While many workers’ compensation industry professionals and regulators focus their time, effort, and resources on claims management, litigation, regulatory initiatives, and the settlement process, many don’t think about what happens after claims settle. When an injured worker settles their case, their life changes dramatically and it can have implications on the many stakeholders involved in the workers’ compensation system.
What Does It Mean to Settle?If an injured worker chooses to settle his or her workers’ compensation case, most often he or she agrees to release the insurance carrier from its responsibility to pay for future medical expenses in exchange for a sum of money, either a lump sum or an annuity. Should the injured worker accept a settlement offer, they are agreeing to close out the case, forgoing any future lifetime benefits. These funds typically represent the future value of ongoing benefits, and usually the cost of ongoing future medical treatment. It is very important for the injured worker to understand what kind of future medical treatment they will need going forward so that they can ensure the settlement funds are enough to cover future medical care. It’s also important to consider how the settlement could interact with other government benefits they could be receiving, including Medicare, Medicaid, social security, and short-term or long term disability. This entire process can be confusing and challenging for an injured worker that is unrepresented, and even a complicated life experience for those injured workers represented by attorneys as well. While the workers’ compensation system was meticulously designed to take care of workers injured on the job, there has not been much insight, research, or thought into the daunting experience injured workers may face at or after settlement, once they leave the workers’ compensation system.
The Benefits of SettlingSettlement can be an appealing option to many injured workers. Settling can mean less restrictive treatment, the freedom to see any doctor, provider, or specialist, and use any pharmacy. If they have been having treatments denied through Utilization Review, settlement represents the opportunity to seek the treatment they would like outside of treatment guidelines. Settlement allows injured workers to get the treatment that they want when they want it without potential denials or hoops to jump through to get approvals. In the workers’ compensation system injured workers are often required to see specific doctors, which could be located miles away. For someone with a significant injury, traveling to and from doctors’ appointments can not only be a challenge, but also exhausting and frustrating. If an injured worker chooses to settle their case, they are able to treat with doctors and providers closer to home and those providers that the injured worker trusts. Settlement can also represent a fresh start for injured workers. They are able to leave the workers’ compensation system, put their injury behind them, and focus on returning to health. They no longer have to attend independent medical examinations or court dates and can concentrate on healing and getting their lives back on track. However, settling a workers’ compensation claim ultimately represents a large future responsibility for the injured worker and a life changing event that will have numerous impacts on their lives well after the settlement occurs.
Challenges after SettlementWith settlement comes a new set of challenges for injured workers. The increased freedom often means increased responsibilities, increased risks, and decreased support/resources for the injured worker, which often times can be overwhelming. Once they choose to settle, injured workers are responsible for managing their own medical care, coordinating treatments, and, if they have a Medicare Set Aside (MSA), complying with the guidelines put forth by the Centers for Medicare and Medicaid Services (CMS). If an injured worker fails to comply with CMS’ guidelines, they risk having their future Medicare benefits denied. One of the largest challenges injured workers face is adjusting to being on their own. Once an injured worker chooses to settle their case, their adjuster, attorney, support from the regulatory system, and any nurse case manager steps away, as the file is closed and the case is settled. This leaves the injured worker without the resources they once relied on to help them coordinate their care or answer their questions. Many times, this can leave injured workers feeling lost as they have no one to turn to in order to help them navigate an increasingly complicated healthcare system. Injured workers must also adjust to paying for their own medical treatments once they settle their case. While in the workers’ compensation system, injured workers are able to treat through the carrier/employer, and therefore get access to their volume discount networks for pharmacy, provider, and other medical treatments. Through the workers’ compensation system and vendors that are utilized, carriers/employers pay less than full price on the treatments and prescriptions on behalf of the treating injured worker – these discounts lead to dramatic savings that accrue to the benefit of the carrier/employer and the workers’ compensation system. Once the injured workers settle their case, they must utilize their settlement funds, yet they do not have access to medical discount networks, and ultimately end up overpaying because they will be charged full retail price for their treatments. This often results in sticker shock for the injured worker who is now spending through his or her settlement funds at a quicker pace than expected. For instance, Celecoxib, an anti-inflammatory, might cost the insurance carrier around $3.82 per pill. Once the injured worker settles, they’ll be paying retail, around $7.58 for the exact same pill. This drastic difference often leaves injured workers confused and scared that their funds will not be enough for their medical treatments for the rest of their lives. Without any of the support they received in the workers’ compensation system, injured workers also need to manage their own medical care after settlement. This includes setting their own appointments, coordinating transportation, and figuring out all of their prescription pickups. For instance, if an injured worker saw a primary care physician, physical therapist for their hip, a chiropractor for their back, a pain management doctor, and needed to fill four different prescriptions, they could have to coordinate four appointments per month, including any transportation to and from these visits, as well as coordinate the pickup of the prescriptions they are taking. For someone that is already injured and trying to focus on returning to health and moving past their injury, this can be a daunting task that can cause confusion and added stress to their life.
Added Responsibilities with a Medicare Set AsideIf an injured worker settled with a Medicare Set Aside (MSA), which about 45% of total submitted settlements do, they have added responsibilities required of them by the Centers for Medicare and Medicaid Services (CMS) in order to remain compliant and protect their future Medicare benefits. These requirements include:
- Deposit the MSA settlement funds into an interest-bearing account
- Use the funds only on treatments related to the injury
- Use the funds only for Medicare-covered expenses
- Pay according to the appropriate state fee schedule
- Prepare and submit annual reporting to CMS and
- Maintain line item detail for the duration of eligibility
- Transaction date • Check number (if any, or transaction number if present) • “Payable to” or health care provide name • Date of service • Description of the procedure, service, or item received • Deposit, interest, or other allowable expense • Amount paid • Any deposit amounts • Account balance • Every expense/treatment