WORKERS' COMPENSATION
Welcome to our workers’ compensation blog page! Our Synergy experts have extensive experience in assisting with workers’ compensation cases and navigating the complex world of workers’ compensation. Our blogs cover a wide range of topics related to workers’ compensation, including the basics of workers’ compensation, our special advice column “Since You Asked”, and more. We understand the challenges that injured workers face and the importance protecting their compensation for injuries sustained on the job. Our goal is to provide you with the information and resources you need to navigate the issues at settlement with confidence and achieve the best possible outcomes. Check back often for new blog posts and updates!
B. Josh Pettingill
Last week, the Centers for Medicare and Medicaid Services (CMS) issued the latest edition of their Medicare Set-Aside (MSA) self-administration toolkit. This toolkit is intended to serve as a guidebook or roadmap for how to properly administer a Workers’ Compensation Medicare Set-Aside (WCMSA) account. The statistics show that 99% of claimants elect to self-administer their MSA account. The problem with that is 98% of them are probably doing it the wrong way. For a summary of best practices for administration of the WCMSA, you can view one of our older posts here which goes into greater detail. To download the latest edition of the toolkit, please click here.
One key addition to the toolkit is that claimants can now submit their annual attestation forms through the CMS portal. The attestation is the yearly accounting CMS wants to see on how the funds were spent. In years past, these forms had to be sent by snail mail. Unfortunately, most claimants who self-administer have likely never completed the attestation. The electronic option makes it a lot easier to do that now. As a follow-up, CMS will be hosting two separate webinars to highlight this latest feature. For more information, or to register for the webinar, you can visit the CMS website.
An alternative to MSA self-administration is professional administration. Pooled Trust Services is the only group offering MSA administration through a trust solution. With both a professional administrator and corporate trustee, there is no greater protection for the claimant. That way, everyone can have the peace of mind that the claimant’s Medicare benefits will never be disrupted. At minimum, best practices for attorneys handling workers’ compensation claims involving a Medicare Set-Aside account would be to include a hard copy of the toolkit or a link with the electronic version for reference. To learn more about professional administration, visit our website.
B. Josh Pettingill
The Centers for Medicare and Medicaid Services (CMS) approval of a Medicare Set-Aside is a voluntary process but getting CMS approval has become the standard practice when resolving catastrophic workers’ compensation cases with Medicare eligible, injured workers. There are countless ways that an approval can be delayed. If any of the following items are missing or not accurate within the submission, the case can be “developed” which in laymen’s terms means investigated and further delayed.[1]
However, the most common reasons we see firsthand as to why there are interruptions with CMS approval are the following:
- Line items in the report were either not priced correctly, and/or omitted purposely or inadvertently by the employer/carrier’s MSP compliance expert;
- The most recent medical records or payouts were not included with the submission;
- The MSA was submitted as a “lump sum” allocation when it should have been submitted as an “annuity funded” allocation.
It is vital to have your own MSA expert review any proposed MSA allocations by the defendant and have the option to prepare an independent WCMSA analysis or medical cost projection. That way, you can be certain that the MSA is an accurate reflection of the future medical costs for purposes of negotiations, as well as ensure expedited CMS approval of the MSA. Furthermore, all MSAs should be submitted as an annuity funded MSA. If CMS approves a different amount, whether it be lower or higher, you have the correct parameters for funding the MSA.
[1] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-2_8.pdf
B Josh Pettingill
Appropriate settlement language can make a significant impact on the total amount of the workers’ compensation settlement, as well as dollars that the injured worker receives. This brief article will provide plaintiff/applicant attorneys with the requisite settlement language to maximize the workers’ compensation recovery, as well as protect their respective firms and clients.
Since the insurance carrier is cutting the check to resolve the workers’ compensation case, they may potentially have leverage to dictate the terms of the settlement. Some plaintiff/applicants’ attorneys may – agree to or overlook certain critical provisions of the settlement to expedite the resolution. Below are the key areas to focus on when drawing up a mediation, or settlement agreement to ensure a timely resolution, as well as maximize the recovery.
