Tag Archives: medicare set-aside

Get a Grip on Non-Medicare Costs

Would you buy a house if you didn’t know its price or the continuing cost of your mortgage? It seems like a ridiculous question, but many claimants are asked to make decisions of the same magnitude on the non-Medicare covered portion of their settlements with little to no reliable information.

Most of the time, claimants don’t know the current cost of their medical treatment nor the future expected increases. While a Medicare Set Aside may provide a vote of confidence to the claimant for the MSA portion of a settlement, given that Medicare approves the amount, the costs that would not be covered by Medicare (also known as “non-qualified costs”) can be particularly daunting.

Many adjusters try to avoid addressing the issue of non-Medicare covered items altogether in a settlement, but oftentimes it is a necessary component of the offer and a very contentious one. Estimating the pricing on big-ticket items, such as facility costs, custodial care service and home healthcare can be extremely difficult and often result in many cases never reaching settlement.  Working with a hands-on professional administration company, you can gain transparency into real-world pricing for these items and reach a definitive number for the costs.

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What are some of the most significant non-Medicare covered expenses?

  • Long-term skilled nursing facilities
  • Home health aides and custodial care services
  • Home modifications
  • Certain creams, gels & compounds (Lidocaine, Voltaren, )
  • Transportation
  • Medical supplies sold over the counter
  • DME bathroom supplies
  • Services like acupuncture, gym memberships, home IV therapy

See Also: Healthcare Costs: We’ve Had Enough

There is no exact science for how to appropriately cost out these expenses for a settlement. Many adjusters are trained to look at the past two years’ cost and then project out the future costs based on the claimant’s life expectancy. The issue with this method, as many applicant attorneys will be quick to point out, is that the carrier has sophisticated cost-containment systems in place to reduce what it pays on its bills. The true expense can be dramatically higher after settlement when the claimant is no longer covered by the payer’s systems and instead faces these costs alone, paying retail prices with cash.

Other adjusters rely on MSA vendors to put together a “non-qualified” projection for these costs. It is worthwhile to examine the basis of these projections, given that, unlike MSAs, there is no specific guideline across the industry that the vendor must follow, so the figures can vary significantly.

In contrast, with a professional administration provider you can often discover the exact cost that the claimant will incur after settlement for these expenses. Professional administration companies can go out and secure pricing for some of the largest cost-drivers, and often minimize or at least lock in inflation risks. For example, at Careguard, we have locked-in rates for claimants at specific facilities for long periods: 10 to 15 years, or for the rest of their lives. In other instances, we have been able to secure rates for home health treatment, depending on the type of care and requirements of the claimant. In addition, many professional administration companies have pharmacy networks that drive discounts on the creams, gels and medications that are non-qualified.

Case Study: California Facility Costs

An attorney introduced a case to CareGuard that was not going to settle due to disagreements over non-Medicare covered costs. The claimant was in a long-term skilled nursing facility in California. He and his family were interested in settling, but hesitant about the continuing expense of the care and medical cost inflation.  CareGuard took the following steps to help move the case forward:article data

In this case, CareGuard was able to negotiate a rate with the facility that was about $54 a day less than the carrier had been paying. This reduced rate over 17 years generated a significant savings that allowed the carrier and claimant to find a middle ground and to settle the case.article ideaaaaaa

Non-Medicare covered expenses will continue to become more significant components of settlements. Reports indicate that home health attendant costs have risen between 1% and 2% over the past five years, that nursing facility costs have risen approximately 4% per year and that, in the last year alone, rates for adult day care rose almost 6% nationwide. There is also enormous price inflation and variance in the cost of the prescriptions. These challenges are not going away any time soon. As the parties to a settlement try to come to a resolution, knowing and using real-world pricing through a platform such as CareGuard can help bridge the gap.

Don’t let the discrepancy in estimates of non-Medicare costs become a huge sticking point in your negotiations. Instead, introduce visibility into the cost and let a professional administrator help get everyone on the same page so claimants can feel confident that they’ve made an informed choice when they settle their case.

