Thanks to all who participated in the Lorman teleconference yesterday. This was the third year I've given that teleconference for them and it was by far the best turnout yet. Again I apologize for not being able to answer your questions as they were presented, but as you could probably tell, not only was it distracting to stop to read them, but I was pressed for time as it was to cover as much information as possible given the addition of the MMSEA information. This year we've decided to post all of the answers to the unanswered questions on our blog so everyone could benefit from the information. I have made my way through only a portion of the questions so expect probably at least 2 or 3 more posts throughout the week. And please let me know if I missed any of your questions or if you have any follow-up questions.

MMSEA information requests.

There were several questions asking to provide "information regarding the last part of the presentation". The information I provided regarding the RRE registration process was taken from the operation manual dated 3/16/09 and the alert dated 3/24/09.  CMS posts all MMSEA publications and transcripts of its teleconferences on its website. 

Group Health MMSEA questions.

There were several questions regarding group health and the MMSEA. As I stated on the call, we only deal with the personal injury types of insurance and group health is outside the scope of our services. I will check to see if the subsequent MMSEA teleconference in June will address those issues and provide another posting with the information.

Does the MSP and MIR apply to occupational accident insurance?

Occupational accident insurance most would likely be considered a “workmens’ compensation plan” as expressly listed in the MSP statute since it generally used to cover owners excluded from mandatory WC insurance requirements in most states. If the state WC statutes do not address this option then it likely just considered a liability insurance. Either way, it is a form of insurance that compensates for personal injury and would be subject to MSP recovery efforts.

Will Lorman be offering any educational teleconferences geared directly to Medicare Advantage plans?

Not to my knowledge however I will pass along the request. The only additional MSP related teleconference that I am aware of is the MMSEA conference scheduled for June 8, 2009.

Can anyone put together and submit an MSA proposal or is there a licensing for this or requirement?

There is no official licensing requirement for preparing and submitting MSAs, however there is a “Medicare Set-Aside Certified Consultant” (MSCC) certification available from the Commission on Health Care Certification.  Although no official training is required, based upon the various reports on which I am routinely asked to provide a second opinion, those who are not properly trained or who prepare a large enough volume of reports regularly generally overfund allocations to the detriment of settlement negotiations due to not being 100% knowledgeable about changes in CMS policies, Medicare coverage, applicable state laws, etc.

Would a Jones Act Employer who pays medical payments to an employee be considered a Primary Plan?

Jones Act claims are considered liability claims (or self-insurance claims if employer carrying its own risk) by CMS given the need to prove negligence in order to make a claim. Accordingly that employer would be a primary payer under the MSP. The distinction to remember is that MSAs on such claims are not eligible for CMS review.

If one obtains substantially all the insurance available in a med mal settlement but only covers about 20% of future meds, does Social Security look to solvency of underlying physicians?

You would have to make an appeal to CMS to compromise their conditional payment recovery based upon the hardship that would be created for the injured party by devoting a likely 100% of the settlement proceeds to medical due to the reduced recovery due to solvency issues. CMS by statute has the ability to make such a determination, however it is made at its discretion and is not guaranteed to occur under any circumstance. Because every case is evaluated on a case by case basis, there is no certain answer as to what CMS's position would be with regard to the insolvent physicians.

Then earlier you said that we should not use any threshold amounts and any settlement (w/ closed medicals) could be reviewed. Could you explain this? Thanks.

This question is not entirely clear, however I believe the question meant to address the misunderstanding between the need for an MSA and obtaining CMS review.  I had stated that you should not utilize the threshold amounts when determining if Medicare had an interest to protect in the settlement. Only WC cases that meet the review thresholds could be reviewed by CMS for a determination of adequacy. The WC review thresholds DO NOT create a safe harbor where an MSA is not needed in a claim with foreseeable future medical exposure.

Does Medicaid have the right to seek reimbursement from settlement funds held in trust for a minor?

Medicaid is outside the scope of this teleconference as it is a state, asset determined medical program unrelated to the federal Medicare program. However if by “trust” you mean a special needs or supplemental needs trust pursuant to 42 USC 1396p(d)(4)(A) or (d)(4)(C), then the answer is probably no as the purpose in forming the trust is to provide for the supplemental needs of injured persons over and above the medical benefits provided by Medicaid as opposed to the medical care itself. Hence the payment of medical care regardless of when provided would likely not be considered an authorized expense from the trust. Not my area of expertise so I would consult with a trustee of similar funds to get their take on your situation.

