Five Things Employers Must Know About Medicare Set-Aside Custodial Administration Arrangements
Republished with permission from ReduceYourWorkersComp.com
I interviewed Christie Luke, VP of Operations, Gould & Lamb, Bradenton, FL about Custodial Administration Arrangements for Medicare Set-Asides. Not being an expert in this area, I asked her to start me off with the basics.
Before we begin let's define a Medicare Set Aside?
The Centers for Medicare/Medicaid Services (CMS) requires their interests be protected prior to any settlement of the medical portion of a claim for qualified individuals. The Medicare Secondary Payer laws are intended to prevent the shift of financial responsibility from primary payers to Medicare. The Medicare Set-Aside Agreement (MSA) allocates a portion of the claims settlement for future medical expense, placed into custodial administration.
1-What is Custodial Administration?
Once a case is settled the MSA funds are placed into custodial administration, or “handling,” either into the hands of the claimant (self administration) or with a custodian (professional administration) on the claimant's behalf. This can include cases sent to CMS for approval, wherein the CMS approval indicates the intent of administration; or can be cases where the client chose not to send to CMS but wants the case properly administered. (WCxKit)
Self Administration involves claimants' handling their own money, with the intent that they follow CMS' guidelines.
Professional Administration involves a pre-designated custodian who has been hired to administer the MSA funds on behalf of the claimant. This usually occurs in larger settlements and/or those with severe injuries (traumatic brain injuries, paraplegics/quadriplegics).
2- Are there exceptions to those who need custodial arrangements?
There are no formal rules or regulations in most cases to those needing post-settlement administration. The exception is in cases where a court has deemed a person incompetent. In those cases it is required that the claimant have a custodian assigned to the case. In other cases, it is up to the settling parties how to proceed and is driven by the risk adversity of the carrier or self insured employer.
3-What impact does it have on insured clients? Who does it affect?
Post settlement administration programs can provide insured clients with comfort knowing they are providing claimant's with post-settlement support ensuring they are able to manage their Medicare Set Aside funds. In many of these cases the parties are overwhelmed and at times, it may discourage them from entering into a settlement. Knowing that these tools and resources are being provided, reducing the potential negative actions by CMS and ensuring post-settlement compliance and risk mitigation is a benefit to all parties to settlement.
4-How should employers proceed when becoming aware of their obligations, then setting up an arrangement with a custodial administrator?
Once a carrier or self insured employers has decided on and set standards with regard to their comfort level on the post settlement administration front, they can then decide how to set their processes and procedures. Generally, they should begin including information on the topic as soon as possible with the parties, at least during settlement discussions if not sooner. That way everyone is aware of the available resources and costs, as well as potential implications of non-compliance and benefits of available programs.
During these discussions they can include the administration companies where needed before and after settlement to ensure information is accurately given and the timely administration of the program to ensure the administrator's notifications to Medicare and to the claimant and their medical providers are seamless. (WCxKit)
5-Why is it better, more cost effective, etc., to use a formal Administration company?
The administration of an MSA is quite challenging. It requires in-depth knowledge of Medicare policy, individual state fee schedules, as well as an understanding of and the application of Medicare coverage and claim related care. Without this detailed knowledge, it is very easy to improperly disperse funds from an MSA or pay amounts above fee schedules, risking future Medicare benefits and entitlement.
Thank you, Christie for your time filling me in on this very important topic that all employers need to be aware of.
Author Christie Luke of Gould and Lamb has worked for nearly a decade in claims management, followed by over five years in all aspects of MSP compliance. She has developed and enhanced products and operational efficiency models supporting growth while ensuring quality. She has an undergraduate degree in business and an MBA focusing in Healthcare Administration, Quality Management, and Economics. She is MSCC certified and is currently earning her Green Belt certification in Six Sigma. She is also a member of NAMSAP. Contact Christie at 941-798-2098, Ext.1314; or email: Christie.Luke@gouldandlamb.com.
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