Ensuring proper management of settlement funds for Medicare beneficiaries

Professional administration benefits both injured workers and payers

Fifty-year-old Raymond sustained an industrial injury to his head, neck, and left shoulder. Over several years, his therapy included surgery, injections, and a growing list of medications for pain, insomnia, and depression. His diagnoses included a ruptured cervical disc, failed back surgery, cervical degenerative disc disease, opioid dependence, and muscle spasm. After a medical review of his case, multiple changes to the prescription medication regimen were made to optimize treatment and contain costs.

As Raymond’s therapy stabilized and his condition reached maximum medical improvement, his claim moved towards settlement. Since Raymond is a Medicare beneficiary, current best practices recommend a Medicare Set-Aside (MSA) be created to provide for future medical and prescription expenses for claim-related conditions that would otherwise be reimbursable by Medicare. If an MSA is not completed, Medicare may require a claimant to exhaust the entire settlement on Medicare-covered expenses before it will provide coverage (42 CFR §411.46(a)).

With this in mind, the payer engaged registered nurses, pharmacists, legal experts, and claim professionals to perform an in-depth evaluation of claim-related medical records and used applicable state fee schedules and average wholesale pricing to estimate Raymond’s future medical and treatment needs. This estimate is included in the MSA based on his life expectancy. At this point, the payer and Raymond have a choice: submit the MSA for approval by the Center for Medicaid and Medicare Services (CMS), or proceed with settlement without taking this voluntary step. In this case, they chose the latter.

The ​case for professional administration

Professional administration is a way to mitigate (if not avoid altogether) settlement concerns that might arise while still protecting Medicare’s interests. At the time of settlement, the designated MSA funds (whether approved by CMS or not) are placed in an interest-bearing custodial bank account. The professional administration firm uses this account to pay only for medical care and prescriptions associated with the claim. Additionally, the professional administration firm re-prices medical bills, secures medications at discounted rates for the claimant, and disburses funds to providers. The firm also submits required reports on account activity to CMS. Through these efforts, the payer’s intent to protect the Medicare trust funds and the claimant’s future Medicare coverage is clearly demonstrated.

Depending on the dynamics of the claim, professional administration services can be cost-prohibitive—especially because the service cannot be paid from MSA funds. However, as these services become more widely used, new options for professional administration are emerging; for example, Helios offers a flat rate option for certain cases that eliminates annual fees and significantly lowers costs. Additionally, as a pharmacy benefit manager, Helios can help claimants stretch settlement funds even further by taking advantage of negotiated, discounted medical and pharmaceutical rates.

In Raymond’s case, although the MSA was not submitted to CMS for approval, because professional administration services were utilized, the payer and Raymond rest easy. Records are readily available to demonstrate that their settlement actions appropriately contemplated Medicare interests. As for Raymond, he receives valuable guidance and assistance with administering his settlement.

For most payers, when one case closes, attentions turn to those that remain. Meanwhile, for the claimant, the management of their settlement funds is just beginning. This is new (and often confusing) territory. Moreover, as federal and state case law has shown, Medicare has a right of recovery against all parties to the settlement if the financial burden is improperly handled.

Professional administration allows settling parties peace of mind. Its use alleviates the need for the claimant to worry whether or not a medication or treatment is covered by Medicare, nor do they have to be concerned about how much to reimburse the physician and pharmacy for future treatment. From the payer’s perspective, professional administration ensures they are providing claimants with the necessary assistance to appropriately administer their MSA account funds, thereby assuring Medicare’s interests are adequately considered. The result is a cost-effective, compliant settlement wherein everyone involved achieves a better outcome.