As our “meteor article” on CMS’ attack on the legitimacy of the evidence-based MSAs and related indemnification programs predicted, there have been a variety of responses among industry insiders and pundits.
The range of those responses has been wide. On one end, CMS’s statutory authority to do anything MSA-related has been revisited. On the other end, the alarms that CMS may seek to invalidate settlements in court have been raised. In the middle, the attempt to dovetail old MSA practices with new CMS policies has begun.
All this fervor reflects a significant reality. Closing workers’ compensation cases is critical to the industry’s survival. For the past 20 years, MSAs have been a significant challenge in doing so. That’s why evidence-based MSA were originally created. A thoughtful, evolving policy on MSAs is not a theoretical debate; it’s a practical requirement for doing business responsibly.
WHY STRUCTURES ARE THE ANSWER TO PROVIDING SAVINGS AND SECURITY
With that in mind, we have an answer that bridges all these different points-of-view. Structures enhance any policy position before or after Version 4.3 of CMS Manual:
- If your claims organization is dropping or modifying your policy on non-submit and/or evidence-based MSAs, structures not only help recover lost savings but ensure that the MSA payments lasts for the life expectancy of the claimant and, therefore, minimize CMS scrutiny.
- If your claims organization will continue to require CMS submission and approval on all eligible MSA, structures can provide savings, ensure that MSA payments last for the life expectancy of the claimant, and even provide that security and savings on cases that do not meet CMS review thresholds.
CMS’ support of structures likely arises from this incredible fact: Structures are the only way for the claims organization to capture savings AND provide:
1) that the claimant or applicant gets every dime in a CMS-calculated allocation;
2) that the payments continue for the expected lifetime of the claimant or the applicant according to a CMS-approved allocation.
This combination of savings, security, and payout is simply not possible without a structure—no matter what your policy may be after CMS policy changes under Section 4.3.
Structures even offer additional savings on cases in which the claimant does not reach the life expectancy in the MSA. With a reversionary rider, the carrier or self-insured can reclaim unpaid portions of the MSA upon the death of the claimant / applicant without the cost of professional administration. Again, all completely CMS-approved.
Structures deliver advocacy and compliance. Structures meet the needs of both parties. They have always been a big part of “the best way to MSA”. Structures have always been–and continue to be—THE answer to maximize MSA savings AND CMS compliance.
HOW TO MAKE STRUCTURES MATTER ON MSAs
In response to our article[hyperlink] last week, a client wrote the following note to me:
“I have put a halt to our non-submit program right now. I agree more than ever about structures and will be pushing even more on this given the loss of savings with discontinuation of our non-submit program, this program will be more important than ever.”
This perspective has launched a new strategy of moving from encouraging structures to making structures a full-blown requirement on every MSA. The good news is that this is not hard to do. It’s all about your partner and your process. It’s all about prioritizing structures from a nice-to-have to a need-to-have with the following features:
- Require your MSA provider to send every MSA over $25k to Chronovo to quote within 24 hours, attach the quote to the MSA, and empower your claims team to begin negotiations with the MSA already quoted.
- Require your structure broker to actively engage with your claims adjusters on each case the next business day. Connecting with the adjuster immediately clarifies that the broker can do all the work to get the MSA structured.
- Require your claims adjusters to back the structure broker and reinforce that every settlement with an MSA requires a structure. The right broker will clarify the value, answer all the questions, and provide a compelling quote that meets the needs of the claimant or applicant. We can make it easy for the adjuster. With an explanation, claimant and plaintiff counsel often understand the true value.
- Require your defense counsel to structure at least 50% percentage of their settlement with MSAs. As we all know, what gets measured is what gets done. While the average is around 5%, we have been part of programs that have far exceeded 50%.
So, there is no need to play the Evidence-Based MSA Blues. Legitimate, CMS-approved savings, security, and compliance are available to you right now. Chronovo can provide you with our Catalyst program or our automated iMSA product with Examworks to maximize the use of structures throughout your claims organization, provide robust reporting and KPI on progress, and meet signed, service level agreements for our own performance.
If you have any questions, please contact Mike Hernandez at mhernandez@chronovo.com or (909) 767-8318.
