Since Medicare Set-Aside (MSA) submissions to Capital Bridge, CMS’ Workers’ Compensation Review Contractor (WCRC), are submitted via electronic portal and reviewed remotely, we have been told that review and approval of MSAs should not be delayed by the COVID-19 pandemic. Assuming that delays do not occur, the new focus on quick closures to meet cash demands or outpace Board closures, even the traditional 30-day turnaround might be too slow to optimize the value of a settlement for all the parties.
With that in mind, it is important to remember that CMS approval of MSAs is recommended but not required in settling workers’ compensation cases that meet their review thresholds. Without reprising a policy decision that most workers’ compensation underwriters have already made, the risk/reward matrix may now tip toward non-submission if saving time has become a new, critical consideration.
The question now arises about changing course on submission policy on workers’ compensation settlements—including MSA-pending CMS/WCRC reviews. If you have already submitted an MSA for CMS approval and want to expedite claim closure and payout inside of 30 days, remember that final review by CMS is not irreversible until it has been issued. If you are within the 3-to-4-week timeframe, your MSA allocator can withdraw your proposal either to suspend WCRC/CMS review or terminate it altogether. Successful suspended review or withdrawal requires a clear, written explanation that the settlement terms or conditions have materially changed from the time of the original submission. Once submitted, your MSA allocator should track the receipt of your request and the status of the decision. Such requests are liberally granted.
“Structures are even more critical in this climate.”
As a broker, the benefits of structuring an MSA are critically powerful for both parties in either a submission or non-submission context—and especially during this COVID-19 crisis when the security of income and medical benefits are paramount. In either case, a structure provides an average of 35% savings to the underwriter while delivering every dollar allocated in the MSA to the injured individual.
In return, the injured individual receives tax-free, highly-secured payments, as well as a “replenishing MSA.” Compared to a lump sum placed in a nearly non-existent interest-rate bank account or a highly volatile stock market, a structured settlement annuity is a policy with schedules, commitments, and mandatory returns for the injured individual.
As for the replenishing MSA feature, CMS will cover any unexpected shortfalls in an MSA if the payout for a structure is properly exhausted in any given year. This ensures that the medical bill on an MSA are paid and that the funds last for the entire span of the MSA. Lump sums cannot deliver that security.
From the standpoint of revisiting the MSA submission decision, structures are also critical for their capacity to mitigate future liability for the underwriter, as well as both plaintiff and defense counsel. Because structures ensure that benefits will not be exhausted until the term of the MSA has run, it is unlikely that pricing methodology or other aspects of the MSA will be scrutinized in either submission or non-submission settlements.
If the COVID-19 crisis has you thinking about maximizing value, minimizing risk and quickening the pace of settlements, skipping the CMS submission process—or withdrawing a pending review—on your workers’ compensation settlements is always an option.
“Bringing a structure into the mix will add savings, create security and value for the injured individual and mitigate risk for all parties to the settlement.”
Whatever course you choose in your MSA submissions, we urge you to consider the addition of a structure on your workers’ compensation settlements.