The Best Tidbits of News From The Workers Comp Community

 

 
While there have been no formal updates to the CMS website, the WCRC recently provided an update to Gould & Lamb that it will have all remaining cases that were not part of the previous streamlined process resolved by February 28, 2013, or will provide the specific information that is necessary for the approval process to be completed. Read more…
 
 
 
From skiing injuries to sniffles, there’s no season like winter for thinking fond thoughts of the American health care system. And there’s no time like exactly one billing period later for screaming curses at the American health care system.
With the Affordable Care Act here to stay and its changes already in motion, we present this week’s Cavalcade of Risk: articles on health insurance and its impact on our lives and economy.  Read more…
 
 
Lexis Nexis News:
 
 
"Larson's May Help Interpret Law, But Can't Supplant Text of Statute, by Thomas A. Robinson. Larson's Workers' Compensation Law is often used by federal and state courts to explain and interpret a workers' compensation statute, particularly when that statute is ambiguous. In a recent decision, the Kansas Supreme Court indicated that although consulting the Larson treatise is in order when the statute is unclear, it may not serve to supplant or alter the actual text of a statute. Read more about this case and other cases on Credit for Pension Benefits, Intentional Tort, and Substantially Certain Rule."
 
 
 
"Strong Association Exists Between AMA Guides Impairment Ratings and Earnings Losses, But Losses Vary Significantly Across Body Regions, by  Robert G. Rassp, Esq. & Robin E. Kobayashi, J.D. A new major study funded by CHSWC focuses on the AMA Guides Fifth Edition in California but has implications for the AMA Guides Fourth and Sixth Editions used in other states. The study purports to quell the main criticism that the AMA Guides can only measure severity of impairmentand not disability. The study examines whether there is a strong association between AMA-based impairment ratings and earnings losses for workers' comp claimants with permanent disabilities, thereby indicating that impairment ratings accurately reflect the effect of impairments on the ability to work. The study also examines…Read more"
 
 
Author 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.
 
©2013 Amaxx Risk Solutions, Inc. 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 about workers comp issues.

The Value of Using Structured Settlements When Addressing Medicare Set Asides

 

Medicare Secondary Payer Statute Protects Medicare’s Interests

 

The Medicare Secondary Payer statute (MSP), 42 CFR 411, requires that primary payers (carriers, self-insured entities) protect Medicare’s future interest when settling the medical component of workers’ compensation claims. Medicare’s preferred method to protect their interests is to include a Medicare Set-Aside Allocation (MSA) as part of the settlement. The MSA serves as the mechanism to fund future Medicare allowable expenses for work related injuries that were included as part of the settlement.

 

The MSP statute clearly delineates that Medicare is a “secondary payer” in situations where primary payers exist. If the primary payer (carrier, self-insured entity) settles future medicals and fails to protect Medicare’s interest, Medicare may deny coverage.

 

Medicare Set Aside Ensures Compliance

 

To comply with the MSP requirements, insurers create a Medicare Set Aside (MSA) agreement (also referred to as a MSA) which estimates the future Medicare allowable expenses relative to the work-related injuries. In certain circumstances, the MSA is submitted to Medicare for their review and approval. If Medicare concludes the MSA amount to be adequate, the insurer proceeds with the settlement which includes the MSA amount. The MSA funds are paid as part of the settlement to the injured employee.

 

Regardless of the age of the injured party, future medical costs are often times very significant.  It is not uncommon that MSA costs adversely inhibit the primary payers ability to move forward with settlement. While many insurers and self-insured entities pay MSA funds by way of a lump sum, it is often much more advantageous for all parties involved to address the MSA with the use of a structured settlement.

 

Structured Settlement Offers Many Advantages

 

A structured settlement is an annuity purchased from a life insurer and established to make annual payments of the MSA amount over the life-time of the employee.

 

The structured settlement of the MSA provides several benefits including:

 

  • Establishes the distribution of periodic payments for the MSA funds and assists in avoiding both a premature exhaustion of funds and/or the inappropriate use of the funds

 

  • Offers cost-containment benefits as the cost of the annuity is less than paying funds out as a lump sum

 

  • Assists in facilitating settlement in situations where money is freed up by purchasing an annuity for the MSA and can be utilized for the indemnity component of the settlement if required

 

 

A Medicare Set Aside Structured Settlement Example:

 

To see how a structured settlement saves money, consider the following hypothetical example.  The injured employee is a former motel maid Jane Doe, age 45, who injured her back lifting a heavy bag of trash.  She is morbidly obese, has diabetes, hypertension and gout.  She has had 3 unsuccessful back surgeries and is expected to be permanently and totally disabled.  Due to her on-going pain management treatment, medical appointments and narcotics, it is estimated that her medical care over her 30 year rated life expectancy will be $10,000 per year or $300,000 in total. There are two ways to pay for the future medical care.  The first way is to write Ms. Doe a check for $300,000.

 

The second way to pay for the MSA is through a structured settlement.  We first obtain a rated age (based on comorbidity factors) and evaluate the structured settlement quotes. After parties agree to terms on the settlement (including the structured MSA) and CMS review is completed (if applicable), settlement funds are disbursed.

 

By structuring the MSA in this scenario, the total cost of the annuity was $225,000 to the carrier or self-insured entity and the injured party reaped the benefits of the annuity payout of $300,000 (includes the CMS required two-years of seed money and periodic payments that will be paid over the life of the annuity).

 

The potential hard-dollar savings in the above hypothetical example is $75,000.  As this is an example, the savings could be actually greater/less all depending on a number of factors – size of MSA, comorbidity factors for rated age purpose and  rates of return on the annuity (tax free interest earnings on the annuity).

 

To learn more about utilizing structured settlements when addressing MSAs, please contact us.

 

 

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.

 

©2012 Amaxx Risk Solutions, Inc. 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 about workers comp issues.

5 Reasons Why Reserves Need to be Higher than You Think

As a Risk manager, claims coordinator, agent, human resources representative — whatever your title may be, the name of the claims game comes down to reserves. Reserves are the tangible part of what an injury costs you, either directly out of budget, or as potential future increased premium costs. A lot of speculation and estimation goes into reserving a file, but a good percentage of the time when you try and come up with a number for a file you find yourself way too low. Why are the numbers that your adjuster recommends so high? What exactly do we have to cover as future medical cost, even though this claimant may no longer work for you? How do adjusters learn how to reserve?  
 

1. It is the cost of the claim for “life”
When you think about reserving a file for the long term, you have to think long term. Not long term as in 10 years. Long term as in for the rest of that person’s life. In most states, if an injured worker needs long-term reasonable and necessary medical treatment for their injury, and the doctor relates  treatment specifically back to that injury, then your company is probably responsible. You can get an IME (Independent Medical Review), or record review to fight why the recommended treatment is not related but, typically, the burden of proof is just causal relationship. If the patient can show the need for treatment relates back to the injury of 20 years ago, they have met their burden of proof. This is when these injuries can come back to bite you. Instead of settling 10 years ago because you thought the number was “too high,” now you are going to have to scramble to come up with a defense and, if it is indeed related, not only will you have medical costs but you may have wage-loss costs as well. (WCxKit)

 
 
The future is your biggest enemy in surgical claims with long-term exposure. Once surgery is performed, nothing is ever the same. Scarring, nerve issues, accelerated arthritis symptoms, the need for ongoing medication and doctor evaluations, diagnostic testing, etc. These things all lie in wait for the future. Sure, right now in 2011 the claimant’s demand of $100,000 may seem like a lot. But you have to break the file apart, and this is what the adjuster does. If your injured worker is 30 years old, you potentially have  55 years of exposure. If back surgery was  in 2011, and the claimant is  30 years old, you have a ton of problems sitting there waiting for you. The claimant may be fine now and the surgery was a success. But what about 5,10,15 years from now? Will be needed another surgery? Maybe that one will not go as well. So consider the long term: The life of the claim, the life of your claimant, and the need for future medical treatment.
 
