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.
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.
Health MMSEA questions.
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 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
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
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
Set-Aside Allocation/Arrangement Recommendations
to Centers for Medicare and Medicaid Services