Despite the important role they play, post-settlement administration of Medicare Set-Aside (MSA) proceeds are often ignored.
Claimants just want their money, and either don’t know or don’t care how to administer MSA funds, while defendants often believe they’re off the hook regarding Medicare Secondary Payer (MSP) exposure once they have settled a claim. In reality, both parties may have more risk and exposure than they appreciate.
“The main problem post-settlement is premature exhaustion of MSA funds,” says Robert L Sagrillo, Chief Compliance Officer, NuQuest. “Typically, MSAs are priced and funded based on the state workers’ compensation fee schedule. However, post-settlement claimants usually pay for medical treatment at retail rates. Thereby, MSA funds are exhausted 35-40% more quickly than anticipated.
Another common issue is the mismanagement of MSA funds by claimants, who use MSA dollars for non-Medicare covered medical expenses or unrelated medical expenses.
The consequences of these two problems can be harsh. Plaintiffs may be denied Medicare coverage for their medical expenses until they can demonstrate that their MSA funds have appropriately exhausted, meaning that they have to dip into other monies to privately pay for medical expenses.
“Alternatively, Medicare may make conditional payments and either offset (reduce) Social Security benefits or attach tax refunds,” Sagrillo says. “Defendants too may face conditional payment recovery actions by CMS. In addition, defendants may have to deal with petitions filed by claimants to reopen their settled claims as a result of consequences claimants never understand were possible.”
Fortunately, for claimants, there are companies that provide professional administration services and self-administration assistance to aide claimants in successfully administering MSA funds post-settlement.
Professional administration is selected in about 5% of MSA claims in which parties use an administration service. Professional administration claims usually involve catastrophic injuries, complicated future medical needs, high future medical costs or unsophisticated claimants. In some instances, professional administration is selected to allow a reversion of remaining MSA funds to the insurance carrier providing the funding.
“Self-administration assistance allows for the claimant to retain possession of their MSA funds. However, the administrator may offer bill review and access to pharmacy, DME and other networks that enable the claimant to pay out MSA funds at the same or lesser rate than the MSA was funded,” Sagrillo says. “In addition, the administrator may assist the claimant understand their obligations regarding Medicare, including tracking and reporting of MSA funds.”
Using an MSA administration service helps a claimant navigate the complexities and unknowns after they’re awarded an MSA. In many cases, a claimant is not aware what is expected of them regarding their MSA funds post-settlement And, they’re not aware that they may only use their MSA funds for Medicare covered medical expenses related to their settled injury; they don’t understand that they should only pay the workers’ compensation fee schedule rates for their medical expenses.
“They also don’t understand what is Medicare covered and what is not; and they don’t know that they need to keep track of their annual expenses and they have to report their usage to CMS annually,” Sagrillo says. “Most importantly, claimants don’t understand the consequences when they fail to administer their MSA properly.”
According to Sagrillo, an MSA administration service helps a claimant to “sleep at night”. They are provided with a resource to ensure that they are appropriately using their MSA funds and that those funds, hopefully, don’t prematurely exhaust. Their payment for medical expenses will be at the workers’ compensation fee schedule.
“Their use of the funds will be accurately tracked and reported to CMS. They will avoid Medicare denial of coverage based on how they have administered their MSA funds and they will avoid future conditional payments,” Sagrillo says.
“For defendants, they will know that their claimants are in good hands. They will know that they have done the most they can to ensure successful administration of the MSA funds minimizing the potential for future conditional payments or petitions for reopening by the claimant.”