Case Study: Double the Ongoing Medical Treatment From Injury Settlement

Reduce your workers' comp case studyInjured individuals across the country are settling claims every day and often they have no idea how much a professional administrator could help maximize the money they receive for their ongoing medical care.

 

Professional administrators establish a bank account for the injured party’s medical settlement funds and pay all their healthcare needs on their behalf, but at significant discounts. The best administrators save the injured individual substantial sums of money on every healthcare bill. The discounts they can command can sometimes be up to 90% of that which was billed for the treatment!

 

Using an administrator to secure discounts can make the settlement funds last much longer which can result in the injured party potentially getting double, sometimes triple or more medical treatment from their settlement funds.

 

Traditionally, professional administrators have been thought to help only catastrophically injured individuals manage their care; however, they can be used for all cases that have future medical needs.  Administrators have also been thought of to help with complex reporting requirements from the government for Medicare Set Aside accounts.  These two uses of the service are still very relevant as they protect the injured party and everyone involved in the settlement as well as save them time, but for most injured individuals and their attorneys, the most powerful benefit is saving money for the injured party on medical bills. Let’s look at three examples of how this happens*:

 

 

Case Study Examples (Provided by Ametros)

 

 

Case Example 1

 

The money saved by the administrator stays in Beth’s account for her future healthcare needs. Beth now has more existing funds should she need another operation down the road. Without Ametros, Beth would have simply paid the bill and not have had the additional funds saved to put towards her future care needs. When Beth (injured individual), settled her case and needed a spinal cord stimulator implanted a year later, she faced some extremely daunting bills. The original billed amount of $132,777 was reduced to $47,551! That is a savings of over $80,000. In this case, much of the savings comes from reducing the bill to the appropriate fee schedule amount because her account was a Workers’ Compensation Medicare Set Aside (MSA).

 

 

Case Example 2 

 

Roger settled his case in 2013 and recently needed a procedure done to replace his catheter implant and graft some tissue. The sticker price billed was $15,359. After review, his bill was reduced to $1,886, a savings of about $13,500.

 

For this procedure, Roger saved about 87% off the original billed charge.

 

 

Case Example 3

 

Discounts for medical costs do not just apply to large bills or individuals that have settled with an MSA.

 

Take Josefina for example. She settled her third-party liability case and two years later needed an X-Ray of her ankle for an unexpected complication.

 

The bill was reduced from the original total price of $529.00 to $201.83.  In this situation, Ametros leveraged its facility network to save $327.17 for Josefina.

 

 

Final Thoughts

 

When you are assessing if a particular professional administrator is a good fit, you should ask them for a cost estimate: how much prescriptions, treatments and equipment will cost on their platform. Most will provide it for free. By doing this, you can easily determine lifetime costs and find the company that offers the biggest discounts and the highest savings.

 

If you are involved in settling a case where the injured party will have future medical costs, you can greatly assist the injured party by helping them not pay the sticker price for future medical costs. An administrator is a powerful ally and advocates for the individual after settlement.

 

*The medical bill examples shown are real bills with real discounts provided. The names of the clients and their personal identifying information has been redacted for privacy.

 

 

Author Porter Leslie, President Ametros. Porter directs the growth of Ametros and works with its many partners and clients. He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, Porter worked in investment banking, private equity and corporate development. Porter earned a B.A. in Economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. Porter is fluent in Spanish and Portuguese and resides in Boston with his wife, Ruth, and son, Camilo.

 

5 Key Terms That Define Professional Administration Contracts

ametrosSetting up support with professional administration of medical funds after settlement is a clear choice.  It helps the injured person save money on their healthcare expenses and provides support in navigating ongoing care. The service is especially helpful for Medicare Set Asides because the administrator helps ensure the injured person’s Medicare benefits remain intact while protecting the injured worker, their attorney, as well as the payor from any potential mishaps.  In fact, Medicare “highly recommends” that injured individuals use a professional administrator after settlement.  (What is professional administration? Learn more)

 

When it comes to administration, all involved should have a thorough understanding of the administrator’s role and how it benefits the injured person. What can sometimes be less obvious is how to set up the administered account with an agreement that adequately governs it and how administration fits into and facilitates settlements.  The following concepts are essential to understand these agreements.

 

 

1. Who is involved? Parties to the Agreement 

 

Ideally, the agreement is between the injured person (also known as the “member”) and the administrator. It’s useful to get to know the administrator involved and to see if it is independent and truly has the best interests of the injured individual at heart. Conducting some background research, contacting the administrator directly, and asking for references are good starting points.

