Lifetime claims and their ongoing wage and medical coverage demands can often be the elephant in the room in a claims office. In a perfect world, claims would settle with ease with an easy agreed indemnity and medical expense. The paperwork would be signed and everyone would move on with their life.
Unfortunately, this is an almost impossible scenario. The truth is that lifetime claims are complicated and can be difficult to resolve for a variety of reasons. A couple of the factors include Medicare Set-Asides (MSAs), failed vocational rehab, and the inability to find new employment. It is very important to get a MSA approved in order to move forward with full/final redemptions if your claimant also receives Social Security Disability, which is most often the case with a lifetime claim.
Carriers now see that settling one factor in a claim is better than settling none. True, resolving future indemnity cost is slaying one of the evils of a work comp claim. It can be done fairly easily through negotiation of the parties, with little costs involved other than legal expense for going to court and signing the paperwork.
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“8 ‘Think Outside the Box’ Tactics to Settle Workers’ Comp Claims”
Lifetime Claim Challenges
Medicare Set-Asides
This leaves a question begging to be answered: Why is it now common practice to give up on reviewing the future medical costs, especially since many studies show that the medical can cost up to as much as 60% of the expense over the lifetime of a claim? One answer could be getting the necessary information needed for a good MSA is labor intensive. You need a great vendor that specializes in MSA work. You need a lot of medical information to submit to get the MSA negotiations rolling. You need to wait for months and months to hear back from CMS, and when they do answer they send you a billing statement with years and years of medical services they think they covered in error. In addition, getting the medical reports that coincide with those dates of service can be nearly impossible. You will be lucky to get a procedure code and an amount billed.
So, in order to avoid spinning the wheels, these cases get ignored. Bills will come in, and will get paid that probably have nothing to do with the actual injury or lingering side effects from countless years of surgical procedures. Most often the biggest expense in this scenario is prescription cost. Many carriers pay Rx bills with little more than the bat of an eye, and the click of a mouse. This is a significant error, but it happens every day. This large medical leakage is the culprit of understaffing, and a lackluster attitude.
Failed Vocational Rehab & Lack of New Employment
A severe injury will lead to permanent restrictions, and if you attempt vocational rehab and job placement with no avail, you have the choice of paying a claim for life or attempting to settle his/her case in order to end your involvement. Indemnity expense will lead the charge at the start of negotiations. This is especially true if an injured worker is treating sparingly, meaning they are going to the actual doctor office once every 4-6 months. There is a likelihood that the doctor is treating with prescription medication month after month after month. This is where carriers get in to trouble because the cost of certain medications can be jaw dropping. Take the monthly expense and make it a yearly cost, then multiply that by 20-30 years for life expectancy and you have a number that would catch the attention of every management personnel at even the biggest carrier out there.
Lifetime Claim Solutions
A fantastic IME, or a few of them with physicians that specialize in medication and possibly addiction, can stop the medical leakage in no time. Just because you have accepted a claim for “life” doesn’t mean that you have to give up on it. Claims people have a lot of weapons in their arsenal of defense, including medication reviews, surveillance to confirm a person is not doing anything outside of their medical restrictions, employment searches to see if they are indeed working somewhere under the table despite receiving work comp benefits, and so on.
Additional Solution options:
- Use an MSA vendor to help you streamline the process. Use their expertise to your advantage. Pick groups of files, and bring them in and let them do the legwork. This is why they are out there, so use them. Their expense will be nothing when compared to the expense of a lifetime claim that is not being closely monitored.
- Utilize a Structured Settlement Organization to move claims toward settlement.Structured settlements can help bridge differences during a negotiation by moving the focus from a lump-sum dollar amount today to meeting the financial needs and aspirations of the injured person tomorrow. Dedicate staff toward settlement, set a goal, and give a handsome reward for those that are successful. If you have 40 adjusters on staff, and each took 10 claims that is 400 claims that could be moving forward, instead of sitting still.
- Utilize a Pharmacy Benefit Manager (PBM). Not only will this reduce medical cost by getting into their medical networks that have reduced Rx costs, but they will have physicians or pharmacists on staff that can review medical dosage, type, and duration and compare it back to the injury to see if it really needs to be dispensed in the first place.
- Attack those claims that have sat on the shelf and have 10” of dust on them. Chances are these are the claims that are killing your medical reserves. These claimants have gotten comfortable, so it’s time to see what they are up to. It’s time for some surveillance, background checks, pharmacy checks, and so on. You never know what you are going to find.
- Get an updated IME. This will go hand in hand with the adjusters working on their 10 claims. IME vendors have a marketer or account rep that can come to your office, so let them dig through the file to find the medical and copy the file. This frees up time for your adjuster to work on the actual file itself instead of standing at the copy machine for 4 hours copying medical records.
Lifetime claims are not going to be solved overnight. It is going to take months, even years to get some of these claims settled correctly, and some may never settle. But you have to be proactive. The definition of a lifetime claim is not just one that sits on a shelf, ignored for years because you have more important things to take care of. If you have done all that you can, and the claim just cannot settle, then that truly is a lifetime claim.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.
Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.
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