Dealing With Medicare Set-Asides
Monday, August 17, 2009 | 2
By Eugene F. Keefe
Synopsis: Should the defense industry move ahead with workers' compensation settlements in advance of pricing, federal approval and completion of a needed Medicare Set-Aside (MSA) agreement?
Editor's comment: We continue to get this question over and over from our defense clients. You are settling a claim for $100,00 to $500,000 and claimant's counsel and his client are itching to get the settlement and move on with their lives. They tell some adjusters the workers' compensation settlement can move ahead immediately and you don't have to wait for:
- MSA documentation;
- MSA pricing;
- MSA approval by CMS; and
- Funding of the Set Aside trust by the carrier/self-insured employer.
Is there anything wrong with moving ahead with settlement contracts and finalizing the settlement prior to final approval and funding of the Medicare Set-Aside trust?
Actually, from our perspective, we feel you take a number of risks in moving forward with the state settlement without getting a federal Medicare Set-Aside trust priced, approved and paid. We want all adjusters handling litigated and non-litigated claims to understand claimant attorneys do what is in their best interests. They are ethically required to do what is in their clients' best interests. They don't care if they put you into a corner.
When asked to move forward with lump-sum settlement contracts while the MSA process is pending, defense attorneys from Keefe, Campbell and Associates don't sign settlement contracts in this setting unless we are directed by client to do so. There are a number of pitfalls to moving ahead without first finalizing the MSA process.
What most of our clients feel is the best thing about Illinois WC is complete closure of claims where petitioner moves on to another employer or outside your organization as part of the settlement process. In such a setting, full closure of medical rights almost always occurs. This does not happen if you settle and move ahead with the settlement but leave the MSA process in the middle of pricing or federal approval. Most adjusters/claims reps do not consider this situation — if you don't get the MSA approved, medical rights stay open and remain the employer's or insurance carrier/TPA's continuing responsibility.
Please note claimant typically has to cooperate at all times in the MSA process. If you move ahead to sign lump-sum settlement contracts and the arbitrator approves them, you have to pay the settlement amount or be subject to a claim for penalties/fees. Claimant can also seek a judgment in circuit court on the approved settlement — the only 'real' defense to such claims is payment. We are confident to advise claimants across the country will no longer cooperate nor sign authorizations or other documentation if they receive settlement checks. If they refuse to further cooperate, medical rights remain open unless and until an MSA is finalized.
The next problem for an adjuster in closing any file with a pending Medicare Set-Aside but active settlement is you are typically settling with an expected or estimated Medicare Set-Aside value. If you sign the contracts prior to the MSA being finally priced and/or approved by CMS, we ask the next question: what if the Medicare Set-Aside pricing or needed approval value comes back at 10, 20., even 50 times the expected amount? We just had a set aside value come in at over $500,000. The claim will settle on the indemnity side for much less due to the many disputes present. But the pricing of the set-aside will be hard to modify or reduce. While we don't agree with that value at all, if you get a wildly high set-aside price, it greatly limits your options when you have already moved ahead with the settlement paperwork at the IWCC.
When you get a very high price for a set-aside, you may want to keep medical rights partially or completely open and/or not do a set-aside. You may want to also see if there are any other options or pricing that may work. When set-aide costs skyrocket, you may also want skip the settlement to fight part of or the entire claim and see what the arbitrator and commission will do with it. In contrast, when you sign contracts that require a set-aside you have committed to do a set-aside at whatever amount or leave medical rights open. The contracts, once approved, cannot be changed or technically modified — even by agreement.
So, our vote is to drag all of it along with you and end at the same finish line with claimant and counsel in tow. We know claimant attorneys push and push to get major claims settled and paid as rapidly as possible — closure for you is a tertiary goal. In ordinary circumstances, we don't recommend adjusters ever move ahead with lump-sum settlement contracts solely to make claimant counsel happy. We feel they can wait for their money until the MSA is both reasonable and approved by CMS and funded to protect everyone's interest. Please always remember it is not your fault claimant may have to wait.
We appreciate your thoughts on comments on this situation. If you need help or assistance with Medicare Set-Asides in the Illinois workers' compensation industry, let us know.
Synopsis: Is it possible to "lean" your leave or absence management programs under FMLA, workers' compensation, vacation and PTO time?
Editor's comment: We saw a very solid article in Business Insurance magazine that is required reading for HR, benefits, workers' compensation and safety folks across the U.S. Please don't take our word C for it, look yourself at www.businessinsurance.com.
Their focus was to applaud and focus on efforts by Boeing Corp. to look at every step of their leave processes and distill them down to the bare minimum. Boeing's leave management programs underwent the process beginning in 2007 because of patent inefficiencies. The company with 147,000 employees previously administered eleven different, complex leave programs and its workers generated 59,000 intermittent FMLA absences annually and 16,000 non-FMLA absences. Their managers felt poor administration of those cases was costing millions of dollars and lost productivity.
Employees and managers were very dissatisfied with the complexity of the cumbersome leave management administration. They moved all of them to one main site and administration. The overall management focus was then to revisit and "reinvent" every aspect of every leave request to see if it could be made more efficient. That required examining minutiae of every step in various leave processes to find improvement opportunities. It also allowed establishing an integrated and centrally managed absence-management program.
Boeing teamed with its group disability provider to obtain short- and long-term disability support. They worked together to implement a current map of its leave processes. The process required a painstaking look where they mapped out every process, every person involved, every single transaction, every system, and every handoff. From the article, it appears to be a win-win situation for everyone involved from top management to the line workers.
We don't see why this same process couldn't be applied to workers comp leave — we feel it would bring definition to a hard to define process. If any of our readers are doing so, please send a reply.
======
Eugene F. Keefe is a partner in the Chicago law firm of Keefe, Campbell & Associates.
======
Comments
This comment is private.
This comment is private.