It is apparent that self administered allocations present a greater risk than initially thought. As litigation emerges and Mandatory Insurer Reporting becomes effective, the Insurance Industry has recognized the exposure future medical settlements represent to all parties involved, including defense and plaintiff attorneys.
If the plaintiff improperly disburses MSA funds, Medicare may deny/suspend benefits. Suspension of benefits has and will expose plaintiff attorneys to a private cause of action, pursuant to the Medicare Secondary Payer Act. Suits may also be filed against carriers under the Unfair Claims Practices Act.
As the current population ages and the number of Medicare beneficiaries under the age of 65 increases, the Medicare program finds itself supporting more beneficiaries with fewer contributors to the program. By 2020, the Medicare program will disburse over one trillion dollars annually. It is believed that Medicare will make all efforts to ensure that the program remains (somewhat) solvent. As a result, The Center for Medicare & Medicaid Services (CMS) will scrutinize allocations and focus on their Medicare Secondary Payer (MSP) rights.
Payments From Set-Aside Fund Must Follow Stringent Guidelines As Outlined In Claims Settlement Agreement
If payments from a set-aside fund are not properly distributed as outlined in the settlement agreement (i.e. MSA report; fee schedule, ICD9 codes and CPT codes), the injured party may lose their Medicare benefits. In addition, the injured party is left without the financial resources necessary to obtain medical treatment related to the accident. The injured party is placed in a position of having to replenish and refund the misappropriated claim settlement funds.
Carriers, TPAs and Self Insured’s subject to Mandatory Insurer Reporting will provide Medicare with the necessary information to determine who is the primary payer or if a right of recovery on individual claims exists.
Self administration by unqualified individuals is prevalent and increases the risks associated with claim settlements involving Medicare eligible individuals. Carriers, TPA’s and Self-Insureds recognize the risk and are adopting protocols to combat their exposure by providing post settlement allocation services. Administration Support services provide all parties to the settlement with the assurance that set-aside funds are disbursed properly and give recourse to the injured party once those funds have been exhausted. Given the cost of defending against civil court actions, the benefits of providing or funding these services is a best practice for risk adverse insurance entities.