Given the challenge that Medicare Set-Asides (MSAs) have posed to parties settling cases over the past two decades, Medicare Secondary Payer (MSP) compliance providers, lawyers and advocates have been quite creative. From zero-allocation exceptions and doughnut-hole deductibles to ill-fated, first-submission guarantee programs, efforts to rightsize Medicare’s settlement requirements have generated many innovations.
Enter the Evidence-Based MSA, or EBMSA. This is an alluring alternative for many carriers, self-insureds and third-party administrators (TPAs). By capitalizing on the voluntary nature of the Medicare submission program and combining it with more aggressive insurance industry network pricing (rather than Medicare’s pricing methodology), EBMSAs have increased the speed of settlement and decreased the cost of compliance. In fact, leading MSA providers cite 6-8 weeks of time saved skipping the voluntary approval process and 28%-40% savings on the allocation over a traditional MSA calculation and submission process.
Still, there is a lingering concern over the EBMSA strategy for many self-insureds, TPAs and carriers. The question arises: if Medicare were to review an EBMSA because it prematurely exhausted, would there be any unintended liability for any party? Given Medicare’s broad—and seemingly ever-expanding—authority to pursue almost everyone involved in the litigation, this becomes an especially critical issue for the deepest pockets in any settlement, the underwriter.
Good news. There are two ways to maximize savings and mitigate risk from evidence-based MSAs:
1. EBMSA + Structure + Professional Administration = “A Replenishing MSA”
Combine a rigorous, evidence-based MSA with a structure from Chronovo and professional administration. The coordinated result is a best-practice solution for all parties. By leveraging CMS’ affinity for both structures and professional administration, the EBMSA sustains ongoing funding throughout the MSA term. Professional administration ensures that medicals are spent according to the MSA agreement, documented and accurately reported to CMS.
However, most programs report only about 20% adoption of professional administration with the restrictions and complexity often cited by claimant and counsel as the reason. This typically leaves two options for 80% of settlements with MSAs: 1) revert to traditional MSA calculations and miss out on the 28% to 40% savings of an EBMSA, or 2) maintain EBMSA pricing that is not available to the claimant and risk future CMS review over that issue. (Indemnification MSA programs usually require professional administration.)
By leveraging CMS’ affinity for both structures and professional administration, the EBMSA sustains ongoing funding throughout the MSA term. Professional administration ensures that medicals are spent according to the MSA agreement, documented and accurately reported to CMS. Consider these factors for and against:
PRO
- Ensures CMS reporting and evidence-based pricing
- Maximizes likelihood that CMS picks up any shortfall in the MSA
- Maximizes likelihood that MSA does not exhaust prematurely
- Enables MSA “indemnification” programs from MSA providers
CON
- Rejected by more than 80% of claimants over PA restrictions
- Does not provide evidence-based pricing when rejected
- Adds at least $1000 to the cost of the settlement
- Misunderstood and sometimes abandoned within months of settlement
2. EBMSA + ChronovoCare = “An Unrestricted EBMSA”
For the 80% of claimants and counsel that balk at professional administration’s control over medical spending, we have a win-win option: ChronovoCareTM. Our new medical savings program provides ongoing discounts on a full array of healthcare expenses, ensuring that evidence-based MSA pricing remains available to the claimant at a provider or retail store at no additional cost. While ChronovoCare does not monitor spending according to the MSA or provide reporting to CMS, it makes the discounts quoted in an evidence-based MSA available to everyone post-settlement.
Combined with an average 38% savings from the Chronovo structured settlement, the evidence-based MSA calculations deliver an additional 28% to 40% savings can translate to dramatic savings without taking a penny of benefit away from the claimant. Importantly, if the claimant does not opt for the structure and/or professional administration, ChronovoCare can ensure that EBMSA discount pricing is available for free for the duration of the MSA. (This benefit would mitigate a CMS challenge over prices cited in an MSA that are not available to the vast majority of individuals who settle and reject the restraints of professional administration.) Again, consider:
PRO
- Ensures availability of evidence-based MSA pricing if PA is rejected
- Eliminates any additional costs or complications in the settlement
- Translates as Claimant-positive because savings come without restrictions
- Eliminates the need to establish a new bank account for the savings
- Available for any medical needs for anyone beyond the MSA
CON
- Does not ensure CMS reporting (it does track expenses)
- Does not provide opportunity for MSA provider indemnification plans
- Does not ensure spending according to the MSA
Weighing the advantages, it is clear that the best protocol to capture lower costs and mitigate risks is a two-step process that ensures maximum outcomes for all parties.
Why choose one option when you can have both?
How to get started?
Step One
Ask your MSA provider to create a “Replenishing MSA” option with an EBMSA, a structure from Chronovo and professional administration. Create a process that ensures that the full offering is layered into the initial EBMSA. This will save your claims personnel time and increase the likelihood of adoption with the claimant and their counsel. It will also signal your preferred/best practice for any review by CMS or questions from claimants’ counsel. Again, the combination of 38% savings with the structure plus 28%-40% savings from using evidence-based calculations in the MSA is dramatic—and retains all the same benefits to the claimant. Professional administration also ensures CMS reporting after the settlement.
Step Two
Because professional administration is only accepted about 20% of the time, create an “Unrestricted EBMSA” option with ChronovoCare as a next step. Most people reject professional administration at the time of settlement (or withdraws after settlement) because of restrictions. ChronovoCare has no restrictions. It provides savings without compromise, essentially justifying the EBMSA and enhancing the value of the settlement, with or without a structure. In addition, providing the injured individual with ChronovoCare underscores your commitment to evidence-based pricing. You can also present ChronovoCare as an option for claimants who leave a professional administration program after the settlement.
Thanks to ChronovoCare, claims organizations can be assured that industry-insider pricing on the full spectrum of medical benefits is always available and free to everyone. This makes using EBMSAs a good policy, not a calculated risk. Following the two-step process, a carrier, TPA, or self-insured can harness the value of EBMSA calculations and structured settlement finance savings (as much 58%-78% when combined) with confidence, while delivering all the benefits of a traditional MSA to the claimant.