Medicare Set-Aside
Make sure to include an all-inclusive figure that encompasses Medicare-covered items, non-Medicare-covered items, and indemnity. Oftentimes, there are ways to get the MSA amount lowered due to the errors by the carrier’s MSA expert or through funding with a structured settlement. Any savings on the MSA can go directly in the injured workers’ pockets. Do not ever agree to terms that suggest some fixed amount PLUS the MSA. If that were to happen, then any savings on the MSA would go the carrier and not the claimant/applicant.
Structured Settlement
There must be language that allows the injured worker the option to place a portion of the settlement proceeds into a structured settlement. If not, some carriers may refuse to fund a structured settlement at a later time. This also allows for time for a qualified settlement consultant to meet with the injured worker to develop a proper settlement plan. Furthermore, you should include verbiage that states any structured settlement shall be brokered or co-brokered by Synergy Settlement Services, or XYZ Plaintiff Structured Settlement Company.
Funding the Agreement
Language should also be included about paying the settlement monies in a timely manner and funding any structured settlements expeditiously. These could be provisions for extra attorney fees, as well as penalties and interest for failure to do so. For example, this could be based either on a certain number of days after CMS approval or approval by the judge of compensation claims.
Continuation of Benefits
Attorneys for the injured worker should include language that medical and indemnity benefits will stay intact for a set time period or until the settlement checks have been issued. That way, the injured worker does not lose out on any benefits and there is no gap in coverage. This can be life-threatening to catastrophically injured workers if they are not able to receive ongoing medical care.
Conclusion
These are just a few of many issues that should be addressed in the settlement/mediation agreement. Other topics include reversionary clauses, CMS approval of the Medicare Set-Aside and what happens if CMS comes back with a larger suggested MSA amount than what was submitted. Settlement language can either make or break a settlement. You need to have a qualified settlement consultant to assist with these complex issues. Synergy attends mediations at no cost to you or your client and offer a number of services to attorneys for workers’ compensation claims, liability claims, medical malpractice and more. Ask us today how we can help protect your law firm firm/your client, maximize the recovery of a workers’ compensation case and make your firm more efficient.
To learn more about Synergy’s Workers’ Compensation Medicare Set-Asides, visit our website.
B. Josh Pettingill
Reversionary clauses have become a common term of settlement in workers’ compensation cases involving a Medicare Set Aside (MSA). It is important for workers’ compensation attorneys to understand how these clauses can impact the injured worker, as well as the settlement.
What is a reversionary clause?
A reversionary clause means that when the injured worker passes away, any funds remaining in the WCMSA account would “revert” back to the carrier. The carrier essentially receives a rebate, or a refund on any unspent medical funds. The argument by the carrier for a reversionary clause is that they should only pay for medicals if the claimant is alive. Therefore, if the claimant passes away before the funds are exhausted, there is a “windfall” of money to the claimant’s beneficiaries or family.
Most plaintiff/applicant attorneys are not apt to agree to such a clause since it is money that the injured worker does not get to keep. There are multiple variations of a reversionary clause where it could be based either on a lump sum amount on the remaining funds in the account, the number of guaranteed annuity payments remaining on any structured settlement used to fund the MSA obligation, or a combination of both[1].
You must be careful when agreeing to use their professional MSA administration company for the MSA account. One trick that carriers use is to offer to pay for lifetime professional administration “for the benefit” of the claimant. They do this for multiple reasons. They may have financial relationships with certain providers that incentivize them monetarily to push business towards a certain company. This also gives assurance that they will get paid back if there is a reversionary clause in place. The MSA administrator becomes a cash collector for them upon the injured worker’s passing. If professional administration is not in place, then it is exceedingly difficult to collect from a claimant’s estate even if this is a material term of the settlement.
Plaintiffs’ attorneys must be proactive to exclude or modify reversionary clauses
A reversionary clause should never be agreed to as a provision of a workers’ compensation settlement. Furthermore, if a settlement is reached, then the injured worker should be given the choice to select the company to professionally administer the WCMSA at the carrier’s expense.
There are rare occasions when a reversionary clause may be useful to reaching an agreement if there is a catastrophically injured person with a large WCMSA and reduced life expectancy. We have seen firsthand where a reversionary clause has helped bring the settling parties together because it allows the carrier to pay more dollars to get the case resolved in exchange for having some protection in the event the injured worker passed away prematurely. If the carrier insists on a reversionary clause, then you can always negotiate that only a certain percentage of any remaining funds or a certain number of annuity payments will revert to the carrier.