 

Tip: Be aware of administrators that operate other lines of related business.  This could create a conflict; for instance, if they work for the carrier/employer to provide low estimates of future medical allocation amounts, it does not make sense that they are also offering to work for the injured person to help them maximize their medical settlement funds.

 

The cleanest arrangement is a bilateral agreement between the administrator and the injured person where the administrator is focused on its duty to protect the injured person.

 

 

2. The Purpose of the Agreement / Responsibilities of the Administrator

 

The administration agreement should outline the benefits and services the administrator will provide.  These often include:

 

  • Placing the settlement funds in a separate, interest-bearing bank account under the member’s name
  • Securing discounts on medical bills where possible and paying medical bills on the member’s behalf
  • Tracking and providing complete reporting on all expenses
  • Filing any required government reports, such as Medicare Set Aside reporting

 

The responsibilities of the administrator should be clearly outlined.  If it is determined that the administrator is going to do something extra or different for the member, this should be included in the agreement.

 

 

3. The Bank Account

 

The administration agreement should provide detail on how the member account will be established. For utmost security, it should be a separate, individual bank account established in the name of the member.  In unique situations where the settlement is funded into a special needs trust, then the account may be required to be setup in the name and Tax ID number of the trust to ensure government benefits are protected.

 

Often times, included in the administration agreement is the standard information the bank requires. With complete security, the administrator is the custodian of the account and must authorize any disbursement.

 

Tip: The safest account is a separate checking or savings account. Be careful of any pooling of the injured person’s funds with money from other clients. This can have significant consequences because it:

 

  1. may result in their funds being invested in less liquid assets or that are at risk of losing value.  (Investment losses are not an appropriate use of MSA funds)
  2. may result in the loss of FDIC insurance of $250,000
  3. means their money and will likely be tracked manually by the administrator instead of the bank which could potentially lead to mistakes 

 

It’s important to know the member’s money is deposited at a reputable bank in a separate and secure account managed by a top-notch administrator. It is also important to choose an administrator that has multiple banking partners to ensure that large accounts that may be in excess of FDIC limits can be set up in the most protective way.

 

 

4. Beneficiary Designation

 

An important provision of the administration agreement is the beneficiary designation language. Similar to the setting up of a trust or estate plan, it’s important for the member and all parties involved to know where the administrator should send the remaining funds in the account when the member passes away.

 

Typically, the administration agreement follows the guidance provided in the master settlement documents.  If there is no designation of a beneficiary in the settlement documents or if the account is established after settlement, the administrator will defer to the member for whom they wish to designate.

 

Tip: this provision, like many others, can be negotiated as part of the overall settlement discussion, separate from the administration service.  The beneficiary of the administered account can be the member or their estate; it can also be a corporate entity like the carrier/employer/payor involved in the claim (frequently referred to as a “reversionary” party), or a non-profit or charity, etc.  During settlement negotiations, the defense and plaintiff parties can negotiate the terms of this part of the agreement to determine who or what entities benefit from the remaining funds; sometimes the designation of the funds or a portion of them can be subject to certain terms and conditions, just as they can apply to other aspects of the settlement.

 

Upon death, the administrator will typically require a grace period to make sure all outstanding bills are gathered and payments are made; then, the administrator will close the account and cut the check to the designated party or parties.

 

 

5. Rights of the Injured Person 

 

Finally, it’s important the member fully understands their rights when their account is being established. They should have a number of common rights and protections and should also be aware of any restrictions. Here are a few common items to consider:

 

  • Review of performance: the member should be able to review the work of the administrator and report any inaccuracy to have it addressed
  • Protection: The member should be held harmless for any mistakes made by the administrator due to negligence
  • Savings: the member should receive the benefit of discounts secured on their behalf by the administrator. If the administrator benefits in any way from discounts negotiated, they should be transparent to the member.
  • Open Network: the member should be able to seek treatment with any provider or pharmacy. While a network may be in place to help the member save money, administrators should not restrict the member’s access to care with any provider, pharmacy or facility.
  • Termination: it should be clearly stated whether termination of the agreement or a withdrawal of the funds is allowed. This can be negotiated as part of the overall settlement. Typically, if the member is the sole beneficiary, they can choose to terminate the administration agreement and receive all their reporting and a check for their funds.  However, if there are other designated beneficiaries, language in the settlement agreement may restrict their ability in order to protect all beneficiaries’ interests.

 

 

Fitting It All Together

 

Along the way, if you or the injured person have any questions, the administrator will be a valued resource to clarify the terms of the agreement or explain how the service works.  Not all settlements are alike, so sometimes it’s beneficial to request edits and tweak terms of the agreement to your liking.

