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by Porter Leslie, Chief Strategy Officer, Ametros Financial
In the course of settling a worker’s compensation or liability case there are many obstacles to overcome. One of the most frequent challenges is reaching a settlement for the injured party’s future medical costs. While settling may be a scary thought for the injured party, the truth is that keeping the case open can also prove to be a huge hassle for them. Subjecting their medical care to the insurance carrier’s Utilization Review guidelines and continuously having treatment and medications denied can often make an already difficult situation worse, typically resulting in more tension and frustration for both parties. In addition, sometimes the adjuster assigned to the injured individual will change, leading to a lot of confusion and no sense of security about their medical care. In many cases, the insurance carrier or payer will want to settle out a claim and eliminate responsibility for having to pay for ongoing medical care. Similarly, the injured party will wish to settle their case to have freedom to manage their injury and the related medical treatment the way they want and to no longer have to work with an adjuster.
A professional administrator is an independent party that can help both sides bridge the gaps to settling the future medical claim. Let’s take a look at the basics of professional administration and how a professional administrator can assist in the process of settling a claim.
What is a professional administrator?
At its core, a professional administrator is a company that makes sure the injured individual gets the medical treatment they need after settlement with personal attention to ensure their future medical care needs are handled smoothly.
The professional administrator establishes a dedicated bank account for the individual’s medical funds from settlement. Then, most administrators provide the claimant with a unique card that works just like a health insurance card. When the claimant shows the card at their pharmacy or doctor, the administrator receives the bill, applies group purchasing discounts, and then pays the bill automatically. The injured individual never touches the bill, but receives a record of every transaction, the savings and their account balance information.
In addition to handling all of the injured individual’s medical concerns, a professional administrator also automatically files all reporting for Medicare Set Aside (MSA) accounts thereby protecting the claimant’s Medicare benefits as well as the statute to take Medicare’s interests into consideration. The service can be used for any medical allocation (MSA or non-MSA medical funds) as the many benefits of the service extend beyond MSA reporting.
Ametros and its flagship product CareGuard is the largest pure-play professional administration provider in the country and the only company that offers online portals and access to preferred provider organizations (PPO) medical networks to the injured individuals to manage their account.
How can involving a professional administrator help determine an adequate settlement amount to cover future medical expenses?
Professional administrators currently manage the settlement funds of injured individuals who settled their cases, so they have a current and accurate perspective of how much medical treatment will cost. This information is extremely valuable to use as a basis for negotiations on and understanding the cost of future medical expenses.
For liability claims, allocating a portion of the settlement for future medical expenses can sometimes be more of an art than a science. Attorneys are frequently hunting for policy limits of the carriers and may assemble a life care plan for the injured party, but they are concurrently asking for pain and suffering damages as well. On large settlements, extensive life care plans and Medicare Set Asides (to be discussed further below) will be created to detail out the specific costs the injured party will need to cover after they settle.
For large claims, it is essential to consult a professional administrator to find out the pricing the administrator will offer when the injured individual is on their platform after settlement. This helps both parties have perspective on the true expected costs the injured party will face after settlement. Often times, due to volume discounts, the administrator can show deep discounts to the projected costs and can therefore help give the injured party comfort to settle the claim knowing they will have enough funds to cover their future medical costs.
When an individual is significantly injured at work, often times a Medicare Set Aside is created. The Omnibus Reconciliation Act of 1980. 42 U.S.C. Section 1395y established the Medicare Secondary Payer (MSP) Statute which asserts that The Center for Medicare and Medicaid Service’s (CMS) will be the “secondary payer” for medical costs when a primary payer, like an insurance carrier, exists. This Act applies to all worker’s compensation, no fault and liability settlements, but was largely ignored until CMS circulated the subsequent “Patel Memorandum” on July 23, 2001 which put the industry on notice that CMS would be demanding compliance with the MSP guidelines specifically for worker’s compensation claims and settlements.
(It’s important to note that in the Patel Memo no specific mentions were made of MSP compliance with no-fault and liability insurance claims. Up until now, many insurance carriers only insist on creating a MSA and involving a professional administrator for their larger claims to show they were in compliance with CMS’ statutes.)
The Patel Memorandum established the building blocks for today’s Medicare Set Asides which are the projections used to determine the adequate amount to settle future medical for on worker’s compensation claims. The Patel memo says that if the injured party is already on Medicare or will be applying for social security disability insurance (SSDI) and thereby becoming Medicare-eligible within 30 months, “Medicare’s interests” should be considered as part of the settlement. A Medicare Set Aside (MSA)MSA projection seeks to satisfy this requirement; it is a report created by a nurse or vendor that specializes in MSA reports. Medicare Set Asides are useful for establishing the value of future medical expenses that CMS would otherwise pay, however, they often do not cover all of the expected expenses the injured party may have because some costs that would not be Medicare-eligible expenses are left out of the projection.