 
2. The injury requires potential future surgical risk
Surgical cases are major red flags for future problems, especially when some sort of hardware is implanted. Most of the time these people return back to doctors due to pain, usually due to hardware or screws becoming loose. Then this person has to undergo a procedure to have it removed. Then, they have to rehab from that, and then they can return to work. But, again, the issue here is when will the person need that hardware out? Some can live with it forever and never come back. Some come back in a year or two. Some have constant problems with it and it creates problems preventing them from making a full recovery from surgery.
 
 
Back surgery is especially risky. In the world of workers comp you do not hear about many success stories with major back surgery. It may lessen the pain, but it can create a ton of future issues. When you evaluate these claims and costs of settling them, be sure to account for future surgical risk. It is very costly, and very risky, and maybe you better get rid of that risk now if you can versus adopting a “wait and see” attitude.
 
 
3. The costs ongoing medications
If you pick up any newspaper you will run across a story about the costs of medications and how they are dramatically increasing. Each drug manufacturer has their reasons to increase price but, whatever the reason, the bottom line is prices are always going up. And if you have a claim where a claimant has to take ongoing medication for pain or nerve issues, those meds are typically not the cheapest ones. Sometimes generics are available and worth looking in to, but its still an ongoing monthly cost that can drag on for years. You can find out from your IME doctor if it is necessary for your claimant to continue taking these meds, how often they should be taking them, etc. That way you can properly estimate the future cost. But keep in mind to add in a percentage for inflation over the years, since prices show no indication of decreasing.
 
 
4. An MSA may be needed
Perhaps the biggest roadblock to settling a claim is the need for a Medicare Set-Aside (MSA). The MSA breaks down future cost for those who require future treatment while also being on Medicare or of retirement age. If your veteran worker sustains a major shoulder injury a year before retiring that is not good. Not only do you have to cover surgery and rehab on a veteran worker in your shop, but also, the chances for a good recovery are guarded, which means ongoing treatment could last for years. An MSA is needed if you want to move this case to settlement. MSA numbers are not small. There are several vendors who specialize in MSA reports and submissions, and they will tell you they are very costly once approved by CMS (Center for Medicare/Medicaid Services).
 
 
MSA’s are costly, speculative treatment estimations. And the key word here is “estimates.” There is no guarantee the claimant will need another surgery. But they may estimate it for you, and make you pay for one just in case. So maybe that is a scenario where you should not settle. It is something to discuss with your adjuster. The point is, be aware if an MSA is needed it is going to financially cost you to settle and resolve your risk involvement in this case.
 
 
5. The age/general health of the claimant matters
Obviously if a 22-year-old worker falls and breaks his neck, you have about 63 years of medical exposure. If your 67-year-old, part-time janitor falls and breaks his ankle, you have maybe 16 years of exposure. Age matters. The younger the claimant, the more severe the injury, the more costly it is going to be.  Reviewing employees  personal health histories correlates to cost as well. The healthier the person, the speedier the recovery and the less it may cost to get them  back to full duty work.
 
 
It is hard to control genetics. Everyone is different and heals differently, but you can get a good idea about if someone is “healthy” or not. If you have seen your claimant in the past eating fast food and chain smoking during  daily breaks or lunchtime, you know quick healing is probably not in that person's future.
 
 
Summary
The art of reserving a file for life expectancy is part science, part estimation, and part experience. Adjusters see the same injuries day in and day out. Sometimes they deal with poor healers and sometimes they deal with those who make a speedier recovery than planned for. This is why reserving a file for probable outcome is an art form. All you can do is look at the evidence and what the future may hold. If in doubt, aim for a higher rather than lower reserve figure.(WCxKit)
 
 
For your long, large claims, utilize the help of a life care manager or an MSA company. Talk about future medical needs and costs with your adjuster. Roundtable the file with your peers and see if you are missing anything. Ask your adjuster during your weekly roundtable meeting. If you don't have a weekly roundtable, it might be time to ask for one. It is complicated to think about every cost an injured worker may need between now and 40 years from now, but if you use the tools at your disposal you should be able to get an accurate, effective reserve for the life of the file. If you want to outsource this – and many do – to a an expert, consider the Life Care Planner services of your TPA or MSA company. Also, ask your adjuster for the Reserving Worksheet – this can clear up any problems.
 