 

Once all parties are confident in the terms of the administration agreement, most often, the administration agreement will be added as an addendum to the settlement documents.  This way, it is part of the overall settlement package and can be approved at settlement; in workers compensation cases, the judge often wishes to sign off on all aspects of the settlement, including administration.

 

 

Author Porter Leslie, President Ametros. Porter directs the growth of Ametros and works with its many partners and clients. He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, Porter worked in investment banking, private equity and corporate development.

Porter earned a B.A. in Economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. Porter is fluent in Spanish and Portuguese and resides in Boston with his wife, Ruth, and son, Camilo.

[CASE STUDY] Lump Sum vs. Structured Settlement

Lump Sum vs Structured SettlementThe combination of professional administration with a structured settlement (annuity) is often the best way to protect an injured party’s settlement dollars in the event of an unexpectedly very costly year due to higher-than-anticipated medical needs after settlement. The combination of these services in a costly scenario allows the injured party to access more coverage from Medicare and pay less out of their own pocket.

 

What Is Professional Administration?

 

Professional administration involves the use of a professional third party to help manage the injured party’s medical settlement funds or Medicare Set Aside (MSA) after settlement.

 

“Professional administration achieves two important goals,” says Marques Torbert, CEO of Ametros. “It saves the injured party significant money on their medical expenses by providing them with access to discounted medical network prices, and it ensures that all their reporting to Medicare for a Medicare Set Aside account is done properly.”

 

When an MSA account runs out of funds and reaches a zero-dollar account balance, as long as it is administered properly Medicare agrees to step in as the secondary payer covering the continuing and needed medical expenses. Medicare “highly recommends” the use of professional administration to make sure that funds are extended as long as possible through discounts, used appropriately for medical care and ultimately reported properly so that Medicare will know when to step in as the payer.

 

 

What Is a Structured Settlement?

 

A structured settlement is a stream of periodic payments paid to an injured party by the defendant primarily through the purchase of annuity (fixed and determinable) issued directly by highly rated life insurance companies. In the case of an MSA, the annuity will enable the issuance of annual payments that cover the entire MSA amount.

 

As Eric Vaughn, executive director of the National Structured Settlements Trade Association, explains, “Structured settlements provide an injured party with a reliable, stable source of income which can be critical to cover their ongoing medical costs. A structured settlement removes the variability of the markets and guesswork out of funding their future expenses.”

 

The Centers for Medicare and Medicaid Services (“CMS” or “Medicare”) is accustomed to the use of annuities with MSAs. Medicare has provided clear guidelines for how the MSA should be set up when annuities are involved, with two years of costs funded upfront and the rest of the cost broken out annually over the injured person’s lifetime. When an MSA is sent to Medicare for approval, Medicare will review and approve MSAs with structures.

 

When assessing future medical costs in an MSA, it’s important to take a very conservative approach.

 

Using a structured settlement and professional administration for the MSA can provide valuable protection to an injured party should they have a costly year. The combination of these services will allow the injured party to properly get coverage from Medicare in the event their MSA funds run out. That Medicare coverage can, in many cases, ensure that the injured person pays less out of their own pocket.

 

As Vaughn points out, “Annuities are a natural fit with MSAs, given the annual medical expenses are already budgeted over the individual’s lifetime.” Torbert adds, “Attorneys and adjusters alike are recognizing the power of combining the annuity with administration not only to assist the injured party in saving money, but also to provide them with support for their medical care over the long run.”

 

It’s important to keep in mind, not all professional administrators and annuities are the same. Choose an administrator that provides the best service and saves the injured party most on medical expenses. When choosing annuities, it’s important to work with a trusted broker and to select a reliable, highly rated life insurance company. Speak with experts in both administration and structures to make sure you and your client make the right selection to ensure you have the most financial protection.

 

 

Case Study

 

Let’s take a look at an example of how an injured party, Joe, can leverage these two important services to protect his settlement dollars in the MSA.

 

Let’s assume that Joe accepted a settlement with an MSA and has a life expectancy of 10 years.

 

Scenario #1

 

In the first, good scenario, Joe is doing well and is using professional administration to receive discounts so he has relatively low spending of a few thousand dollars a year on MSA medical items.

 

Both a lump sum and structured account would have the same amount spent at the end of Joe’s life expectancy.

 

 

Scenario #2

 

Let’s take a look at the unique protection that professional administration and a structured settlement together can offer Joe in the scenario where he undergoes a costly surgery or other adverse outcomes.

 

Let’s assume that Joe is offered the exact same MSA settlement amount and starts out on the same pace. Unfortunately, three years after settlement, Joe needs to pay for a complex surgery.