About Synergy’s Workers’ Compensation Settlement Experts
Synergy’s Workers’ Compensation Settlement Services team is headed up by Jason Lazarus who is a former workers’ compensation attorney and Josh Pettingill who frequently testifies as an economist on workers’ compensation matters. Both Jason and Josh are Medicare Set Aside Consultants Certified by the International Healthcare Commission, have served as MSP compliance expert witnesses and have authored numerous articles on Medicare Set Asides. Collectively, they have handled over 10,000 workers’ compensation cases and have taught over 500 hours of CLE education on settlement planning, Medicare Set Asides, public benefits protection and other complex issues impacting the value of workers’ compensation matters.
[1] High dollar WCMSAs are typically funded by way of a structured settlement that is only payable for as long as claimant is alive or for the claimant’s life expectancy. MSAs can typically be funded at a present value cost of 40%-60% less than the cost to fund the lump sum MSA amount.
B Josh Pettingill
Evidence Based MSAs (EBMSAs) have taken the workers’ compensation industry by storm the past several years. It is imperative for workers’ compensation attorneys to understand how EBMSAs can impact both the settlement value, as well as your clients’ benefits post-resolution. EBMSAs can be a cost savings mechanism in resolving a workers’ compensation claim. However, using an EBMSA to resolve a claim is not without risks.
EMBSAs are prepared based upon clinical guidelines and trends in medical research to project future Medicare covered expenses. This is a logical approach one would think. However, The Centers for Medicare and Medicaid Services (CMS) takes a different position as it relates to their approved methodology for preparing an MSA with a future cost projection.
Three Key Components of Evidence Based MSAs
There are numerous MSA practitioners and companies who offer EBMSAs for workers’ compensation cases. There are three key components to an EBMSA that should be noted:
- The EBMSA utilizes a pricing strategy that does match up to the CMS approved pricing guidelines when pricing a WCMSA[1].
- The EBMSA mandates professional administration for the claimant for a specified term[2].
- The EBMSA assumes the settlement parties will not seek CMS approval of the WCMSA.
Real World Pricing Strategy
There are two components of a Medicare set aside: prescription drugs and medical items/services[3]. The largest part of an MSA is usually prescription drugs. On average, prescription drugs make up 65% of the total MSA amount from a dollar standpoint. EBMSAs tend to be priced the CMS approved way as it relates to medical items and services. However, as it relates to prescription drugs, there is massive dichotomy in the approach for pricing. Specifically, CMS requires that any recommended drugs be allocated for the life of the claimant/applicant[4]. Whereas, EBMSA uses period certain durations (shorter timeframes) based on supporting medical evidence.
The Pros & Cons of an EBMSA
The cost of prescription drugs and their inclusion in an MSA can be one of the primary barriers to settlement of a workers’ compensation case. Since EBMSAs do not use full life expectancy to calculate future prescription drug costs, there can be a massive cost differential when compared with a non-evidence based MSA. One could argue that Medicare is being purposely being defrauded by a substantial amount by not using the appropriate pricing strategy for medications. However, an argument could also be made that pricing the MSA this way is more consistent with the “real world” approach; more importantly, the medical evidence supports this approach. It is not realistic to price medications for the lifetime of an injured worker. In fact, extended use of certain medications can contribute to a reduced life expectancy.
EBMSAs frequently have mandatory professional administration as a requirement to use them. The argument for the EBMSA is that the MSA funds will always be spent appropriately with a professional administrator. But the caveat is that the claimant/applicant must agree to use that company’s professional administration service. Unfortunately, that particular company may not always be the best solution for the injured party’s needs.
EBMSAs are not submitted to CMS which clearly is a pro but it has risks associated with non-submission. CMS approval of a WCMSA is always voluntary but recommended in order to have final closure. In other words, CMS approval provides the guarantee that CMS cannot come back years down the road and argue not enough money was originally set aside to consider their future interests. CMS approval is still the only way to have definitive peace of mind that your client is protected. One could even argue that there are malpractice risks for the claimant’s attorney if they rely solely on the carrier’s expert in determining the MSA amount using the evidence based method, while at the same time not getting CMS approval as part of the settlement process.