It is useful to involve a professional administrator to consult their pricing for both MSAs and these non-Medicare items. While a professional administrator cannot change the value reached for an MSA, their current pricing can show if the pricing in the MSA is close to reality. The professional administrator can provide a real look at what the future costs would be because the administrator is currently paying bills for existing injured individuals. In many cases, the professional administrators pricing will be far below the pricing in the MSA. This allows parties to discuss if the MSA seems fair and if they feel comfortable moving toward settlement. When it comes to the non-Medicare covered projections, some attorneys and carriers will insist on using the professional administrator’s pricing to settle that piece of the claim. Some professional administrators, like Ametros, provide these pricing analyses for MSAs and medical projections for free.
How can a professional administrator help convince an injured party to settle their future medical?
Professional administrators will often speak with the injured party prior to settlement and address their concerns about managing their future medical care. The administrator will explain to the injured party the benefits of the service. This provides the injured party with a sense of security in knowing they will have a team of healthcare advocates behind them to assist with their treatments and unlike an adjuster, there is no interest to deny any treatment; the care of the injured party comes first and foremost. With an administrator, the injured party is free to medically treat their injury the way they want with the support of professionals that understand healthcare and Medicare compliance. This enhances their quality of life and their potential to recover.
Some injured parties are hesitant or unwilling to settle their cases because they have fears about taking care of their future medical and/or remaining compliant with the MSP statute. A professional administrator is experienced in navigating these issues and will talk with the injured party about how they can minimize the risks so that the benefits of the settlement are front and center.
How do attorneys engage a professional administrator?
Many attorneys offer or demand professional administration on their settlements because it guarantees that the injured party will be taken care of responsibly after settlement and also that they will get the most out of the medical funds. If there is no administrator, attorneys can be bombarded with questions about healthcare issues and the injured party will often be paying cash at higher retail rates for their treatments which means they run out of the funds more quickly.
Professional administration gives the injured party a company to answer their questions after settlement so that the attorney’s office is not fielding questions about healthcare. In addition, when it comes to MSAs, many attorneys recognize the complexity of abiding by the MSP statutes. The injured party is supposed to report their spending annually to CMS and perhaps more frequently if they exhaust funds. Attorneys know that misuse of MSA funds could potentially eliminate the injured party’s chances of being able to receive Medicare benefits if they exhaust the MSA inappropriately.
Professional administration automates all of the MSA reporting and is responsible for making sure all of the treatments are MSA-eligible. If any new treatments or drugs are suggested that were not originally listed in the MSA, the professional administrator will make sure the injured party gets a letter of medical necessity from their doctor in order for the expense to be documented properly. Many attorneys view professional administration as essential in minimizing the potential for any confusion or liability down the road. By offering administration, they have fulfilled their duty to the injured party and increased the chance that the injured party will abide by the MSP statutes and be pleased with the outcome of the settlement.
How much does it cost?
Pricing can vary based on the provider. The industry leader, Ametros, offers professional administration via its CareGuard service typically for an administration charge of $2,000 as a one-time payment. Other vendors have tiered pricing structures based on the size of the case or length of years of administration expected. Some can charge fees as high as $10,000 or more after factoring in annual costs.
How do I evaluate a professional administration provider?
Not all professional administrators are created equal. The administration fee price is only one factor to consider. Another key component to uncover is the savings that the professional administrator provides to the injured party. It’s important to research the pricing that the administrator has on the medications, equipment and treatments for your case.
While one provider may offer a cheaper fee, they may overcharge the injured party on their medical care later on to earn even more revenue on the case. In this situation, the injured party will run a greater risk of running out of their medical funds and being exposed to paying out-of-pocket costs. If the administrator is not up-front about their pricing and how they earn revenue, the injured party may be surprised down the road when they discover that their medical expenses have been marked up. Find out if the administrator has multiple pharmacy, provider and equipment networks to help minimize the injured party’s costs and if they display all of their savings to be transparent to the injured party.
Another consideration is to choose a professional administrator that has been vetted by significant organizations in the industry. There a number of mom-and-pop providers that may not use best practices or even have the platform needed to properly administer the case. It is prudent to get references and make sure the administrator you choose has relationships with top players in the field that have performed due diligence on its operations.
Finally, it is worthwhile to compare the service offering of the administrators. Contact their call centers to understand the level of customer service they offer. Ask for samples of the statements they provide to the injured party. Find out if they have online tools and telehealth services for the injured party. These elements make the experience far better for the injured party and can be difference between an injured party being concerned or content with their settlement.
How do I determine if a case is a good fit for professional administration?
Any settlement with ongoing medical costs can be a good fit for professional administration. The best way to find out is to contact the administrator early in the settlement process so that they can discuss the services with any and all parties. Administrators do not charge for these consultations. They only charge when the case settles and becomes administered. It’s worth sharing the option of professional administration with injured parties. It helps improve the chances of the case settling and the injured party understanding and being comfortable with how they will manage their medical care after settlement.