 

With a lump sum account, Joe ends up having to pay for the remaining cost of the surgery after using what funds he currently has in his MSA account. Unfortunately, with a lump sum settlement, he will never receive MSA funds again. If he is Medicare-eligible, Medicare will cover about 80% of the remaining balance, and Joe will have to pay 20% out of pocket for all future treatment costs for the rest of his life (such as Medicare premiums and his regular treatments).

 

If Joe has a structured account managed by a professional administrator, his funds will take a large hit at the time of his surgery, but the administrator will have ensured the funds were spent appropriately so Medicare will step in as the primary payor. Medicare will pay for 80%, and he will take care of 20% out of pocket for the remaining balance of the surgery only for that year. After that year, his account will continue to replenish annually, and he can use his MSA funds to pay for future treatment.

 

 

Summary

 

In summary, the outcomes for Joe can be strikingly different. With the lump sum settlement, he is losing personal funds, and he never again has the chance to build value in his MSA account. With the structured settlement, Joe is better off over time. The way Joe settles his case has a very powerful impact on his finances, and the combination of a structured settlement and professional administration protects the injured party more effectively.

 

 

 

Author Porter Leslie, President of Ametros. He directs the growth of Ametros and works with its many partners and clients. He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, he worked in investment banking, private equity, and corporate development. Leslie earned a B.A. in economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. He is fluent in Spanish and Portuguese.

8 Questions from Attorneys about Medicare Set Aside Administration

8 Questions from Attorneys about Medicare Set Aside Administration1.  “What is my risk if my client makes mistakes with their MSA?”

 

 

2. “What’s the chance that Medicare denies my client’s care because they misused or misreported their Medicare Set Aside funds?

 

 

3. “Why can’t my client just find coverage through another private insurance plan?”

 

Determining the best approach to address MSAs with their client in the settlement process can be a challenge for many plaintiff attorneys. The questions above are common amongst plaintiff attorneys who struggle to provide comprehensive advice to their clients regarding the regulations and ramifications of the Medicare Secondary Payer statute (“MSP”).

 

There are still quite a few attorneys in the workers’ compensation and liability industries that try to find ways to avoid the need for a Medicare Set-Aside (“MSA”) altogether when their clients settle their claims. It is understandable; the MSP regulations are complex, and the guidelines from the Centers for Medicare and Medicaid Services (“CMS” or “Medicare”) restrict how their clients can use the settlement funds – which their clients do not like at all. In addition, most jurisdictions preclude attorneys from taking contingency fees on medical funds allocated for Medicare purposes.

 

These factors, among others, can lead attorneys to shy away from addressing MSP issues head-on with their clients and instead, consider risky approaches that may put them in danger of committing a malpractice claim. This article, in consultation with a number of the nation’s prominent plaintiff attorneys, addresses the less obvious aspects of MSP compliance and the common questions attorneys have, as well as how attorneys can best protect themselves and their clients as they address these issues.

 

 

Protect Your Client’s Benefits

 

4. “Will Medicare really deny my client’s benefits?”

 

 

5. “Show me a case where Medicare benefits were ever denied, or Medicare came after the client or attorney for misappropriated MSA funds?”

 

Denials of treatment from CMS after settlement occur daily. The Medicare Administrative Contractors in charge of approving all Medicare claims have systems in place to automatically deny injury-related treatments for individuals that have MSAs accounts with remaining funds. The Contractors are closely monitoring MSA account recipients using the Mandatory Insurance Reporting Section 111 data they receive from insurance carriers for every single settlement that involves a Medicare beneficiary. They match this data with the injured party’s MSA reporting to verify if the MSA has funding to pay, or if Medicare should accept payment.

 

Generally, very few of the MSA accounts managed by professional administration exhaust, when that occurs, the administrator should automatically notify Medicare of the account’s exhaustion. We are often contacted by Medicare to review the treatments that were paid and to determine exactly when the funds were exhausted. In most cases, Medicare requires receipt of this information before they begin providing coverage for any injury-related bills. There can be a number of unique issues that arise after settlement, such as conditional payments, denials, etc., that require specialized attention to be resolved.

 

There are no known litigated cases against Medicare for cutting off benefits due to misuse of MSA funds; however, that does not mean that denials of care are not routinely taking place. The ability to deny care and remain the secondary payer is the fundamental right that Medicare established in the federal MSP statute. Most industry experts have seen Medicare increase its commitment to monitoring MSA accounts over the past several years and expect that will continue into the future. In addition to workers compensation cases, Medicare has indicated that it plans to also institute a review process for liability cases as well; it’s a clear sign that, if anything, Medicare is paying closer attention to all settlements.