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New Tool for Settling Open Medical Claims

The almighty dollar is often just one component of a successful workers’ compensation settlement. Savvy negotiators recognize that they have several tools at their disposal when it comes to bridging the gap between the payer’s offer and the plaintiff’s demand, many of which dictate how and when the settlement dollars can be used.

On both sides of the negotiating table, many are adept at minimizing or maximizing the medical cost projection or the amount that goes into a Medicare Set Aside (MSA). Many in the industry also understand how a structured settlement (annuity) can unlock value and allow for the pacing of stable income for the claimant.

Now, a small but growing number in the industry are beginning to understand how offering professional administration (PA) of the claimant’s future medical funds can help facilitate a settlement. PA provides the claimant with a dedicated support team after he settles the case, along with technology to ensure he saves money when he actually spend the settlement dollars on healthcare.

What settlement issues can you use PA to help address?

The most often cited concerns of injured workers when they face the prospect of settling are regarding: 1) access to their medical treatment and 2) how long it takes to get a response from their adjuster, attorneys or the board as they go through settlement process. Examples of these concerns are easily found by reading the comments directly from injured workers in a survey by the New York Workers’ Compensation Board. Issues like “denied treatment” and “delayed processes” are at the core of nearly every complaint.

PA is effective in addressing these concerns because PA services do not restrict the claimant’s access to medical treatment via utilization review or a medical provider network (MPN); PA services provide expanded choices for treatment. In addition, many PA services have call centers that offer support to their clients, the injured workers. CareGuard, for instance, offers 24/7 coverage to its members and prospective members to answer any questions they may have as they navigate the complex healthcare maze after settlement.

Through the life of their claim, many injured workers simply lose trust in the attorneys, judges or system in general. This is often because the settlement process sets the parties up at a table for purposes of a one-time transaction, but then each group walks their own separate way.

There is sparing research done on injured workers’ attitudes toward settling their case, but a survey in Minnesota in 2013 scratched the surface of what a daunting undertaking settling is for the injured individual. The study found that about one-third of injured workers did not fully understand their settlement. Further, it revealed that around three-quarters of injured workers did NOT believe they achieved a “fair” settlement. The sample used were folks who actually overcame their concerns and settled regardless of the negative sentiment the process evoked. Many claimants do not have the courage to push forward with settlement and instead decide to leave their future medical claim, if not their entire claim, open.

PA can be a valuable tool, whether for adjusters, defense attorneys or plaintiff attorneys, to inject trust and solutions into a contentious situation. A team becomes available to address claimants’ concerns about their future medical treatment. PA also introduces a party to the settlement negotiation whose interests are aligned with the claimant’s, because the PA provider will be the only party continuing to provide service to the claimant after settlement. This can give the claimant much-needed peace of mind that a partner is looking out for his best interests, and it is this peace of mind that helps reluctant claimants see that settling could in fact be their best decision. PA services give claimants comfort and confidence that life after settlement can be a rewarding and hassle free experience.

How can you leverage PA in a settlement?

To leverage PA effectively, negotiators on either side of the table should introduce the service early on in the process and clearly explain its benefits to the claimant. Often times, it’s useful to connect the PA provider directly with the claimant or her attorney so that a relationship is established and the service is well-understood. After all, the agreement between the PA provider and the claimant will exist for years beyond the settlement; it’s better to begin that relationship early on rather than try to throw it in last minute.

The PA provider can serve as a neutral party that helps explain to the claimant what she can expect after settlement. Some PA providers, like CareGuard, can go further to provide cost analyses of what treatments will cost on their platform and demos of how their service works. PA providers understand that they do not get paid until the case settles, so they are a source of information and guidance toward settlement for all parties involved.

The 6 Acute Needs in Workers’ Comp Cases

Everybody has needs. These six are acute for parties in workers’ compensation:

1) The Need to Be Heard
Applicants need to tell their story. At the Workers’ Compensation Appeals Board (WCAB), applicants are sitting in the waiting room or cafeteria, if they are there at all. Mediation may be the only time an applicant can tell his needs to a neutral person and know he has been heard. This emotional release is a first step toward resolution. The employer’s representatives also need to vent. Folks on this side of the table can be just as emotional as the applicant. Mediator feedback can help both sides.   
 
