A new research brief on MSAs and Workers’ Compensation by the National Council on Compensation Insurance (NCCI) reveals significant opportunities to help injured parties, especially through use of support systems like a professional administrator.
The brief updates a previous report published in 2014. That document considered data on MSA submissions to the Centers for Medicare and Medicaid Services (CMS) between September 2009 and November 2013. The latest version also includes information from 2014 and 2015 submissions, based on 11,500 MSA submissions.
As Medicare is a secondary payer for work-related injuries, insurance carriers must protect Medicare’s interests when settling claims. Many insurers create MSA funds to help pay for injury-related costs that Medicare might otherwise pay. There is no legal requirement to submit a proposed MSA to CMS; however many insurers choose to do so. Once the CMS-approved set-aside amount is spent and properly accounted for to CMS, Medicare will pay for future covered expenses.
Findings and Discussion
- “The largest share of MSAs are submitted about four years after the injury. The number of submissions gradually decreases after that, but it is not uncommon to have a submission 20 or 25 years from the accident.”
The amount of the MSA increases with each passing year. As NCCI’s report notes, in the first year, the average amount of an approved MSA is $53,213; by year 5, that has increased to $105,430; and by year 20, it is $168,469. Clearly, it makes sense for payers to settle claims as soon as possible. It also benefits the injured party, who is in a better position to move on with his life and not dwell in a disability mindset.
- “Almost 95% of submissions are for claimants who are Medicare-eligible.”
- “Almost all MSA settlements are self-administered. Larger MSAs are more likely to be professionally administered than smaller MSAs.”
In fact, only 2 percent of MSAs are handled by professional administrators. This is discouraging, as that means 98 percent of injured parties with MSAs are themselves responsible for complying with all the Medicare requirements, including:
- Maintain line item detail for the duration of eligibility
- Use the fund only for Medicare covered expenses
- Pay according to the appropriate fee schedule
- Prepare and submit annual accounting report to CMS
- Deposit the fund into an interest-bearing account
- Use the fund only for treatments related to the injury
Failing to comply with all six requirements puts the injured party at risk of being denied benefits by Medicare.
In addition to compliance, having a professional administrator involved can also extend the life of the MSA fund. Savings on provider bills, durable medical equipment, medical treatment, and prescriptions are only available to injured parties who have a professional administrator involved with their post-settlement scenario.
- “While many MSAs have been approved by CMS as submitted, CMS often requires that the MSA be increased.” In fact, the gap between the average amount submitted for an MSA and the amount approved by CMS increased slightly from 2013 to 2015.
- 2013 — Submitted amount: $101,260; approved amount: $111,793 – a difference of $10, 533.
- 2015 — Submitted amount: $88,911; approved amount: $103,288 – a difference of $14,377.
Much of the increase in this gap is due to prescription medications.
- “Overall, drugs are about half of MSA amounts, but for more than one-third of MSAs, drugs are less than 10 percent of the MSA value.”
Working with a professional administrator can entitle injured parties to significant discounts on medical costs. Injured parties who are shown the cost differences through a professional administrator compared to the retail prices they would otherwise pay are often pleasantly surprised to see how much they can save.
- “More than half of MSA claimants seek claimant attorney assistance when establishing MSA arrangements”
54 percent of MSAs involve an attorney, while the remaining 46 percent do not.
Injured parties leery of settling their claims often feel overwhelmed by the various requirements for compliance, as well as the fear of managing their money so they don’t run out too soon. Professional administrators can help guide injured parties (and all involved parties) through the settlement maze, and stay with them after settlement.
For information on how a professional administration can help with MSAs, visit:
