What Happens After the Settlement?
The Impact of MSA’s on Injured Workers and Future Liability

By Jason Beans, CEO, Rising

55 Ferncroft Road Suite 201
Danvers, MA 01923

(866) 630-CPSC Toll-free
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www.CPSCmsa.com

55 Ferncroft Road Suite 404
Danvers, MA 01923

(866) 630-CPSC Toll-free
(978) 774-0540 Facsimile

www.CPSCmsa.com

The settlement process has been a common tool used by the insurance and legal communities to bring resolution to disputes. For the injured worker, it protects them from bankruptcy risk and can provide them with much needed liquidity for coping with their injury/illness and loss of income. For the insurance carrier, it allows them to close out their books on a claim and mitigate their future risks. In many situations, both sides win.

When Medicare started mandating that a portion of the settlement funds intended for future medical treatment be “set-aside” for select claims, the funds management requirements and landscape changed dramatically.

The Medicare Set Aside (MSA) process is a noble concept. Medicare is paid for by society. The money paid by the insurance carrier for future medical treatment should be used for that purpose before society picks up the tab. At one time, the story of an injured worker taking their settlement check and buying a new car or boat and then getting on Medicare was so common it became almost cliché. The MSA process is intended to eliminate such abuses.

Up until this point, the insurance industry has been focused on meeting the MSA allocation requirements. Little to no effort or consideration had been placed towards understanding or mitigating the impact on the injured worker after the settlement process is complete. That is, until now.

While still in its infancy stage, the number of self-administering injured workers in jeopardy of losing their Medicare benefits will grow exponentially. Add to that the emotional cost. “My attorney isn’t talking to me, my insurance adjuster isn’t talking to me, and my nurse case manager isn’t talking to me,” laments one injured worker.

Before the MSA process, injured workers really had no requirements for managing settlement funds and therefore had no risk of losing their Medicare coverage. Now, Medicare’s protocols are so rigorous and complex that they require injured workers to have a substantial background in medical bill re-pricing, medical coding, Medicare guidelines, state workers’ compensation regulations, financial management, and legal compliance. Frankly, it’s nearly impossible for a non-industry individual, regardless of their intelligence or education, to properly adhere to Medicare’s MSA account requirements.

Let me give you a point of reference. Our company provides medical-financial solutions to the workers’ compensation market. We have invested millions of dollars in our medical bill re-pricing systems and ancillary software. We have a full time staff of professional medical bill auditors who do nothing but analyze and process workers’ compensation medical claims. We have a compliance team who does nothing but research federal and state workers’ compensation legislation and guidelines to ensure our adherence. We have an intense training program for new employees. Still, it takes us an average of six months to train them to do the basics requirements of their positions. That is just for our medical cost management services. For our financial services, we have brought on CPA’s and financial experts to properly handle the funding, management, and reporting requirements for our MSA custodial accounts. To expect a non-expert to handle all of these components properly is illogical. If it weren’t so scary, it would be comical.

The challenges self-administering injured workers face is just the beginning. The average MSA settlement we handle covers more than 17 years of future medical treatment. The whole MSA process is only a few years old. If MSA funds are left continually mismanaged, it won’t be long before there are other negative outcomes including possible liability issues for plaintiff attorneys and insurance carriers.

Plaintiff attorneys who guide their injured workers to settlements without requiring professional administration or proper training risk future malpractice suits if injured workers can’t get Medicare coverage due to mishandling of MSA funds. In many cases, these are elderly or severely injured parties. To lose Medicare, their insurance of last resort, at a critical time could be catastrophic.

There is also risk to the insurance carrier. Medicare’s Secondary Payer legislation and ensuing CMS Memorandums have been written in a very open ended manner. If Medicare’s interests aren’t taken into full consideration, Medicare may pursue the carrier. Put it this way. If there are thousands of destitute elderly who are not compliant with MSA guidelines, is Medicare likely to pursue them or the carriers that did not ensure that Medicare’s interests were being considered? The deepest pockets are most often at the greatest risk.

“All I know is this money is for my doctor payments, at this rate it won’t last long,” explains one distressed injured worker.

What can be done? Part of the solution lies in providing administration assistance to support injured workers. For the smaller settlements or for more highly educated injured workers, there are self-administration support services which offer compliance assistance tools, resources, forms and specialized information.

For larger settlements or for less educated or mentally incompetent injured workers, professional administration services are most beneficial. The long term risk for the injured worker, carrier, and plaintiff attorney is negligible. By hiring a professional administrator to properly manage the MSA funds, Medicare cannot argue that their interests were not taken into account, thereby eliminating this future risk factor.

As with any new development, it will take some time for the industry to digest the long term impact of the MSA process and evolve to address that impact. By getting ahead of the impending risk with MSA administration support services and other measures, we can help protect injured workers, carriers, and attorneys from negative outcomes. These proactive steps are beneficial for the industry and for society as a whole, and they are well within our reach today.

Written by Jason Beans, Founder and CEO of Rising Medical Solutions and Rising Financial Solutions.

Jason Beans has more than 19 years of managed care experience in the workers’ compensation and auto markets. He has an extensive background in medical bill review, care management, and finance administration and he has authored the Rhode Island Workers’ Compensation Medical Fee Schedule for 11 years. He has been featured in various media outlets and has been a speaker at numerous industry events, including Lloyds of London, AmComp and NAMSAP. Mr. Beans holds a finance degree from Boston College.

If you have an idea for an article or a comment on a newsletter, please contact Louis Porrazzo, Esq. at lporrazzo@cpscmsa.com

Editor-In-Chief Louis D. Porrazzo, Jr., Esq.

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