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CLASSIC LIST

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19/Apr/2022

Economic inflation is a major topic of discussion these days. Just about everything, from gas to food, carries a higher price tag than it did a year ago. Some say this is a temporary side effect of economic recovery. Others argue that much of this may be here to stay. Regardless, most are mindful of the impact inflation is having on the average American’s buying power.
No one should be surprised to hear that the cost of medical care has an inflationary rate as well. Well before the present economic factors and policy decisions precipitated general inflation, medical costs have increased year over year by a rate that outstrips the general economic rate of inflation. According to the U.S. Bureau of Labor Statistics, medical care costs have increased 100.86% since 2000. That’s a doubling of medical costs in two decades! Bottom line: medical care will be more expensive in the future.
This brings us to a serious problem most medical settlements face. Often, the final portion of the settlement award designated for medical care is determined by looking at present day costs and the life expectancy of the beneficiary. Basically, it’s an annual expense multiplied by years of expected need. This, for instance, is generally how Medicare set-aside allocations are calculated, but the calculation is frequently applied to the entire medical portion of the settlement. Rarely is the inflationary rate of those medical costs considered.
This is why I’m calling inflation the medical settlement’s “silent killer”. In the year or two following settlement, it may seem like the funding is adequate. But as time marches on, each dollar reserved for medical expenses buys a little less care, fewer drugs, and fewer supplies. Soon, a beneficiary must find other money, cheaper alternatives, or simply treat less frequently. Factor in that many settlements aren’t funded at full value and that the beneficiary is buying services in an insurance-driven ecosystem as a cash payer, and you quickly see the long-term problem.
Factoring inflation into the settlement would be one way to mitigate much of the problem. But, if we’re going to be realistic, we must acknowledge that there are many factors that create a significant headwind to the “more money” solution. There are also other considerations: What rates are reasonable? How does the beneficiary avoid being gouged? What about coordinating with another policy that may be able to pay instead? Then there’s the need to keep settlement funds intended to consider Medicare’s interest separate and properly accounted for to protect the beneficiary’s Medicare benefit. If healthcare cost inflation is a silent killer, these other considerations are death by a thousand cuts.
Anyone who’s lived by a budget understands that when more money is not an option, keeping spending under control is essential to not running out at the end of the month. One must stretch their settlement proceeds if they are going to last, or at least last longer. This is where a professional administrator can make all the difference. Professional administrators are typically thought of as the go-to option for making sure a Medicare set-aside (MSA) arrangement is used properly. As a matter of fact, CMS highly recommends professional administration of MSAs (MSA Reference Guide v3.6, 17.1). The professional administrator uses the MSA according to CMS’ expectations and meets the beneficiary’s obligation to attest annually to the MSA’s proper use, thereby protecting the beneficiary’s Medicare benefit (as CMS can suspend benefits if it determines that improper use of the MSA represents a burden shift to Medicare). The professional administrator can also stretch MSA dollars to help them last.
So, we know that professional administrators are a great option for handling the compliance obligations placed on MSA money. But what about the “silent killer” problem? What can professional administrators do to address the concern of healthcare cost inflation? It comes down to our budget reference above and all the ways a professional administrator is well-positioned to reduce the spend and keep the funds solvent.  Yes, professional administrators protect MSAs, but they also step between the beneficiary and the healthcare system in any settlement where future medicals are contemplated.
Consider the similarities between the experience of a beneficiary responsible for MSA funds and a beneficiary responsible for general future medical funds: The beneficiary is going to be a cash payer and likely pay top dollar. They are likely to receive bill after bill from their medical providers, expecting them to cut the check in a timely fashion to prevent interruption of care. They might have other insurance plans that could pay if benefits were properly coordinated. They’re probably not experienced at handling a lump sum of cash all at once and may struggle to use the medical settlement proceeds as intended. Fortunately, a professional administrator can provide better outcomes in all these situations.
A professional administrator steps between the beneficiary and the healthcare world where payment is concerned. Rates are negotiated. Incorrect bill coding, duplicate charges, and other types of billing mistakes are identified and addressed. All payment concerns, bills, coordination with other payers, etc. is taken care of on behalf of the beneficiary. And the money is used for what it is intended: medical care. The result is the preservation of settlement funds as a hedge against the fatal climb of healthcare cost inflation. In many cases, the medical proceeds will remain solvent for the life of the beneficiary, depending on the nature of their injury expenses and the cost controls available.
It’s fairly simple and affordable to set up professional administration of future medical settlement proceeds, and Medivest can help you integrate professional administration into your cases. From the simple straightforward claims to the most complex, Medivest has developed resolutions that address an array of post-settlement concerns, especially healthcare cost inflation. Contact us today for a free case consultation.


