MSA - Kenneth A. Puzycki, JD

Report
Liability Medicare Set Asides
Battling Fear & Chaos
What an Elder Law Attorney
Needs to Know
Introduction
Two Take Aways
1. Medicare beni/reasonable expectation within 30 months
2. No statute/case requires MSA ….BUT
MMSEA - MIR
Medicare & MSP Basics
Acronym MANIA
MSA:
WCMSA:
LMSA:
CMS:
AWP:
COBC:
COBSW:
MSP(A):
MSPRC:
NGHP:
GHP:
RRE:
EDI:
SSDI:
MMSEA:
MIR:
ORM:
TPOC:
Medicare Set Aside
Workers Compensation Medicare Set Aside
Liability Medicare Set Aside
Center for Medicare and Medicaid Services
Average Wholesale Price
Coordination of Benefits Contractor
Coordination of Benefits Secure Website
Medicare Secondary Payor Act
Medicare Secondary Payor Recovery Contractor
Non Group Health Plan
Group Health Plan
Responsible Reporting Entity
Electronic Data Interchange
Social Security Disability Insurance
Medicare, Medicaid and SCHIP Extension ACT
Mandatory Insurer Reporting
Ongoing Responsibility for Medicals
Total Payment Obligation to the Claimant
Or ….
AWP:
CMS:
MSA:
MSPRC:
RRE:
NGHP:
GHP:
MMSEA:
Ain’t What’s Paid
Can’t Make Sense
More Sad Answers
Maniacal Superior
Professionals Reporting
Confusion!
Ridiculously Restricted
Existence!
Not Going to Help Pay!
Going to Help Pay!
More Money Spent
Elsewhere Act
Medicare Govt Agency Hierarchy
U.S. Department of Health & Human Services
Parent Agency
Centers for Medicare and Medicaid Services (CMS)
Oversees Medicare & Medicaid
Central Office in Baltimore with 10 Regional Offices
Medicare Secondary Payer Recovery Contractor (MSPRC)
Tracks Medicare payments
Collection of reimbursements for Medicare
Reviews accountings for Medicare Set Asides
Coordination of Benefits Contractor (COBC)
Identifies 3rd party payers who may be liable to Medicare
Central clearinghouse for 3rd party liability information
SSDI/Medicare
Not income or asset sensitive (entitlement)
Funded by FICA
Enough Quarters & Disability
Medicare Entitlement 30 months after Disability
Medicare Coverage
Part A Hospital Insurance (typically premium free) - Covers inpatient
care in hospitals and skilled nursing facilities (but not custodial or longterm care).
Part B Medical Insurance (premiums) - Helps cover physician and
other supplier items/services as well as hospital outpatient care. It also
covers some other medical services that Part A doesn't cover, such as
some of the services of physical and occupational therapists, and some
home health care.
Part C Medicare Advantage Plan Coverage (HMO/PPO) - Run by private
companies approved by Medicare. Alternative to the fee-for-service
Part A and Part B coverage and often provide extra coverage for services
such as vision or dental care.
Prescription Drug Coverage (Part D) - Private companies provide the
coverage. Beneficiaries choose the drug plan they wish to enroll in, and
most will pay a monthly premium.
Medicare Secondary Payor Act (“MSP”)
42 U.S.C. §1862(b)(2)(A) of the Social Security Act
& Regulations found at 42 C.F.R. § 411
Precludes Medicare payments for services to the extent
that payment has been made or can reasonably be
expected to be made promptly due to any of the following:
- Workers’ compensation
- Liability insurance
- No-fault insurance
Obligations Under the MSP Act
P
A
S
T
Conditional
Payments
S
E
T
T
L
E
M
E
N
T
Medicare
Set-Aside
F
U
T
U
R
E
CMS LMSA Memos
MSA Case Law
Finke, 596 F. Supp. 2d 1254 (2009):
No LMSA necessary where plaintiff was covered by GHP plan
Benoit, 2011 U.S. Dist. LEXIS 1392 (2011):
LMSA necessary in Jones Act Case
Hinsinger, 18 A.3d 229 (2011):
Reduce MSA by procurement costs
Schexnayder, 2011 U.S. Dist. LEXIS 83687 (2011):
Cites Stalcup memo
Marine Terminals, 2011 U.S. Dist. LEXIS 90428 (2011):
Federal Ct approves MSA when CMS fails to review
Allocations
The “Allocation”
An MSA allocator performs an in-depth review of the injured party’s medical records to
determine the future anticipated amount of Medicare covered medical treatment.
