There is a thin—and potentially costly—line between settling a claim and keeping it open. If that critical window is missed, claims can quickly nose-dive down a dark and expensive road. Implementing a well-coordinated claims settlement project can help insurers close multiple sets of claims much faster. Here are seven steps to help claims payers build a solid settlement initiative.
1. Keep it manageable: Do not bite off more than you can chew. Limit the project to a manageable set of claims to ensure that the necessary time and resources are available. One idea is to create “case groups,” with each group comprising no more than three to four claims. These groups can be assigned to a single adjuster or to larger settlement “SWAT teams” that will be responsible for devising and deploying an action plan.
2. Target the right claims: Strategically triage the best claims for the project. Start with low-hanging fruit—claims that are clearly ripe for settlement. This will help quickly move cases that can (and should) be settled to the front lines. From there, determine which other claims make the most sense to include. Take a look at those “old dog” files that have been kicking around for a long time and newer claims with complex injuries, expensive medical treatment, and significant future exposure. Be careful not to spin your wheels on claims with minimal settlement potential—for example, claims where the claimant has no real interest in settling or has totally unrealistic perceptions of claim value. You can always circle back to those tougher cases later.
3. Diagnose the problem: Carefully analyze the core issues that need to be addressed to get the claim on the settlement track. These focus areas can really run the gamut—from compensability disputes, requests for medical treatment, outstanding indemnity claims, and MSA/Medicare issues to more benign requests that have simply fallen through the cracks and are impeding possible settlement.
4. Make sure Medicare is in order: Tackling potential Medicare issues should be an integral part of any settlement project. First, determine if the claimant is a Medicare beneficiary. If so, confirm the “type” of Medicare the claimant has—that is, traditional Medicare or Medicare Advantage. And since beneficiaries can switch plans once a year, also ascertain whether he or she has perhaps had both types at different points during the course of the claim.
From there, address whether a Medicare Set-Aside (MSA) is necessary. If an MSA allocation was previously prepared, determine if it needs to be revised—in particular, if there are opportunities to reduce the allocation amount, especially regarding prescription drugs and other “big ticket” items such as surgery, spinal cord stimulators, and so forth.
Concerning claims where CMS came back with a counter-higher MSA figure, which then resulted in the claim staying open, keep CMS’s Amended Review process in mind as this may help in now getting CMS to take a second look at its previous MSA approval. Introduced in 2017, CMS’s Amended Review process allows parties, in certain unsettled cases, an opportunity to request CMS approve a new and lower WCMSA allocation amount based on new medical evidence and changes in the claimant’s treatment regimen occurring after CMS’s original MSA approval. In October 2019, CMS extended the eligibility period for cases using the Amended Review process. Now, Amended Review requests can be made between 1-6 years from the date of a conditional CMS approval, which makes it an excellent time to review your claims and leverage this process. This process could breathe new settlement life into claims which were put back on the shelf following CMS approval of a MSA amount significantly higher than the figure submitted by the parties.
Also, determine if Medicare is asserting a conditional payment claim (including whether there is a potential Medicare Advantage lien claim). If so, carefully examine the claim and dispute any unrelated or inappropriate charges. Regarding Medicare Advantage, also determine if there are any applicable jurisdictional defenses. If the claimant is not a Medicare beneficiary, assess whether an MSA (or some other form of future allocation) may still be applicable (or prudent) per Centers for Medicare and Medicaid Services (CMS) policy guidelines (that is, the agency’s workers' compensation MSA [WCMSA] review threshold for non-Medicare beneficiaries) or company best practices and protocols.
5. Devise your action plan: After identifying the core issues, devise your game plan. Make sure all key players are involved as necessary—defense counsel, nurse case manager, MSA/Medicare vendor, structure broker, and others. Make sure all required claim details are updated, such as exposure analysis, reserves, and settlement authority.
6. Talking settlement: Once your action plan is completed, it is time to talk turkey. Obtain and assess the claimant’s settlement demand. Determine if direct settlement discussions with claimant’s counsel make sense or whether using a mediator would be more helpful. Consider setting a “settlement conference day,” when several claims can be addressed at one meeting.
It is important that all issues are clearly addressed as part of settlement negotiations so there are no misunderstandings. This is especially important regarding MSA/Medicare issues because the case law landscape is littered with court decisions where supposed settlements blew up because Medicare issues were not adequately addressed or not addressed at all.
To avoid this, be sure all pertinent MSA/Medicare issues are carefully recorded as part of the settlement process. The settlement agreement should address all applicable issues, responsibilities, and obligations in a clear and understandable manner. A few items to consider here include WCMSA funding and administration, whether the settlement is contingent upon CMS approval of the submitted MSA amount (for those cases being submitted to CMS for review and approval), and who is responsible for reimbursing Medicare conditional payments. Consult company protocols regarding how MSA/Medicare issues are to be handled and what settlement provisions should be included.
7. Improving for the next time: As you work the project, think about how you can improve your practices going forward to optimize settlement and prevent the next batch of “old dog” files. For example, assess your current cost reduction strategies to determine if they are meeting your objectives. Take a hard look at your MSA/Medicare practices to make sure they are aligned with CMS’s current landscape and that proactive strategies are in place to reduce MSA amounts, especially for prescription drug costs.
On a more global scale, consider the power of predictive analytics. Over the past few years, tremendous strides have been made in data technology which is providing claims payers with unprecedented ability to identify potentially high-exposure claims earlier in the claim cycle. This advanced capability can help you better triage your “settlement project” claims, drive proper resource allocation, and prevent claims from spiraling out of control. If predictive analytics is not part of your current program, it is high time to look into this because you may very well be missing a tremendous opportunity to reduce costs and settle claims.
Taking the time to build effective claims settlement projects can go a long way in moving cases from the books, reducing costs, and creating leaner and more nimble claim-handling practices.
Making it work: Settlement projects in practice
Our team has experience in helping claims payers close out cases through settlement projects and initiatives. As part of our approach, we can help you address Medicare issues in real time—such as preparing MSA allocations, formulating strategies to lower Rx and other costs, and addressing Medicare conditional payments. We have helped many customers achieve positive results as part of their settlement projects and we look forward to sharing our experience and expertise to help you settle out difficult claims. As part of our Settlement Service, we work directly with our customers in identifying the unique challenges each claim presents and devising tailor-made strategies to help get cases settled.
Don’t let unclosed claims linger longer than they should: Build proactive settlement strategies and projects to meet this challenge.