 

 

Facts about MSAs:

 

 

The reference guides and memos provided by CMS have some authority, but the authority is not statutory. An attorney could follow all the guidance provided by CMS, yet still, run some minimal risk of failing to address the regulations under the law. Nonetheless, the safest approach is to recognize and consider MSP laws in settlement proceedings which requires providing thorough client guidance and a qualified advocate, to help the client abide by the guidelines. By doing this, the attorney can show that they did everything possible to protect the client’s Medicare benefits thus avoiding any successful claim of malpractice.

 

 

Insurance Coverage Misconceptions

 

6. “ But can’t my clients find coverage through another private insurance plan after they settle?”

 

 

7. “What about the Affordable Care Act?”

 

There is a frequent misconception by attorneys that their clients can get insurance coverage elsewhere and thereby not have to worry about an MSA. Although sometimes the injured party may initially be able to get another entity to cover their injury, most of the time insurance carriers are including exemptions for care relating to settled claims. Using another plan may be a good near-term way to save some of the MSA funds, but it may result in confusion over the long-term and the client spending MSA funds to pay for the premiums and deductibles of these new plans which will put them out of compliance with Medicare’s guidelines.

 

Private insurance plans, whether they be Medicare Advantage, Affordable Care Act plans, or provided through an employer, only last for one year at a time. MSA funds are meant to be used properly for the client’s lifetime. If the injured party believes they can rely on a private plan to cover their injury costs, they may be more incentivized to use their MSA funds to pay for that plan or for other non-injury related costs. If the private plan they rely upon ceases to exist, increases premiums drastically, or starts to deny their injury-related claims, the client will have put themselves in a very compromised position. At that point, they will likely not have a record of what they did with their MSA funds which will result in Medicare denials if they exhaust their funds. At the heart of the matter, it is risky to assume that a private insurance plan will be in place and available to the injured party for 10, 15 or 20+ years after settlement.

 

Over the past several years, private insurance plans have become much more vigilant on MSP matters. Other insurance entities are becoming increasingly savvy regarding the fact that they should not be the primary payer for these work-related or personal injuries and are finding ways to avoid paying. Medicare is the ultimate backstop for an individual’s healthcare, so if the injured party has misused their MSA funds and can’t get coverage, there really is nothing left to assist them with their care. When the client has exhausted their funds and cannot find private coverage, they will likely make two calls: The first is to their attorney, the second is to a malpractice attorney.

 

 

What is My Responsibility?

 

8. “I advised them of the risks, what else am I supposed to do?”

 

For attorneys that recognize the importance of having their clients thoroughly advised and aware of MSP guidelines, they are off to a good start. Many attorneys give their client an overview of the MSA’s purpose, but struggle to determine how they can truly protect themselves and their client once they hand their client what can be a sizable amount of money.

 

Medicare does allow for self-administration of MSA’s, but there’s good reason that Medicare recently came out and “highly recommended” professional administration (See Section 17 of Medicare’s updated reference guide).

 

Going through self-administration alone has often proven to be too much of a burden and challenge for the injured party. Medicare seems to have realized that its 31-page Self-Administration Toolkit is just too complicated for the average individual to follow. Attorneys need to consider whether their client understands what is happening and must determine whether they can realistically handle what is being asked of them for the rest of their lives. Or as Medicare puts it: will they be a “competent administrator?” Providing a professional administrator to help the client with administration of the MSA funds not only shows good faith to abide by Medicare’s recommendation, but it also helps the injured party save money on their medical care, remain compliant and have a resource to rely upon so that they are not continually reaching out to the attorney after settlement.

 

 

Get Professional Administration Involved

 

As with all decisions, attorneys should consider what approach sets both their clients and themselves up for success and the most defensible case if there are complications down the road. Taking a little extra time to get a professional administrator involved to explain what the MSA is and to set up administration will save the attorney potential exposure on a number of issues. Also, one should not forget, typically carriers are offering to pay for the administration service, so it is no extra cost to the attorney or the injured party.

 

Plaintiff attorneys take enough risks managing and growing their businesses and fighting for their client’s rights; there is no need to add to those challenges by risking any potential issues with Medicare.

 

If you have questions about MSA compliance and administration, don’t hesitate to reach out to our team of experts.

 

 

 

Porter Leslie is the President of Ametros. Porter has a passion for directing the growth strategy of Ametros and working with its many partners and clients.  He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, Porter worked in investment banking, private equity and corporate development.

 

Porter earned a B.A. in Economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. Porter is fluent in Spanish and Portuguese and resides in Boston with his wife, Ruth, and son, Camilo. Contact: https://www.ametroscards.com/porter-leslie/

 

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