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 website 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, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com. Contact: RShafer@ReduceYourWorkersComp.com.
 

NEW 2012 WORKERS COMP BOOK:  www.WCManual.com
 
WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

5 Things Employers Must Know About Medicare Set-Aside Custodial Administration Arrangements

 
LowerWC.com interviewed Christie Luke, vice president of operations at Gould & Lamb, in Bradenton, FL about custodial administration arrangements for Medicare Set-Asides (MSAs). She started off  with the basics.
 
Define Medicare Set Aside
The Centers for Medicare/Medicaid Services (CMS) require their interests be protected prior to any settlement of the medical portion of a claim for qualified individuals. Medicare secondary payer laws are intended to prevent the shift of financial responsibility from primary payers to Medicare. The Medicare Set-Aside Agreement (MSA) allocates a portion of claims settlement for future medical expense, placed into custodial administration.
 
 
What is Custodial Administration?
Once a case is settled MSA funds are placed into custodial administration, or “handling,” into either the hands of the claimant (self administration) or with a custodian (professional administration) on the claimant’s behalf. This can include cases sent to CMS for approval, wherein the CMS approval indicates the intent of administration; or in cases where the client chose not to send to CMS but wants the case properly administered.(WCxKit)
 
 
Self Administration involves claimants’ handling their own money, with the intent to follow CMS’ guidelines.
 
Professional Administration involves a pre-designated custodian hired to administer MSA funds on the claimant's behalf. This usually occurs in larger settlements and/or those with severe injuries (e.g. traumatic brain injuries, paraplegics/quadriplegics).
 
 
Are there exceptions to those who need custodial arrangements?
There are no formal rules or regulations in most cases to those needing post-settlement administration. The exceptions are cases in which a court has deemed a person incompetent. In those cases the claimant is required to assign a custodian . In other cases, it is up to the settling parties how to proceed — this is driven by the risk of adversity to the carrier or self-insured employer.
 
 
What impact does it have on insured clients? Whom does it affect?
Post settlement administration programs can provide insured clients with comfort knowing they are providing claimants with post-settlement support. This ensures they are able to manage their Medicare Set Aside funds. In many of these cases, the parties are overwhelmed and, at times it may discourage them from entering into a settlement. Knowing these tools and resources are provided, reducing the potential negative actions by CMS and ensuring post-settlement compliance and risk mitigation is a benefit to all parties to settlement.
 
 
How should employers proceed when becoming aware of their obligations? How do they then set up an arrangement with a custodial administrator?
Once a carrier or self-insured employer has set standards with regard to their comfort level on post settlement administration, they can decide how to set processes and procedures. Generally, they should begin including information on the topic as soon as possible with the parties, at least during settlement discussions. This way, all of those involved are aware of available resources and costs, as well as the potential implications of non-compliance and the benefits of available programs.
 
During these discussions they can include administration companies. In order to ensure the administrator’s notifications to Medicare and to the claimant and their medical providers is seamless before and after settlement, they can check to be sure all information is accurate and the program is administered in a timely manner.(WCxKit)
 
 
Why is it better, more cost effective, etc., to use a formal administration company?
The administration of an MSA is quite challenging. It requires in-depth knowledge of Medicare policy, individual state fee schedules, and an understanding of Medicare coverage application and claim related care. Without this detailed knowledge, it is very easy to improperly disperse funds from an MSA or pay amounts above fee schedules, risking future Medicare benefits and entitlement.

Thank you, Christie for your time filling us in on this very important topic that all employers need to be aware of.
 