2) The Need for Validation
Good-faith participation in mediation demonstrates respect for the other side and its position. Parties need to show that respect in their words and body language.
 
3) The Need for Revenge
Each side may blame the other for acrimonious litigation. The response may be to ratchet up the aggression. Finally, the two sides may not be able to talk to each other. The mediator can interpret negotiations between the parties without animosity getting in the way.

4) The Need to Create Meaning
Like the blind men feeling different parts of the elephant, parties may not be seeing the whole picture. Mediation sometimes reveals misunderstanding of the other side’s primary concerns. Mediation can help parties make sense of the conflict.  
 
5) The Need for Vindication
When a party feels wronged, that hurt can make her keep fighting. Because the mediator is the communication intermediary, a mediated settlement can help a party feel the wrong has been righted.   
 
6) The Need for Safety
Any resolution must assure both sides that the settlement protects them. The applicant must feel confident that the money on the table is reasonable after consideration of all contingencies. The employer’s side may require protections such as inclusion of a Medicare Set-Aside with custodial administration.

It’s Time to Rethink WCMSA Legislation

A fresh approach may be needed to address how best to protect Medicare’s interest in a workers’ compensation settlement.

Today, the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a routine part of most settlements. The WCMSA takes a part of the workers’ compensation settlement and allocates it specifically for future medical expense. If this is done correctly, the Medicare beneficiary is then free to spend the non-allocated portion.

The widespread acceptance of the WCMSA is based on a recommendation by the Centers for Medicare & Medicaid Services (CMS), the agency responsible for the administration of the Medicare Trust Fund.  The WCMSA has become the de facto rule because CMS can ignore a workers’ compensation settlement agreement between parties if it believes there has been an attempt to shift responsibility to pay for future medical care to the Medicare Trust Fund.

In recent years, however, some have objected in certain types of claims because changes to the review process have increased the dollar amounts that need to be set aside for the WCMSA, to preserve the Medicare Trust Fund. Some feel that the amounts have become unreasonable.  The result has been some failed settlements, contrary to a public policy that favors settlements.

In establishing a WCMSA, information is submitted to the Workers’ Compensation Review Contractor (WCRC), and it is evaluated to provide an allocation number for the set-aside that CMS will accept. There are obvious tensions. For instance, the contractor may require extensive documentation for medical care that goes beyond what is necessary for the workers’ compensation claim. This requirement can delay the process or even require the parties to the workers’ comp claim to start over. The contractor may also increase the amount that has to be allocated for the WCMSA, as medical treatment that is unrelated to the workers’ compensation claim can make it into the set-aside.

CMS allows for the use of structures to fund the allocation that can save some money by avoiding the need for an up-front, lump sum payment. However, there is little flexibility to discuss disputes over treatment, prescription use and costs.

H.R. 1982 is the legislation, supported by the insurance industry, that represents the present attempt at reform. Introduced on May 5, 2013, by Republican Congressman Dave Reichert from Washington’s 8th Congressional District, and co-sponsored by Democrat Congressman Mike Thomas from California’s 5th District, the bill was immediately referred for consideration to two House Committees with jurisdiction over Medicare issues:  Energy and Commerce and Ways and Means. But little else has occurred. Today, as the close of the 113th Congress draws near, H.R. 1982 has 14 co-sponsors, evenly split between Republicans and Democrats, but no companion legislation exists in the Senate.

It is difficult to imagine a path for this bill to become law. Members are getting ready for the August recess, to campaign. When they return, larger issues of foreign policy and immigration will take center stage.

Passage is not impossible, and it is important to continue support through the end. It is also important to plan ahead, as about 9,170 bills are currently pending, and only about 5% are expected to become law when this congressional session ends on Dec. 31. Revisiting the strategy of H.R. 1982 is important to improve chances of success should re-introduction be necessary.

Revision would necessitate assembling likely stakeholders. This meeting should take place as early as possible to allow for an early introduction in the 114th Congress. The process should follow that adopted by the Medicare Advocacy Recovery Coalition (MARC), which led to the successful SMART (Strengthening Medicare and Repaying Taxpayers Act) at the close of 2012. Broad-based support is critical to success in a Congress that is expected to be even more divided in the next session.