What carriers do you recommend for life expectancy?

Life insurance companies have changed significantly over the past year with respect to the type of business they are interested in pursuing. At this time, American General (an AIG subsidiary) is the most aggressive provider of rated ages. It is assumed that given the overall state of its parent company, the loss of it’s A+15 AM Best rating and the markets reluctance to place business with anything related to AIG, American General is willing to take on that substandard business and is providing aggressive rated ages to make the pricing of life contingent annuities more favorable. Historically Liberty Life was very aggressive in its ratings, however in recent financial times has become considerably more conservative. If you are looking for a rated age that may truly evaluate the diminished life expectancy (keeping in mind that these determinations are generally based upon evaluation of no more than 10 pages of medical reports), you’ll want to look to a company that neither pursues nor shies away from what is considered substandard business – perhaps something like Pacific Life or NY Life.

Some other things to know about these life companies is that they are not in the business of providing rated ages where there is no reasonable expectation of potentially writing a structured settlement on the claim. Rated ages are becoming harder to come by because of this abuse created by CMS in requiring that rated ages be provided on life insurance letterhead. Some companies will not provide underwriting services where they are not on the P&C carrier’s vendor approved list. Allstate does not underwrite WC claims in general. The MSA industry should prepare itself for not being able to benefit from a reduced life expectancy unless it begins to implement a standard use of structured settlements for funding MSAs.

What protections are there if the settlement is a confidential settlement?

Besides the contractual obligation of the parties to the settlement, HIPAA would be the only protection I can think of to the confidential settlement as that is generally what CMS hangs its hat on when refusing to discuss a claim without a release signed by the beneficiary. After July 1, 2009, all settlements of those Medicare entitled will have to be reported to the government and information and documents controlled by the government are subject to freedom of information act requests so the terms of the settlement may be subject to such a disclosure. However it my understanding that such requests are limited if concerning private medical information.

So the cost of professional administration does not reduce the expected Medicare set aside?

Pursuant to published CMS policies, you may not pay the costs of professional administration from an MSA, effectively reducing the expected MSA. They must be paid in addition to the allocation determination.

So, what you are saying, is that by structuring you can save 40%, but if you do not structure it is not proper to reduce to present value by that 40%, is that correct?

Correct. Say you have a $100K MSA – you cannot reduce it to $60K and provide that as a lump sum at the time of settlement as an MSA. However you can elect to fund the MSA annually which may cost $60K at the time of settlement but had an expected payout of at least the necessary $100K.  And remember that if in any given year the MSA account is completely exhausted, CMS will permit Medicare coverage until the next annuity check is due, which could happen on an annual basis and is totally acceptable to CMS.

In a PI liability settlement where a set aside trust is used. What happens to the proceeds in that trust if the settling Plaintiff does not receive future medical care? When can the settling Plaintiff access that trust?

Prior to May 2008, CMS had a policy in place whereby it could be petitioned for a reduction or release of MSA funds when treatment had decreased by at least 25%. Without that policy, MSA funds are expected by CMS to be kept in that dedicated account indefinitely.  However the reality of the situation is that should the MSA recipient truly require no future related medical treatment and elect to utilize those funds for another purpose, he should do so with the knowledge that should his condition return or deteriorate and require future treatment, the MSA funds will act as a deductible and it will be necessary to provide to CMS an accounting of the entire MSA amount properly spent on related Medicare covered medical treatment before Medicare coverage of that treatment will become available.

Could you repeat about isolation of Medicare exposure in the future?

A strict interpretation of the MSP statute is to make sure Medicare does not make payment for treatment of an injury with a primary payer. Medicare does not pay 100% as there are co-insurance payments and deductibles that must be paid by the beneficiary. Therefore, Medicare’s interest in a settlement, that which we are obligated under the MSP to protect, is less than that which CMS requires funded in WC claims subject to its review process. Identifying and isolating only those portions covered by Medicare and providing only those funds as an MSA at settlement would fully comply with the MSP statute via a strict interpretation of the law. Of course demonstrating claimant’s understanding of the need to pay the copay and deductible portions as with a regular Medicare claim will help make taking that position more defensible.

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Post-Settlement Administration

Pharmacy Benefit Management