 
Author Christie Luke of Gould and Lamb has worked for nearly a decade in claims management, followed by over five years in all aspects of MSP compliance. She has an undergraduate degree in business and an MBA focusing in Healthcare Administration, Quality Management, and Economics. She is MSCC certified and is currently earning her Green Belt certification in Six Sigma. She is also a member of NAMSAP. Contact Christie at 941-798-2098, Ext.1314; or email: Christie.Luke@gouldandlamb.com.   GOULD And LAMB BLOG
 
 
 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Medicare Set Aside Changes Regarding Prescription Medications

Medicare, Prescription Drugs, and the MSA

On May 14, 2010 CMS Central Office published some important changes about the way Medicare will view prescription drugs in MSAs. Before we discuss the impact of these changes on future settlements, it is appropriate to mention numerous companies, and groups, acting in concert on behalf of the industry, are responsible for driving this significant and logical change.

 

CMS Part D: Medicare Prescription Coverage

One of the most significant changes is Medicare’s statement saying they will no longer support off-label use of drugs in MSA calculations. This decision impacts certain high cost drugs inappropriately prescribed by physicians for a long time.

 

While a positive effect on settlements will be seen, as the cost of these drugs will be accepted by the WCRC as “non-covered” and outside of the MSA costs, the decision also requires the  selection of an MSA vendor with a trained and knowledgeable staff of pharmacists with a serious  understanding of and ability to navigate the FDA guidelines and multiple drug compendia referenced by CMS to take full advantage of the reductions.

 

A team of pharmacy experts analyzed off-label usage of drugs in workers’ compensation claims and discovered the 10 most commonly prescribed drugs used for non-FDA or compendia accepted conditions are: Actiq, Cymbalta, Gabapentin, Gabitril, Lamictal, Lidoderm, Neurontin, Provigil, Seroquel, and Trazadone.

 

The short list is only an example of some of the more common drugs used for off-label conditions. Being on the off-label list, does not mean these drugs will never be seen in an MSA projection when the medical condition is appropriate.

 

CMS Operating Rules

The new CMS Operating Rules, released on 4/22/10, indicate a Brand to Generic substitution will not generally be accepted in the MSA if all evidence indicates a Brand has historically been prescribed.

 

Please note, a substantial number of states have statutes requiring or allowing Brand to Generic substitution except in cases where the drug is prescribed “Dispense as Written” (DAW). It’s important to be fully informed on all these statutes and/or seek legal counsel who will employ a legal argument to reduce the MSA and will supply irrefutable legal citations to support Prescription Drug Review positions.

 

Prescription Drug Reviews

Prescription Drug Reviews (PDR) must continue to work in harmony with clinical, pharmaceutical, and legal staff to mitigate the Part D component by making medically or legally indicated changes based on contra-indications, duplication of drugs, over-utilization, and lifetime impact.

 

PDR must be supported by the most up-to-date medical and legal evidence. It is gratifying to learn that after a year of struggling with drugs, the WCRC has added pharmacists and pain management specialists to their internal staff.

 

These new experts are a welcome addition because they understand and will accept clinical and pharmaceutical standards for coordination of future care. Statistical evidence shows an increased acceptance of drug reviews over the last 60 days and it appears that CMS is moving towards following their published review policies on Part D.

 

Reconsideration of Previous Denied Allocations

A most encouraging sign Medicare seriously and fully takes to heart these changes is the fact Medicare agrees it is proper for MSA rejected under the old, flawed rules can be resubmitted for reconsideration under the new rules.

 

In the future, these changes allow for a quick first pass approval without the need for the lengthy reconsideration procedures plaguing the industry since June of 2009.

 

CMS Memo: Rated Ages

In addition to addressing off-label Rx, CMS has indicated that submitters must certify “that all rated ages obtained on the claimant, at any time during that individual claimant’s lifetime, have been included as part of the submission to CMS.”