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17/Aug/2021

Medicare Set-Aside (MSA) arrangement beneficiaries have some very specific limitations when it comes to how their money is spent. When it comes to choosing a provider, the options are wide open. A beneficiary will often deal with who they know or a provider that is close to their home. As a cash payer with limited funds to cover all future Medicare allowable and injury related expenses, the wrong choice can put a beneficiary in a world of hurt. Here are some best practices when choosing a provider to treat an injury post settlement and using Medicare Set-Aside funds:

 

Choose a Medicare Certified Provider

While MSA funds can be used to pay any provider that supplies covered care related to the injury, not every provider is able to bill Medicare for these medical goods or services. If a beneficiary properly exhausts their MSA funds in a given year (when the MSA is funded with a structured annuity and receives deposits periodically) or the MSA funds have permanently exhausted, Medicare will assume responsibility to pay Medicare covered expenses related to the injury and coordinate with any other applicable insurance plan. If the provider is not Medicare certified, that provider will not be paid by Medicare even if the beneficiary has maintained Medicare coverage. This can leave the beneficiary as the responsible party if no other insurance benefit is available. We recommend choosing Medicare certified providers to avoid such situations.

 

Choose Providers Who Offer Discounted Cash Rates

A beneficiary with MSA funds is considered a cash payer by medical providers. There is no “in network” policy with set payment rates for cash payers. If the provider is not accustomed to dealing with patients without a primary medical insurance plan, the provider may charge its full retail rate. A beneficiary may have a difficult time negotiating a medical bill on their own or in advance of services being completed and this can add up to a significant expenditure of MSA funds. It is best to ask about cash rates and if any discounts are available when contacting a new provider.

 

Avoid Providers That Don’t Normally Bill Insurance

Billing insurance for medical services means increased access to patients because it agrees to a negotiated contract that reduces the average cost of services. Some providers opt to avoid insurance altogether. This allows these providers to charge higher rates for services because there is no set rate or maximum charge. Moreover, these providers will only take the beneficiary’s cash even if they have a group health plan or public benefit. This lack of flexibility is often costly for the beneficiary.

 

Choose Providers Experienced with Traumatic Injuries

This may seem obvious, but as a professional administrator, Medivest sees beneficiaries choosing providers that are not familiar with treating traumatic injuries post-settlement. This can be problematic from a communication standpoint (while the beneficiary and the administrator know the injury backwards and forwards, the doctor may see very few of these cases) and it can make billing and payment more difficult or present difficulties when seeking a referral to a specialists. The most efficient approach is to choose a provider that KNOWS the beneficiary’s type of injury from direct experience.

 

Choose a Flexible Provider

Here are a few common red flag phrases from providers that limit the beneficiary’s options:

We only bill Medicare.”

We don’t deal with liability injuries.”

“We never treat workers’ compensation injuries.”

“We only treat workers’ compensation injuries.”

“We don’t bill third parties.”

“We don’t take cash.”

Providers experienced with multiple scenarios provide the beneficiary with options when it comes to treatment and payment.

 

Beware of Signing Rate Agreements for Specific Services

A beneficiary that is not acquainted with the typical market rate or medical fee schedules is advised to run away from any agreement or contract that would lock them into a guaranteed payment rate. A rate agreement of this nature can put the beneficiary on the hook for significantly inflated cost. If they’re using a professional administrator (and they should be), it can negotiate with the provider directly on the beneficiary’s behalf. Don’t confuse this document with an authorization form to bill insurance or a notification that the beneficiary is responsible for any non-covered services. They’re not the same thing.

 

Avoid buying OTC Supplements or Supplies Directly from a Provider

Over-the-counter supplements or supplies that are sold directly by a provider typically come with a markup and can usually be found cheaper elsewhere. Your providers may recommend a device or a supplement that they conveniently stocks for sale. You should be aware that the providers may be looking to increase their margin per patient. Take your doctor’s advice and do your research.  If the recommended supply of supplement makes sense, shop around for a better price.

 

Do Not Be Discouraged if a Provider Rejects Payment from the MSA

Most providers within the US Healthcare system do not understand what a Medicare Set-Aside is or what it is for. They are frequently hesitant to accept it as a form of payment. They may mistake it for a Medicare Part C plan or out of network benefit. Sometimes, they are highly suspicious and cannot believe that Medicare is not the primary payer. It can be daunting for a beneficiary to be in the position of educating a provider’s billing office. A professional administrator is a great resource for coordinating benefits and having the MSA be the primary payment source, when applicable.

 

Conclusion

A MSA beneficiary with a persistent injury deserves the best care possible, but also needs to be positioned to ensure the MSA funds last. And if they don’t last, that the beneficiary has a proper safety net in place. Part of this strategy includes finding the right providers to not only address the injury with competence but also provide affordable and flexible options to ensure continuity of care and protect the beneficiary from having to dip into other settlement or personal funds.  Even when Medicare is responsible for covering injury care, the beneficiary can be billed for any deductible, copay, or coinsurance balances.

Last, we’d be remiss if we didn’t point out that a professional administrator addresses these challenges every day and not only talks to a beneficiary’s provider on their behalf, but will also coordinate benefits with other insurance, communicate with CMS about the MSA, and negotiate rates in ways a patient will struggle to match. If you or your client is a current or future beneficiary of a Medicare Set-Aside, don’t hesitate to contact Medivest. We help thousands of beneficiaries avoid these and many other MSA pitfalls.

