*This article was originally published on Risk & Insurance by Michelle Kerr.
Payers have a smart tool at their disposal to encourage settlement acceptance, reduce the risk of liability, and do the right thing by injured workers.
While employers and payers are eager to settle long-tail claims, they may find that the injured worker refuses to settle.
Some may resist a claim settlement offer out of fear that the money will run out too soon. Some may not understand how the offer has been calculated and assume it’s a lowball offer. Others may simply be uncomfortable with all of the unknowns of leaving the workers’ comp system.
Payers motivated to settle claims must have a thorough understanding of the fears an injured worker may have before settlement, and the challenges they may face afterward. Educating workers about what the transition will look like, and giving them the tools they need to protect their interests can help them feel more comfortable about accepting a settlement offer.
An increasing number of payers are opting to meet all of those needs by offering claimants the services of professional administrators (PAs), which offer a range of services to help injured workers achieve a smooth transition to a post-settlement life. Professional administration companies preserve and protect the settlement funds and prevent “dissipation risk.”
“Whether you’re a plaintiff attorney, defense attorney, adjuster, risk manager, employer, carrier, TPA, settlement broker … all parties should be working together to make sure that worker is protected,” said Melissa Wright, marketing manager for Ametros Financial based in Burlington, Mass.
Many see it as simply doing the right thing — an extension of their duty to care for employees injured in the course of employment. But for many stakeholders, including carriers and attorneys, it’s also a smart measure of risk reduction.
Not taking Medicare’s interest into consideration, as required by the Medicare Secondary Payer (MSP) Statute, could be a basis for a claimant’s potential claim against a payer or an attorney.
Also, CMS has the right to audit the injured person’s settlement and the Medicare Secondary Payer (MSP) Statute gives strong recovery rights against the defendant (double damages incurred by Medicare plus interest).
It’s notable that CMS has begun scrutinizing misspent funds more closely than ever before, said Wright. “If the funds aren’t spent appropriately — especially for the attorney on the case or the carrier — CMS can come back and say, ‘You let this person go out into the world with no resources, a very limited amount of money, and now we have to step in to pay for the remainder of their treatment.’
“There is some obligation on everyone that’s involved in the settlement to make sure that the person has the resources available, especially in cases where CMS and Medicare eventually have to foot the bill,” Wright said.
Risks of Self-Administration
For an injured worker, there are plenty of up sides to accepting a claim settlement. No longer bound by the workers’ comp system, they’ll have the freedom to choose their own doctors. They won’t have to worry about utilization review, independent medical exams, treatment denials, litigation or appeals. They won’t have limits on physician choice and won’t have to obtain approvals for treatment.
But there are potential down sides too. All of the responsibility that once fell to a team of experienced people then falls in the lap of the injured worker. The worker will have to coordinate their own medical care and treatment. There’s no one to call if they have questions, no attorney, no adjuster, no nurse case manager to offer advice.
“98 percent of cases decide to self administer. And don’t know what they’re getting themselves into.” — Melissa Wright, marketing manager, Ametros Financial
And then there are the bills. Discovering the retail prices for medication is often a shock to those who’ve been in the system for a while. Many have no idea what it actually costs for their prescriptions or physical therapy, or how much it might cost to replace a medical device like a spinal stimulator.
Trickiest by far are the cases that involve a Medicare set-aside (MSA). Workers who choose to self-administer their settlements will need to abide by strict rules established by the Centers for Medicare & Medicaid Services (CMS). If injured workers don’t dot every “i” and cross every “t,” Medicare can opt to suspend benefits.
CMS requires that parties with an MSA:
- Deposit the funds into an interest-bearing account.
- Use the funds only for treatments related to the injury.
- Use the funds only for Medicare covered expenses.
- Pay according to the appropriate fee schedule.
- Prepare and submit annual accounting report to CMS.
- Maintain line item detail for the duration of eligibility.
That means tracking every single receipt and filling out complicated forms. It also means negotiating with providers to match the state fee schedule — around 55 percent below what doctors actually bill. Patients who don’t negotiate will likely pay full retail, draining the settlement fund too quickly.
Those outside of the system also aren’t likely to understand the quirks of Medicare-covered expenses. A shower bar, for instance, is a non-covered expense. But it will be covered if it’s coded as a “grab bar” instead.
“If you’re an injured worker and you’re trying to figure out what’s covered and what’s not, it’s not black and white,” said Wright. “There really is kind of a gray area, and trying to figure out what you can actually spend your money on is pretty complicated process.”
Due to this complexity, CMS updated its Reference Guide for Workers’ Compensation Medicare Set-Aside Arrangements in July 2017 to say that “Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”
And yet, around “98 percent of cases decide to self administer,” said Wright. “And don’t know what they’re getting themselves into.”
There are some resources available from CMS for those who choose to self-administer, including the WCMSA toolkit, which runs through the self-administration process all the way from setting up the bank account through the exhaustion of funds.
“It is definitely an intense read for the average person, said Wright. “It’s very long and still there’s no one to call and ask questions if you’re confused.”
Professional administrators can provide guidance and also communicate with providers to ensure that workers are receiving maximum savings on treatments and medications in order to protect the viability of the settlement fund.
If funds are exhausted, the PA will be able to provide the necessary documentation that prove that you spent it all properly, ensuring that Medicare will accept responsibility for further treatment.
Working with a PA, the injured worker “never has to touch a bill or worry about running out of funds or being prepared for any unexpected treatments or potential surgeries, which is a big concern that a lot of injured workers have,” said Wright.
Being able to pick up the phone and talk to someone and get answers is a significant piece of the settlement puzzle for injured workers.
“Obviously this is a complicated process and having someone they can reach out to you is really important to them,” she said. … “[It gives them] the resources to make the most informed decisions, while focusing on getting better.”