The purpose of H.R. 1982 is to increase the number of workers’ compensation settlements with Medicare beneficiaries. This must be an important goal of any rewrite. Because H.R. 1982 is designed to amend the Medicare Secondary Payer Act (MSP), already considered to be “one of the most impenetrable texts within human experience” (Parra v. Pacificare of Arizona, Inc., 2013 U.S. App. LEXIS 7861), another goal must be to have it be easy to understand. A third objective must be to avoid unintended consequences, by clearly defining terms and reconciling conflicts with existing MSP terms.

There can be no doubt that H.R. 1982 favors the workers’ compensation plan. The workers’ compensation industry would go from having no ability to raise legitimate disputes to being freed from constraints. CMS, neutered by the proposed law, could do very little to seek increased protection for the Medicare Trust Fund. This is most likely the Achilles heel of the present legislation.

Congress enacted the MSP law in 1980 to stem the red ink of the Medicare Trust Fund. Congress passed the Medicare & Medicaid SCHIP Extension Act of 2007 in furtherance of that objective. Any succeeding legislation must be consistent with such protections.

This can be achieved and still provide immense benefit for all stakeholders. To see how, here is a look at the major areas covered by H.R. 1982 and how they could be revised to increase the likelihood of adoption:

Thresholds

H.R. 1982 may be too aggressive in codifying what is already well-established CMS policy for situations where Medicare’s interest need not be considered. Already, in situations where the claimant’s treating physician does not reasonably expect continuing medical treatment, the parties are free to settle without an allocation for a set-aside. All that is required is documentation from the treating physician. Similarly, no allocation can be required if medicals, as alleged or claimed, are not being released (in other words, if the medical portion of the claim is not being settled).

Rather than have legislation codify where Medicare’s interest need not be considered, a better approach would be to require CMS to adopt regulations.

One issue that can only be addressed through legislation is a value-based threshold that involves a release (or settlement) of medicals. The H.R. 1982 threshold value includes settlements of as much as $25,000; below that level, Medicare’s interest would not have to be taken into account. Today, CMS does not review such settlements but expects that they will “consider” Medicare’s interest. The necessary analysis can be expensive and so time-consuming that contractors will exceed CMS limits on workload. A way around the analysis of smaller settlements could be for Congress to authorize the CMS actuary to determine a threshold based on the cost to the government of review. The threshold should work out to at least $25,000.

Qualified Medicare Set-Aside

The term “Medicare Set-Aside” is not currently codified in the MSP law. Stakeholders should study the potential unintended consequences of codifying the term in ways that have the force of statute. CMS has established policy and procedures that it recommends on when to submit a WCMSA for approval. H.R. 1982 does not add any benefit by adding definitions and can be simplified by omitting them.

The critical component that should be discussed by stakeholders is whether the rewrite should establish a “safe harbor” settlement amount in which a certain percentage is paid to CMS by lump sum or stream of annuity payments that legally “considers” Medicare’s interests. This approach prevents codification of the WCMSA and still achieves the objective. The percentage of the settlement amount would need to be analyzed to maintain cost-neutrality of the bill. As a starting point to demonstrate neutrality, Medicare Set Aside stakeholders should be able to provide Congress data on the ratio of the MSA allocation to the amount of the settlement.

Authorizing CMS to Receive Allocation Amount

This is long overdue. While it sounds like such a feature would add revenue to Medicare, helping the bill to pass, government accounting won’t recognize this approach. The Congressional Budget Office must score each bill to determine if it costs or saves money, and the CBO doesn’t count as revenue money that is received in advance of when it needs to be paid out. This method is counterintuitive, but stakeholders must take it into consideration. Nonetheless, for the benefit of the injured worker, and non-interruption of Medicare or Social Security benefits, letting CMS receive the WCMSA allocation amount is important and would make sense to Congress.  It is important to have the legislation authorize both a lump sum and stream of annuity payments.

Limiting Conditional Payments to the Fee Schedule

Stakeholders should discuss the issue of healthcare providers that, under present CMS regulation, may collect more than is allowed under the fee schedule. H.R. 1982 is designed to deal with considering Medicare’s interest in workers’ comp settlements, and it might be wise to limit legislation to that area rather than also taking on the issue with fee schedules. Simplifying the legislation might avoid drawing unintended adversaries who might lobby against it.

Applicability of Fee Schedule

CMS already accepts the workers’ compensation fee schedule or, in its absence, the usual and customary rate. H.R. 1982 would like to extend the use of the workers’ compensation fee schedule, but some plans may already have better rates. Stakeholders should discuss how medical services and items, including pharmacy, should be priced. There must be no cost to the Trust Fund because of any legislation. In fact, there are ways in which the fee schedules could benefit the fund.

Right of Appeal

Last year, the Strengthening Medicare and Repaying Taxpayers Act (SMART) became law, providing for an appeals process for workers’ compensation laws or plans. The legislation requires appeals over any “determinations” by CMS. Because an approved WCMSA is a CMS “determination,” it would logically be subject to the appeals process. But, because the WCMSA process is recommended and not required, the appeals process may not be triggered. When parties use the WCMSA, they also waive any right of appeal. The appeals process specified by SMART therefore has no applicability unless the WCMSA is required by an actual law. Stakeholders should consider adding legislation to strengthen the SMART right of appeal. A fair, two -way process to discuss legitimate disputes is essential to increasing settlements.

Respecting State Decisions

Recently, CMS issued an updated user guide for WCMSA submissions. A section was added that has resulted in confusion on the application of state law. Section 4.4.1 states that CMS will respect the allocation of non-medical portions of a settlement by a board with appropriate jurisdiction, after a hearing on the merits. By implication, what’s left over in the settlement is for medicals, and CMS likely would respect that allocation, as well. But CMS may disagree. Stakeholders should discuss clarification of how state law should work with the Medicare Secondary Payer Act. This may require an analysis of pre-emption rules, as well as defining the types of hearings.

H.R. 1982 has both positive and negative implications, creating mixed support. CMS will most likely oppose it if it moves in the present Congress, as it prevents CMS’ ability to enforce the MSP and protect the Trust Fund. Providers, MSP compliance companies and structured-settlement companies would also line up to oppose the bill. It is not clear where beneficiaries and beneficiary organizations will line up – while, in the short run, H.R. 1982 would cause more cases to settle, the adverse impact to the Trust Fund may result in delay in the delivery of benefits as well as their reduction. Nonetheless, there are positives to H.R. 1982.

A fresh approach is needed with all stakeholders involved to secure broad-based support to resolve problems for the injured worker, CMS and the workers’ compensation law or plan.

With the right legislation, a fix can happen, and one is sorely needed.

CMS' New MSA Toolkit for Self-Administration

The Achilles heel in Medicare Set-Aside compliance in workers' compensation settlements has always been self-administration. For cases within the CMS' “review threshold,” carriers and self-insureds have procured Medicare Set-Aside allocation reports at no small expense. They file for CMS approval, insisting that settlement documents provide for separate set-aside funding. Then, in 99% of the cases, the money is turned over to the claimant with little or no direction other than to go forth and administer your own set-aside account.

Most of us would be unable to keep track of the moving target of which medical goods and services Medicare will pay for. We’re not so good at submitting annual reports, either. According to the Pew Research Center, only about a third of Americans even prepare their own tax returns. Yet, insurers and self-insureds leave themselves open to Medicare Set-Aside reimbursement liability by trusting that the injured workers will be up to the self-administration task.

Finally, CMS has seen the problem and done something about it. On March 21, 2014, CMS published a Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements. This booklet guides the self-administering former claimant through the steps, which are numerous and not all easy.

For many on both sides of the negotiating table, review of this booklet may be the deciding factor in choosing professional administration. The problem is that many settlements are too small to make custodial administration cost-effective. Some carriers and third party administrators have access to the Medicare Secondary Payer Charitable Foundation, which provides no-cost professional administration. Its account starting minimum is $25,000. Parties should check on the availability of this option before finalizing the settlement.

The purpose of Medicare Set-Asides is to prevent a double-dip: The U.S. taxpayer should not be paying medical bills for which the claimant already received advance payment through insurance. Publication of the toolkit is an important further step toward that goal.