 


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26/Feb/2019

It is perhaps cliché to say that life is made up of the decisions you make. But, overused maxims tend to communicate common truths, hence their ubiquity. Decision-making is mainly about choosing one of two or more options to achieve the most desirable outcome. Some decisions are straightforward and obvious. Many are not. Still more are tied up in the tension between what we want to do and what we should do. Values, discernment, and even willpower all factor into the process.

Decisions about money are among the most consequential. It therefore reasons that decisions involving large sums of money are highly consequential. Injury settlements are a prime example of how poor decision-making can produce unfortunate, even disastrous outcomes for both the injured and their families. Really no different than the lottery winner whose sudden wealth turns into debt and insolvency within a brief period, so the injured person who receives a cash settlement of any size is often just as unprepared and soon makes decisions that cannot be undone. Money, once spent, cannot be unspent.


“Where There Is No Vision, the People Perish”

Many people have very good intentions from the outset, but good intentions are not enough. General goals without specific plans to reach those goals will usually fall short. So, what are the missing plans that can cause settlement funds mismanagement?

  • a plan to get the most value out of every dollar spent
  • a plan to use the money for what it was intended
  • a plan to ensure the funds are insulated from poor decision-making

This type of planning helps set priorities and leads to the details needed to help the plan succeed. It is really no different than the priorities considered in good personal finance planning. Some settlement beneficiaries get this, but many do not. That’s because this is a problem common to almost all of us. Most of us do not fund our retirements as we should, do not save as we should, and often do not limit our spending as we should. Any bonuses we receive evaporate quickly. We live up to our means and, some how, when we receive a raise, we then live up to that new limit again. And for individuals with injuries who may not be able to work or whose treatment costs exceed expected costs over their lifetime, mismanagement of a fixed settlement amount will likely result in considerable hardship for the injured and their family.


The Advantages of a Professional Custodian

Once one considers how important it is to have a detailed plan for competent management of  settlement funds, the use of a professional custodian begins to make a lot of sense. Vesting a professional custodian with the responsibility for settlement funds decisions addresses the major problems created by the introduction of a large sum of money into an injured person’s finances.

We’ll look at the advantages of a professional custodian, but first, let’s consider the major factors that often negatively affect the decision-making process for a beneficiary handling their own funds:

  • Lack of Expertise – Inability to seek or negotiate for the best price on products and services due to a lack of knowledge about fee schedules, rates, coordination of benefits, medical billing department practices and policies, and negotiation.
  • Dependence on Willpower – Decisions are at the mercy of the beneficiary’s self-control.
  • Outside Influences – Life circumstances, or the needs or even manipulation of family members or friends creates pressure to spend imprudently.

 

Again, these are pitfalls relatively common to all of us. It is easy for emotion and even rationalization to play into spending decisions. This is why there is certainly wisdom in building a wall around all or at least portions of a settlement to protect the funds and beneficiary alike.

Consider how a professional custodian’s decision-making process addresses the issues we’ve discussed:

  • Professional Expertise – Knowledge and experience in reviewing and repricing claims down to applicable fee schedules, and negotiating reductions in claims where possible.
  • Limited by Agreement – Discretion in spending decisions is limited by agreement. The custodian is not permitted to use the funds in any fashion not explicitly contemplated by the contract. Emotionality is factored out of the decision-making process.
  • Contingency Planning – In the event of specific circumstances, special exceptions can be planned for and facilitated.


Custodial Arrangements: Not just for Medicare Set-Asides

Medicare set-aside accounts, which are created as mechanisms to comply with federal law by protecting Medicare from paying when it should not, and which contain funds specifically limited to the Medicare allowable and injury-related expenses, are commonly administered by a professional custodian (or “professional administrator”). But, other settlement funds should be placed with a professional custodian as well. It’s also worth mentioning that the best way to ensure that settlement funds are used according to the dictates of a settlement is to place those funds with a third party that is bound to comply with the terms that establish their custodianship.

At Medivest, we frequently receive calls from beneficiaries who are interested in seeking some flexibility in how their professionally administered funds are spent. The most common reason for this request is that they have already spent their remaining settlement funds and the monies under our company’s charge are all that remain. It is not difficult in those circumstances to surmise what would have happened with those custodial funds had we not been “in the picture.”

As example has shown time and again, managing large sums of money is not a simple task, and requires proper planning ahead of time to prevent problems down the road. In each settlement, it makes sense to consider using a professional custodian if concerns about fund mismanagement are warranted. Medivest has been providing custodial services to injured beneficiaries for over twenty years. We’ve helped thousands of  individuals spend their settlement funds in a strategic and prudent manner in order to help stretch those funds to their benefit and the benefit of their families. If you have questions about how to integrate a custodial arrangement into a settlement, please do not hesitate to contact us.

 


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