 

While this is a poorly worded certification given the reality of what rated ages are and how long they are valid, we understand the intent. CMS does not want insurers or submitters hiding rated ages to misrepresent the life expectancy.

 

Those responsible for driving these significant and logical changes, as noted above, are in the process of reviewing the language and practices for securing rated ages from and for clients and we will provide CMS the language they require in our submissions to meet this new standard. (workersxzcompxzkit)

 

Conclusion

Since the memorandum’s publication May 21, 2010, there have been many confusing exchanges on how to implement these rules in MSAs. In reality the rules are quite simple to follow if your vendor has the appropriate multi-disciplinary experts involved in the MSA process.

 
Podcast: KNOW the New OSHA Recordkeeping Rules — OR Risk Fines and Criminal Penalties.  Click Here:
http://www.workerscompkit.com/gallagher/podcast/Non_Compliance_with_Recordkeeping_Standards/

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.

 

©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

 

Claims Resolution and Settlements: MSA and Annuities

Medicare Set Asides
Under federal law,  Medicare is precluded from paying the medical expense for a person's workers' compensation injury.  The Center for Medicare and Medicaid Services requires all Medicare (CMS) beneficiaries to protect Medicare's interest in all work comp claims and ensure Medicare is secondary to work comp.  Therefore, it is required of the adjuster to take Medicare's interest into account every time a work comp claim is settled.  On small claims this amounts to the adjuster paying the estimated future medical cost.  

Where things get  interesting is on the larger claims.  If the employee is a Medicare beneficiary at the time of the settlement and the total settlement is over $25,000, or if the employee has a reasonable expectation of Medicare enrollment within 30 months of the settlement and the total settlement is greater than $250,000, a Workers' compensation Medicare Set Aside (MSA) proposal must be submitted to the Center for Medicare and Medicaid Services for their pre-approval of the settlement.


If Medicare's
 interest is not protected, and the CMS determines Medicare made improper payments, it can seek recovery not only from the employee but also from the employer.  If CMS determines the failure to take Medicare's interest into consideration was intentional, it can recover double the amount paid out. 

Therefore,  it is recommended an expert in Medicare Set Aside Trust be retained on all claims meeting these thresholds.  The MSA expert evaluates the employee's medical condition, medical history, and potential future medical cost, along with an evaluation of the employee's current and future disability.  The MSA proposal should be submitted to CMS and the settlement delayed until the settlement has been approved by the CMS.

It is recommended  CMS approval be obtained whenever possible.   When CMS approval is not obtained, the settlement agreement/release must contain language verifying Medicare's interest was considered and protected in the settlement.  Source:  https://blog.reduceyourworkerscomp.com/?p=32  Medicare Set Asides Blog.

Structured Settlements/Annuities
In conjunction  with the MSA, it is often wise to conclude the large workers' compensation claims through the use of a structured settlement or an annuity.  With this type of settlement of a workers' compensation claim, the employee receives an immediate cash settlement plus a stated number of future payments at stated intervals.  The future payments are funded by the employer or the insurance carrier purchasing an annuity from a life insurance company, with the future payments made directly to the employee.

When the  employee has anticipated future medical needs, the structured settlement can prevent the employee from spending the entire settlement before the future medical cost is incurred.  As a part of the structured settlement process, a life care plan should be prepared showing the anticipated future medial cost and the approximate dates of the medical expenses.  A "spend thrift" MSA Trust can be established as part of the structured settlement protecting the employee from wasting their settlement and protecting the employer from a CMS claim for medical expenses spent by Medicare. (workersxzcompxzkit)

The structured  settlement benefits the employer or the insurance company by establishing a set amount for the future exposure of the claim.  The total future cost of the claim can be paid and the need to carry reserves for the claim is eliminated with the purchase of the structured settlement.


Author Robert Elliott
,
executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com.

Our Work Compensation Book click here: www.WCManual.com

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers' comp issues.

