Thursday, August 4, 2011

Have You Stopped Settling Future Medical?

In a recent LinkedIn group discussion (Work Comp Analysis Group) the debate started with a question about how many states permit settlement of future medical rights.

Like a lot of forum threads, the discussion went slightly off topic, and several comments were made that there seemed to be less future medical settlement activity as a consequence of the dabbling of the Centers for Medicare and Medicaid Services (CMS) into claims because of the increased costs in complying with CMS reimbursement negating any savings that might occur from such settlements.

In the closed world of workers' compensation, the ability to settle out claims for future medical care provides a very important economic benefit to both claimants and employers.

Claimants receive typically much needed cash up front - while that cash is ostensibly to provide for needed medical services, my guess is that more often than not it is spent on something other than future medical services. Regardless, that cash provides a small economic boost.

Likewise, closing out medical for the employer means the claim closes faster, ergo less impact on the "long tail" affecting the employer's experience modification.

And carriers can enjoy the investment power that comes from freeing up cash that is otherwise tied up in future medical reserves.

But when carriers start pulling out of the settlement of future medical because the cost of settlement actually exceeds the cost of holding onto that reserve, then there is a serious problem. The financial wizards that count the beans at the top of the insurance heap know that their calculators do not lie - as long as the data input is correct, the numbers are typically pretty accurate, and the numbers are saying hold on to the reserves.

There has been talk of CMS reforming its procedures to be more efficient and stable, but laws attempting to accomplish such have died.

Something as obscure and confusing as CMS' interaction in workers' compensation settlements is a very difficult topic for legislators to understand, much less comprehend how CMS can affect the economy.

So the path to a more efficient CMS is going to be through regulation. CMS would need to be convinced, in these budget-challenging times, that it can intake more cash by streamlining its processes than it currently is experiencing. CMS did create a workers' compensation Medicare set-aside web portal as a step in the right direction, though the review and decision processes are still mired in complexity and uncertainty.

Still the question remains whether the industry is experiencing fewer future medical settlements. I'm interested in your comments - post them here.

No comments:

Post a Comment