Medicare regulations establish the treatment Medicare would normally cover.
The total allocation is based upon remaining NLE which is determined by the injury victim’s
current chronological age, pre-existing medical conditions, accident/injury related medical
conditions, and recommended medical treatment. Rated ages are used by CMS as evidence of
impaired NLE.
A projection is then made of the likely expenses for the injury related Medicare covers
services based upon the applicable medical reimbursement fee schedule and injury victim’s
life expectancy.
This allocation is the amount that should be placed in the Medicare set-aside.
MSA Allocation Calculation
Future Injury-Related Medical Expenses of
the Type Normally Covered by Medicare
+
Future Injury-Related Rx Expenses of the
Type Normally Covered by Medicare
Over Remaining Life Expectancy = Allocation
The Importance of Rated Ages for MSAs
A “rated age” is a life expectancy adjusted age used to calculate the cost of a
structured settlement
The life insurance company has decided that the claimant’s life expectancy
is less than normal
shortened life expectancy = lower total MSA
Why?
What costs are used?
Medical Costs Based Upon:
– “Usual & Customary” (Liability) or
– WC Fee Schedules (WC)
– Isn’t based on Medicare approved amounts; and Medicare
deductibles or co-pays aren’t factored in
Rx Costs Based Upon:
– “Average Wholesale Price” (AWP)
– Deductibles, co-pays and the “doughnut hole” aren’t
factored in
– Priced for generics only when generics are available
Past Medical & RX Expenses + Futures
Determine Set Aside Allocation Amount
Allocation is Based on Historical Data +
projected future medical care
Need
• Medical & RX Payment History
+
• Medical records
What docs are necessary for allocation?
• 2 years worth of RX payouts with National
Drug Codes (“NDC”)
• 3-5 years worth of medical records and payouts
• HIPAA Release
Reduction Methodology
A la Ahlborn
Not CMS “approved”
Total Case Value:
$3,000,000.00
Actual Settlement:
$1,325,000.00
Fees, Costs & Liens:
$609,255.00
Net to Client:
$715,745.00
Set Aside Amount:
$284,053.09
Percentage of Recovery:
23.86%
Reduced MSA Amount:
$67,769.86
CMS Submission/Review
Stalcup Memo: Review for LMSA
“There is no formal CMS review process in
the liability arena as there is for Workers’
Compensation, however Regional Offices do
review a number of submitted set-aside
proposals.”
“voluntary process”
LMSA SUBMISSION PROCESS
• Submission package (including allocation) is forwarded to
appropriate CMS Regional Office
Can be done electronically and includes:
05 - Submitter Letter or Other Summary Documentation
10 - Consent Form
15 - Rated Age Information or Life Expectancy
20 - Life Care Plan
25 - Settlement Agreement or Proposed or Court Order
30 - Set-Aside Administrator or Copy of Agreement
35 - Medical Records
40 - Payment History
45 - Future Treatment Plan
50 - Supplemental or Additional Information
MSA SUBMISSION PROCESS CONTD.
• CMS Regional Office may request further
documentation.
• CMS agrees to Set Aside Amount or increases/decreases
• There is no appeal from CMS’s MSA approval process
Regional Office
Reviewer
Phone No.
Region 1
Boston
Region 2
New York
Judy Grant
212-616-2529
Region 3
Philadelphia
Roberto Tirado
Johnny Barnes
215-861-4423
215-861-4322
617-565-1318
Address
John F. Kennedy Federal Building
Room 2325
Boston, MA 02203
26 Federal Plaza, 38th Floor
New York, NY 10278
Public Ledger Building
Second Floor, Suite 216
150 S. Independence Mall West
Philadelphia, PA 19106-3499
Region 4
Atlanta
Atlanta Federal Center
61 Forsyth Street, S.W., Suite 4T20
404-562-7316 Atlanta, GA 30303-8909
Region 5
Chicago
Region 6
Dallas
233 North Michigan Ave, Suite 600
312-353-1801 Chicago, IL 60601
1301 Young Street, Suite 714
214-767-6441 Dallas, TX 75202
Sally Stalcup
Region 7
Kansas City
Martha Gannon
Region 8
Denver
Nancy Hunter
Richard Bolling Federal Building
Room 235
601 East 12th Street
816-426-6357 Kansas City, MO 64106
Colorado State Bank Building
1600 Broadway, Suite 700
303-844-1535 Denver, CO 80202
Region 9
San Francisco
Tom Bosserman
75 Hawthorne St, Suite 408
415-744-4907 San Fransisco, CA 94105
Jonella Windell
2201 6th Ave
Suite 701
Mail Stop 46
206-615-2385 Seattle, WA 98121
Region 10
Seattle
Instructions
Responsible For
Reviewing on a case-by-case basis
Reviewed as long as it is over $0. Usually
turn around in a week.
