By B. Josh Pettingill, MBA, MS, MSCC (Medicare Set Aside Consultant Certified by the International Healthcare Commission)
Life Expectancy Tables
The Centers for Medicare and Medicaid Services (CMS) made recent announcements that will impact Medicare Set Aside (MSA) allocations. The first change, which took effect on March 31, 2014, is to the life tables utilized for preparing MSAs. CMS has started referencing the Center for Disease Control’s Life Tables for the total population for MSA life expectancy calculations. The previous update occurred in January of 2013 when CMS switched to the 2008 life tables. Importantly, the integration of the new life tables will equate to larger MSA allocation amounts. According to the National Council on Compensation Insurance (NCCI), more than half of the MSA allocations reviewed by CMS last year were over $100,000. Those numbers are only going to increase in an effort to protect the Medicare trust fund. To download the new life tables, Click Here.
With the incorporation of the new life tables driving MSA allocations higher, it is important to take advantage of the ways CMS allows us to reduce the MSA allocation amounts. When properly preparing an MSA allocation report, the end goal is to get the lowest MSA allocation possible while adequately protecting Medicare’s interests. One technique to reduce the MSA allocation obligation is to apply appropriate rated ages. A rated age is a substandard life expectancy assigned to an individual based upon debilitating medical conditions. A healthy 60 year old male may have a life expectancy of 23 years, whereas, that same 60 year old male who is a quadriplegic may have the life expectancy of an 80 year old, or 9.1 years. As evidence of a reduced life expectancy, CMS will accept the median age rating issued by life insurance companies. Utilizing this reduced life expectancy will result in a lower MSA allocation amount.
One of the most common errors Synergy Settlement Services sees when evaluating MSA allocation reports prepared by other firms, is not applying a rated age or not applying the appropriate rated ages. The following example highlights the importance of this concept. An MSA allocation report was prepared by another firm for an injury victim with a traumatic brain injury. The MSA allocation amount was $1,699,000. The MSA vendor used a median rated age of 41 with a life expectancy of 39 years. They failed to use the appropriate rated ages, which was a median rated age of 54 with a life expectancy of 28 years. This 11 year differential equated to overestimating the MSA amount by $410,000. Synergy recognized the rated age error prior to mediation so we were able to use that information to our advantage during negotiations. Once the case resolved, we informed the other side of this error and had them update the MSA allocation to reflect the correct life expectancy. Ultimately, our client was able to obtain the difference in savings.
MSA Toolkit for Self-Administration
Additionally, CMS has recently provided long anticipated guidance to injury victims on how to self-administer their MSA allocation accounts. In the past, injury victims had to rely on reading the CMS policy memorandums or the CMS website for help with administering their MSA allocation accounts. In March of 2013, the Worker’s Compensation Medicare Set Aside Guidebook was published and was the first to consolidate the CMS policy memorandums as well as website information into a single document. To access the guidebook, Click Here.
Although there were existing sections of the guidebook dedicated to administration, there still was not a sole resource provided by CMS for injury victims to use for self-administration assistance.
In March of this year, CMS finally made a resource available for individuals who choose self-administered MSA allocation accounts. This MSA Self-Administration Toolkit is not only a reference for injury victims who have already established MSA allocation accounts, it can also be helpful for injury victims when deciding on whether or not they want to self-administer or professionally administer their MSA allocation account. To access the toolkit, Click Here.
Some of the topics include:
- Annual accounting
- Final attestation
- Fee schedules and what to pay
- Exhaustion letters
- Letters for health care providers
- Key contact information at Medicare
Attorneys should explain or have an expert explain to their clients the intricacies of self-administration and let them make an informed decision before opting to self-administer. Professional administration is the recommended method to ensure full compliance with Medicare Secondary Payer requirements and to eliminate any possibility of the plaintiff losing their Medicare coverage. There is an additional cost for professional administration but it offers the peace of mind of knowing that health coverage will never be jeopardized.
For all of your Medicare secondary payer compliance needs, please call us at 877-242-0022.