©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

Five Strategies Tried to Avoid Medicare Set Asides

While Medicare Set-Asides (MSAs) are designed to protect Medicare and the claimant, claimants and their attorneys often look for ways around them. Generally, avoiding MSAs is tough to do. 

Strategies Tried to Avoid MSAs

1. There is one approach  to avoiding MSAs that works — go to court or to the work comp board. The Centers for Medicare and Medicaid Services (CMS) will honor judicial decisions by a court or state work comp boards after a hearing on the merits of a work comp claim. If the court or a state's workers' comp board designates a portion of the funds to future indemnity and a portion to future medical care, then Medicare will accept that designation of funds. The downside to this approach is the insurer and the claimant are not negotiating the settlement.

For CMS to honor
 the court's decision or ruling, it must be solely the court's or work comp board's decision, not the court or work comp board approving a settlement agreement entered into by the claimant and insurer. CMS will not accept the terms of the court or work comp board approved settlement if the amount of the future medical payments are inadequate to cover all future medical expense. CMS takes the position that if Medicare's interest are not protected, then Medicare will not pay for medical services related to the work comp claim until the work comp related medical expenses have exhausted the entire WC settlement, including what was designated as indemnity. If Medicare determines it has paid for a work comp related medical expense, it will seek reimbursement from the claimant and/or the medical provider.

2. Occasionally you will
 have the claimant who really does not want to deal with Medicare or who thinks he can outsmart CMS. The claimant will be willing to waive his interest in any future medical care related to his work comp settlement to reduce or eliminate the portion of the MSA related to medical. The claimant can even go so far as to sign an affidavit or some other legal document asserting Medicare will not be billed for any medical services not included in the MSA. 

This approach will not work
. The Regional Offices (RO) of CMS will not approve work comp claim settlements agreeing not to bill Medicare for future work comp related medical care.

3. Another approach taken
 by some work comp claimants is to refuse to enter into a settlement involving the CMS or a MSA. They take the approach if no one tells CMS about their work comp claim, they will settle now and even settle for a little less. Do not go there! 

The CMS position
 is you are still responsible to comply with the law. When CMS finds out about the work comp claim (and they will), CMS will pursue recovery for the payments they have made for work comp related medical service. When the claimant refuses to settle because of the potential for CMS involvement, your insurer should notify the CMS RO. The RO will send the claimant a certified letter asserting their interest in the WC settlement. The RO will quote the statute's book and verse to the claimant. 

Again, CMS
 will take the position that if Medicare's interest is not protected, they can refuse to pay for medical services related to the work comp claim until the work comp related medical expenses have exhausted the entire WC settlement, including what was designated as indemnity.

4. A favorite approach
 of some claimant attorneys is to go the structured settlement route in an effort to circumvent the CMS and the need for a MSA. For example, they put forth that the cost to purchase the structured settlement is $200,000 and that the claimant is not yet enrolled in Medicare. The proposed structured settlement is $50,000 now and $20,000 per year for 15 years, or a total payout by the structured settlement of $350,000 ($20K X 15 yrs = $300,000, + $50K).  

This will not work
 either if the claimant has a “reasonable expectation” of enrolling in Medicare within the next 30 months. CMS will not look at what is paid today for the structured settlement ($200K), but at the total amount to be paid to the claimant over the life of the structured settlement ($350K).

5. Then there is
 the claimant and his attorney who want the all cash settlement for $250,000.00 and not one penny more (as it would then be greater than $250K and subject to a MSA). However, the insurer (and probably the attorney as well) think the true value of the work comp settlement is $275K. To protect themselves the insurer or the attorney asks the CMS to issue a letter certifying that a MSA is not necessary. 

CMS will not
 issue such a letter. You can still settle for $250K and the claimant will not be subject to protecting Medicare's interest, if at the time of the settlement the claimant has not applied for Medicare and does not have “reasonable expectations” of doing so in the next 30 months. (workersxzcompxzkit)

DO THIS!
The best approach  is not to think of ways around the MSA on your very large work comp claims, but to protect the claimant from future Medicare recovery claims by having the MSA reviewed and approved by CMS. It is CMS's policy to review all proposed work comp settlements within 60 days (it does not always happen!) of all necessary documentation being presented.   Take the time for the CMS approval, in the long run you will be glad you did.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.

Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

Workers Compensation and Medicare Common Overlaps

Workers’ Compensation  and Medicare overlap is a huge topic – impossible to cover every aspect of how they are interrelated. Here, we will discuss some of the more common issues that arise.

Under federal law
,  the U. S. Department of Health & Human Services operates the Centers for Medicare and Medicaid Services (CMS). The law requires all workers' compensation insurers (including self-insurers, risk retention groups, alien insurers and non-admitted insurers writing excess coverage) to protect the interest of Medicare when a work comp claim settlement meets the criteria set forth in the Medicare Set-aside Arrangements (MSA) statutes. 

A MSA is a settlement
 plan where a portion of the settlement proceeds are set-aside in a trust to pay the claimant's future medical expense. MSA keeps Medicare from paying for medical care that should be paid by the work comp insurer. [Please note: if the work comp claim settlement leaves future medical care open and only closes the indemnity portion of the claim, the MSA statutes do not apply].

The requirements
 for requesting a MSA approval when the future medical portion of the work comp claim is being settled include:
1. CMS must review  and approve an MSA if the work comp claimant is a beneficiary of Medicare at the time of the injury, and the total settlement amount is greater than $25,000.
2. There is a  “reasonable expectation” of Medicare enrollment within 30 months of the settlement date, and total settlement amount for both disability and medical is greater than $250,000.

What is “reasonable expectation” of Medicare enrollment within 30 months? Glad you ask. It is:
1. Anyone age  sixty-two years and six months, or older, at the time of settlement.
2. Anyone under  age 65 with permanent disabilities.
3. The claimant  has applied for Social Security Disability Benefits.
4. The claimant  has been denied Social Security Disability Benefits but anticipates appealing the denial decision.
5. The claimant  has already filed an appeal of Social Security Disability Benefits denial.
6. Anyone  with end stage renal failure.

When a MSA is submitted to CMS it needs to contain:
1. The claimant's  identity.
2. The claimant's  social security number.
3. A copy  of the settlement, judgment, award or other payment agreement.
4. Medical information  such as medical records, medical diagnosis and prognosis.
5. Life care  plans or MSA cost-projections.
6. Life expectancy  information.
7. The payment  history on the claim.
8. Any other information  showing Medicare’s interest were protected in the resolution of the claim.

Do not ignore
 Medicare's interest when settling a work comp claim. The CMS by law has a priority right of recovery for any payments they make that should have been covered by work comp. The CMS can pursue recovery against any entity receiving a payment from them.

A MSA is not required
 for work comp settlements of $25,000 or less. However, for current beneficiaries of Medicare, CMS still has the right of full recovery for ANY medical payments by Medicare that should have been paid by work comp. 

While CMS has
 not had the man-power to cross check all work comp claims against Medicare's enrollment, the day this is done electronically is not far away. A question the work comp adjusters need to start asking during the initial interview with the claimant is “Are you enrolled in Medicare or anticipate enrolling in Medicare in the next 30 months?”

On the other hand
,  take the claimant who settles the work comp claim for $245,000. The claimant at the time of settlement does not have a “reasonable expectation” of enrolling in Medicare within the next 30 months. Five years after the work comp settlement, the claimant has spent the settlement funds on other things and has not saved anything to cover on-going medical needs due to the work comp injury. As the claimant did not have a “reasonable expectation” of enrolling in Medicare at the time of the settlement, the claimant can enroll in Medicare and Medicare will pay for the work comp related services without having a right to recovery. (workersxzcompxzkit)

When you create
 a MSA, the claimant often wants to self-administer the trust created. If your state law will allow the claimant to administer his own trust, it is okay with the CMS. What the claimant often does not realize is the self-administered trust is subject to the same rules and regulations as any other set-aside arrangement

Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

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