workers compensation issues. Medicare set asides is such a topic — and one those in the workers compensation industry can never know too much about.. Here Michelle Leon-Perez, director of Strategic Services for Gould & Lamb (an Amaxx Resource Center advertiser) answers some key questions.
What is a Medicare Set Aside (MSA)?
A Medicare Set Aside is a comprehensive report detailing reasonable future Medicare covered costs related to the alleged injury/accident. An MSA addresses only future Medicare covered expenses and its funds are not used to pay for past treatment. Simply put, the MSA identifies potential future Medicare-covered treatment costs and ensures all parties involved in the settlement are protected from Medicare Secondary Payer Act litigation and actions, post settlement.(WCxKit)
What does a self-insured, self-administered company need to know about the MSA process as opposed to a company with a third-party administrator (TPA) or an insurance company handling the claim?
Producing an accurate allocation requires expertise in Medicare guidelines, legal issues, medical cost projections, bill review, and claims handling. The self-insurer should confirm that their MSA provider has these experts in-house and, when appropriate, offer post settlement administration options to ensure an optimal Medicare Secondary Payer (MSP) complaint settlement. As Medicare’s scrutiny of MSA allocations has increased, this process is riddled with pitfalls; all entities should collaborate with an MSA partner who has a strong history of Medicare approval success and who provides a defensible allocation amount.
Tell us about the “why” of MSA in terms of necessity? Who is primary and who is secondary regarding payments of medical claims for workers compensation? And, why is it not smart for employers to think they can skip it?
Medicare considers any entity with or without regard to policy that is reasonably expected to make payment to the benefit of a plaintiff/claimant as the primary payer. All entitles handling bodily injury claims, especially self-insurers, must understand Medicare Secondary Payer (MSP) rights and focus on them as the primary payer. Actions under the law include: rights of recovery by Medicare or private cause of action by the plaintiff/claimant under the MSP. It is important to partner with a company that can provide them with the necessary experience and compliance tools to protect themselves by mitigating these exposures. Failure to comply with the MSP could, in effect, undo a funded settlement and expose them to additional payments post settlement. What an entity chooses to do regarding MSP compliance is their decision but skipping the MSA process is potentially more costly than the MSA itself.
MIR/MMSEA has made skipping MSP compliance in workers compensation very risky. Centers for Medicare & Medicaid Services (CMS) will be supplied with the information necessary to determine which claims involve a beneficiary and who the primary payer is. In other words, CMS will be looking for entities that skip the process, which can result in civil or federal actions exposing the self-insurer to monetary damages that may exceed the MSA amount had it been completed.
What is the connection between MSA and prescription drug plans (Medicare Part D) and how do these plans fit into the set–aside process?
When a claim has considerable prescription exposure; submission to CMS can be challenging. Since June of 2006, Medicare has reviewed the adequacy and sufficiency of the prescription drug component in MSAs. Since this change in the review policy, prescriptions are now a key cost driver in some MSAs. Issues emerge regarding the allocation for certain medications as well as frequency/dosages. Poorly constructed prescription drug components can result in CMS review determinations (the allocation amount) being considerably higher than originally forecasted. Understanding the potential exposure and obtaining the right partner to address them is the most important decision to be made.
What’s the best way to obtain MSA set-aside approval?
Provide and prepare. Providing all of the appropriate releases and documentation is a key step to avoiding untimely delays. You should select your compliance partner carefully as they will prepare you for the protocols and requirements involved in CMS submissions.
What happens if a claim is settled without an MSA reserve account? Is the employer off the hook for future medical payments?
If there is Medicare exposure and it is not addressed via an MSA and noted in settlement documents, the self-insured employer is not off the hook! They ultimately are responsible for addressing MSP exposures and potentially will have to provide additional funds to remedy any deficiency. Certainly, however, an employer can choose to ignore it. But, in this litigious environment, proactively addressing the risk is often more cost effective than addressing it re-actively.
What internal processing does an employer need to set up to monitor claims, settlements, etc? How often should status reports be received? How many dedicated people are necessary to efficiently process claims?
MSA providers should update their clients either monthly or quarterly on MSA referral status. These “report cards” typically detail metrics needed to globally manage an optimal MSP compliance program and ensure that exposures are kept to a minimum. If a self-insurer has a good MSA partner; the status reports they receive could keep the number of dedicated compliance people to one or two.
How are annuities/structured settlements handled?
Annuitizing allocations is CMS’ preferred method of MSA funding. Making known the option to use an annuity early in the settlement process is important. Once the plaintiff/claimants are educated about how these financial tools can benefit them and their families it is an easy sell. Having worked in claims for 15 years it is the easiest and most cost-effective method I’ve encountered.(WCxKit)
Are there any new legal aspects of MSA you can talk about?
Most recently, there has been litigation regarding conditional payments and Medicare Set Asides involving liability claims. At G&L we are fortunate to have Russell Whittle as our vice present of compliance. He is an attorney and is very involved with the Medicare Advocacy Recovery Coalition (MARC). He routinely writes about legal challenges facing our industry and his commentaries are posted on our blog. Many of our clients rely on his expertise and advice to help guide them.
Author Michelle Leon-Perez, Director of Strategic Services for Gould & Lamb is Board Certified in workers compensation and has 17 years of industry experience. Her areas of expertise cover first-hand knowledge of claims practices at a variety of carriers and practical, hands-on experience with Medicare compliance and claims. She can be reached at firstname.lastname@example.org or http:// www.gouldandlamb.com
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