Quality Improvement
Organizations and End Stage
Renal Disease in: CT, ME,
MA, NH, RI, VT, NY, NJ, PA,
DE, MD, DC, VA, WV, Puerto
Rico, Virgin Islands
NY, NJ, US Virgin Islands,
Puerto Rico
Reviewing all that are submitted
As a general rule, they do not review liablity
MSAs. It depends on their work load. We
can submit and they will send a letter saying
if they will or will not review it.
Review only cases over $250,000 and when
individual is a Medicare beneficiary. They will
not review $0 proposed amount.
DE, MD, PA, VA, WV, DC
Reviewing large settlements
AR, LA, NM, OK, TX
IA, KS, MO, NE.
Quality Improvement and
Organizations and end Stage
Renal Disease in: IA, KS, MO,
NE, ND, SD, KY, MN, MI, WI,
IL, IN, and OH.
Not currently accepting liability MSAs due to
current workload. This could change
depending on amount of work. They
suggested calling them every few weeks.
AL, NC, SC, FL, GA, KY, MS,
TN
IL, IN, MI, MN, OH, WI
CO, MT, ND, SD, UT, WY
AZ, CA, HI, NV, American
Samoa, Guam,
Commonwealth of the
Northern Marina Islands
Does not review liability MSAs
AK, ID, OR, WA. Quality
Improvement Organization:
AK, AZ, CA, CO, ID, HI, MT,
NM, NV, OR, UT, WA, WY,
American Samoa,
Must call and get verbal agreement to review Commonwealth of the
Depends on workload, size of settlement and Northern Marina Islands,
need for future care
Guam
Does not review liability MSAs
Funding &
Administration
Lump Sum vs. Annuity Funding
A MSA may be funded with a lump sum or an annuity which pays is in
annually over NLE.
• Lump Sum – MSA allocation gives the amount that must be placed in the
MSA if funded in lump sum fashion.
• Structure – MSA allocation gives annuity funding parameters which
includes “seed” and annual payments.
• Seed = 2 years of tx and medications plus large ticket items/surgeries
• Annual – remainder of MSA less seed divided by NLE minus 1
Annuity Funding of MSA
A structured settlement should be used to fund most Medicare Set-Asides
Why?
•
Smaller amount has to be set aside
• Lower Cost
• Rated Age – life expectancy = smaller MSA
•
“Temporary Exhaustion” vs. “Total Exhaustion”
•
Taxability (greater net rate of return)
•
Greater creditor/judgment protection
•
Reduced cost for funding Professional Administration
MSA Funding Summary
Annuity Options from Metropolitan Life Insurance Company
Rated A+ by A.M. Best
Annuity
Options
Guaranteed
Expected
Cost
Total Cost with
Seed ($46,165.22)
Option 1- Temp
Life
$0
$128,406
$74,627.91
$120,793.13
Option 2 - Life with
Certain
$111,657
$161,903
$90,756.99
$136,922.21
Option 3 - Premium
Guarantee
$89,326
$161,903
$89,113.01
$135,278.23
LMSA Administration
A Medicare Set Aside allocation should be placed in a dedicated interest
bearing account.
• Self-administered (if allowed by state law)
• Professionally administered (MSAT)
The funds are to be spent only on Medicare covered medical expenses and
Medicare covered prescription drugs cost that are specifically related to the
underlying injury. Upon exhaustion of the funds and proper notification to
CMS, Medicare will begin paying for covered services and prescription drugs
relating to the injury.
Private vs. Prof. Admin of MSA
When to use Prof. Admin. and why
• Dollar Value of the MSA
• Sophistication of the claimant
• Potential benefits to the Medicare beneficiary:
• The availability of an expert to negotiate the cost of future medical
services
• Ensuring that future Medicare benefits are uninterrupted or delayed
for any reason
Private vs. Prof. Admin of MSA
Attorneys Representing the Parties - Prof Admin.
• Reduces potential legal exposure to all parties to settlement by
ensuring that Medicare’s future interest is adequately protected
• Highest degree of protection for an injured parties’ future Medicare
coverage.
• Reduces errors and omissions as well as any potential malpractice
exposure.
Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
Chief Executive Officer
[email protected]
Toll-Free: 877.242.0022
Direct:
407.977.3387

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