A trend in the Medicare Set-aside industry is having the MSA allocator provide settlement contract language, Self-administration Agreements, or other form contracts for use in the settlement contract. Claimants, Plaintiffs, insurance companies and self-insured entities often accept these forms without question on the assumption that the MSA allocation “expert” is also a contract drafting expert. This assumption can jeopardize the very settlement that the MSA allocation “expert” was trying to protect. Protocols, LLC, the first and foremost multi-disciplinary medical settlement consulting company, strongly advises against the acceptance of such documents absent attorney scrutiny.

The following is an example from a common form contract and illustrates why no form contract language should be accepted without attorney scrutiny.

"In reaching this Agreement the parties have paid considerable attention to the Claimant’s receipt of Medicare and Medicaid benefits under 42 USC 1395y, as well as CMS subrogation and intervention rights pursuant to 42 CFR 411.46 to recover any overpayment made by Medicare or Medicaid."

This paragraph clearly shows the MSA allocator’s lack of understanding of public benefits laws and could jeopardize the finality of the settlement. For example, Medicaid’s right of recovery is governed by separate Federal and State statutes, not the Medicare Secondary Payer (“MSP”) statute and regulation, as cited above. By confusing these two very separate programs, the language provides a false sense of security to the claimant or plaintiff that his or her Medicaid rights are protected by a Medicare set-aside and that is completely contrary to the actual law. In fact, the use of a Medicare set-aside for a Claimant or Plaintiff that receives Medicaid is likely to cause the claimant to lose both their Medicaid benefits and their entire settlement proceeds.

As a consequence, the claimants or plaintiffs loss of benefits can expose the insurance carrier, claimant or plaintiff’s attorney, self-insured entity and the MSA allocator to possible litigation from the claimant or plaintiff who relied upon this erroneous statement. This litigation can challenge to the entire settlement and may cause the settlement to be overturned. This is just one illustration of the possible problems with the language above. There are other legal issues apparent in this language, some depending on the underlying facts of the settlement.

That is why Protocols recommends attorney review of all public benefit contract language on all cases. It is important that the contract language be created by attorneys knowledgeable of the MSP and the public benefit laws. In addition, a one size fits all approach does work in the MSP, or public benefit settlement. Each contract should be modified to fit the specific settlement facts and any jurisdictional requirements. Legal citations and language must also follow this specification.

Finally, if an MSA allocator provides such inadequate and troublesome contract language, then one must question whether the provider is truly an "expert." If the MSA allocator does not understand the difference between Medicare and Medicaid, do they fully understand the Medicare set-aside requirements? Is it worth the risk to have a settlement overturned because the MSA allocator is providing contract language that is legally defective?

Please contact Henry Kohnlein or Robert Sagrillo for additional information or questions concerning this topic.

This article was taken from Protocols' blog.  To read and comment on this and other articles, click here.

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Since January 2006 and the coverage of prescription medications by Medicare, prescription medication costs often represent the bulk of the Medicare set-aside amount. In order to minimize those costs, Protocols relies on its long-standing expertise to:

* Use generic drug costs whenever a generic equivalent is available;

* Use cheaper costs from sources such as drugstore.com rather than costs obtained from the medical payment history;

* Use the results of a Drug Utilization Review report to identify therapeutic interchanges available to reduce costs.

Protocols does not stop there, however. Continuing its pioneering history, Protocols uses other tools to help reduce exorbitant medication costs (these tools are dependent on the details of each individual case). Unlike other vendors, Protocols still analyzes the facts of each case to provide the lowest Medicare set-aside recommendation.

For more information this topic, please contact Protocols, LLC's MSA Unit.

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The rumor that CMS Regional Offices will be closed is just that – a rumor. The Regional Offices are in place and are not being abolished. Regional Offices will continue to support CMS Central Office. All questions regarding a specific case are to be directed to the RO allocated to that jurisdiction. One change that has been made recently involves cases in the Florida region. All Florida cases were previously referred to the Atlanta regional office, but now, due to the abundance of cases handled by the Atlanta office, all Florida cases will be handled by the Philadelphia office.

Please do not be alarmed by the phone message at the Philadelphia office stating that they will return your phone call in two weeks. It has not, in our experience, taken two weeks for a return phone call, and the central office is working to get the greeting changed to a more friendly voice message.

Please contact Laura Morel for further information.

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Protocols News
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Custodial Account Administration

Many reasons abound as to choose Protocols, LLC to administer the settlement funds for an injured worker. Our custodial account administration ("CAA") unit not only manages MSA funds, they also provide the same services for non-Medicare covered medical costs. Often, the intricate medical care and financial support required for the lifetime of the injured worker require administrative and accounting of bills well above what they can provide themselves. Protocols, LLC understands Medicare’s ever-changing laws and can ensure that funds are utilized correctly. This administration expertise puts all parties to the settlement at ease with regards to post-settlement funds administered.

The best time to set up a custodial account with Protocols, LLC is prior to settlement. Once aware of the settlement, we will prepare the custodial agreement and distribute to all appropriate parties. This agreement can be signed and executed during settlement, therefore making the process much smoother.

We would like to reiterate that the focus of our custodial account administration is on the injured worker and his or her needs. This is accomplished through personal administration and consultation. Protocols, LLC administers each and every custodial account with a technical understanding of regulations and also takes adequate time to listen to each injured workers’ specific medical needs.

To learn more about the ever-changing CAA industry, we asked Tom Spratt, Senior Vice President of Technical Operations at Protocols, LLC, why a custodial account should be used for certain Medicare set-asides. His response was unequivocal:

“One of my biggest concerns, shared by many others, is that the average worker is not equipped to manage the MSA funds – the larger the MSA, the more the risk. While utilizing an annuity to fund the MSA minimizes the risk that all the funds can be spent at once, it doesn’t eliminate the risk that funds will be used for other than Medicare-covered medical needs.

The premature exhaustion of funds could be attributed to use for medical services not covered by Medicare through ignorance or in the case where the monies are spent on non-medical, misappropriation of funds for totally unrelated purposes. Another scenario is that Medicare may pay for services the MSA should have paid for as conditional payments and then seek reimbursement. In all these scenarios, the fallout can be problematic both on individual cases as well as the overall climate on worker’s compensation settlements.

In the long term, fallout from misuse of funds can have several untoward consequences; states could further restrict worker’s compensation settlements or insist on professional demonstration for all MSAs. Whereas now approximately 94% of MSAs are approved for self-administration by CMS, they could also take a similar approach on professional administration. Also, CMS could seek to recover funds from the self-insured employer or carrier if the obligation of self-administration was not clearly documented at the time of settlement.

Lastly, I would recommend that a program where “larger” MSAs are annuitized and also considered for custodial accounts (professional administration), defining larger as in excess of $10,000.00 a year. Broaching the one year assistance program as a bridge for cases where the annual dollar amount isn’t large but the claimant may not be confident they can self-administer.”

Please contact Protocols, LLC's Custodial Account Unit at 1-800-660-7573 for further information.

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Our Staff Spotlight intends to help our clients get to know the people behind Protocols.  This month's spotlight focuses on Edward Ballenger, Protocols' newest Regional Account Manager. Eddie and his family spend much of their time outdoors. On the weekend you can find them at the lake or out at their ranch in Jacksboro, Texas. Eddie's wife Laura is a teacher, and his son Blake is just over a year old with a knack for causing trouble.

Please contact Edward Ballenger for further information.

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