There are certainly benefits to an EBMSA such as reduced exposure to the employer/carrier which frees up other dollars to be used to resolve the claim. These companies claim that if CMS ever disagrees with the amount or denies something post-settlement that the claimant/applicant, as well their attorney, will be indemnified and held harmless. Also, the MSA company will either pay back Medicare if this were to happen or fight the claim that not enough funds were earmarked for the Medicare set aside.
Conclusion
As an attorney for injured workers, if you are presented with an EBMSA by the employer/carrier, you must consider the implications. We recommend obtaining an independent MSA analysis or medical cost projection to ensure that the EBMSA is an accurate reflection of the future medical costs. CMS has stated that the MSA is a claimant issue, not a carrier issue. If one chooses to accept the EBMSA, keep in mind that you are also relinquishing your ability to control the MSA process. As such, you are at the mercy of the employer/carrier’s expert for determining your client’s future needs.
An EBMSA is only one way to resolve a workers’ compensation claim. Synergy can help the injured worker and their attorney to not only save money but also maximize the recovery of the case. The last thing you want to happen is for CMS to return years later and disagree with the EBMSA amount because there was no CMS approval. Your client could find themselves in a situation whereby Medicare is denying coverage for accident related care. Such a situation could result in a legal malpractice case. Having a trusted partner to help take control of the MSA process, as well as guide you through the complex settlement issues, is imperative. To learn more about Synergy’s services for workers’ compensation settlements, visit our website by clicking HERE
[1] According to the WCMSA Reference Guide
[2] The duration depends on the product
[3] Durable equipment, medical services, items, etc.
[4] According to the WCMSA Reference Guide, “Reviewers (CMS) use the evidence in the records to determine if the proposal accounts for the reasonably probable future prescription drug needs. This includes the prescription drug history, the treatment notes, provider medication lists, and physician dispensing records.”
B. Josh Pettingill
We frequently receive inquiries regarding workers compensation MSAs (WCMSAs) and whether it is possible to get CMS (Centers for Medicare and Medicaid Services) to re-review an MSA once an amount has already been approved. The good news is that it is possible. However, you only get one opportunity and certain criteria must be met to qualify. It is vital for claimant/applicant attorneys to audit their files to see which cases may be eligible.
For years, CMS only allowed a re-review of an WCMSA in two limited circumstances: 1) blatant errors and mistakes with the report or 2) omission of pertinent documentation from the submission. In many instances, the claimant’s medical condition may have improved considerably since the approval letter was issued. Accordingly, it was becoming cost prohibitive then for the carrier to resolve the claim if they must overfund an MSA that does not match the injured worker’s current medical condition.
However, CMS changed their position recently. There are situations where CMS will actually take the time to re-review the WCMSA. Per the Workers Compensation MSA Reference Guide, the following guidelines for the case must be met to be eligible for an amended review[1]:
- CMS has issued a conditional approval/approved amount at least 12 but no more than 48 months prior.
- The case has not yet settled as of the date of the request for re-review.
- Projected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.
Takeaway – an Amended WCSMSA Review is Possible in Certain Circumstances
If you have a case that was approved even a day beyond four years ago or less than a year ago, then you are stuck with the original approved MSA amount. As of this writing, there is still no formal appeal process for WCMSAs. But, at least you now have the option for an amended review in certain circumstances. Do not let an overinflated, CMS approved WCMSA be a barrier to resolving a workers’ compensation case. Whether it is the first time for CMS approval or an amended review, Synergy’s team of experts can help to ensure a timely settlement while maximizing the recovery.
In our next post, we will discuss Evidence Based MSAs, the implications of getting one and not submitting to CMS for review/approval. To learn more about Synergy’s Workers’ Compensation Medicare Set-Asides, visit our website.
[1] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-2_9.pdf
BLOGS
READY TO SCHEDULE A CONSULTATION?
The Synergy team will work diligently to ensure your case gets the attention it deserves. Contact one of our legal experts and get a professional review of your case today.
