As part of a long-standing tradition known as New Year's resolutions, people often take stock of the year that has just passed and make plans for the one that is yet to come. Here are the changes that should be done to the California Workers' Compensation system in 2023, in my opinion.
Fair and accurate Medicare Set-Asides (MSA)
What is an MSA? It is a requirement set forth in federal law by the Centers of Medicare and Medicaid Services (CMS) when an Injured Worker is on or eligible for Medicare and settles their future medical care rights as part of settling their California Workers' Compensation case.
In these situations, CMS requires all parties, the Injured Worker, the workers' compensation insurance carrier, and all attorneys involved in the settlement to protect Medicare’s interests. Protecting Medicare’s interests means making sure sufficient funds are provided for in the settlement to cover the costs of the future medical care the insurance carrier would pay for the Injured Worker’s work injury, so Medicare does not get stuck with the bill in lieu of the insurance carrier. In short, the Medicare laws are attempting to make sure Medicare does not foot the medical bill the Injured Worker’s workers’ compensation insurance carrier should pay. Makes sense.
The laws even go so far as noting what the Injured Worker can and cannot do with the funds they receive as part of the settlement set aside in an MSA, i.e., they must spend it ONLY on their medical bills related to the work injury. No buying new cars or taking trips with the money. But if the Injured Worker does use all the money in the MSA for their work injuries and has no more money left, then Medicare will agree to pay for the medical care related to the Injured Worker’s work injuries.
The insurance companies use outside companies to estimate the value of the Injured Worker’s future medical costs. Some of these companies, what those of us in the industry refer to as MSA companies, continually lowball the future medical care costs. Why? Well, because they have been hired and are paid by the insurance companies. The lower the costs, the more money the insurance companies can save.
Too often, it appears the MSA companies are not protecting Medicare’s interests, they are protecting the insurance company's interests. I have seen MSA companies leave off of their MSA estimate the costs of $50,000.00 surgeries, indicating an Injured Worker will only need a treatment twice over their 25-year life expectancy despite the fact the doctors have said the Injured Worker will need the treatments 6 times a year for their lifetime, and use the costs for treatments that are not accurate, such as indicating the cost of a total knee replacement for $1,100 (a more realistic cost is about $25,000)
Who benefits from these creative accounting methods? The workers’ compensation insurance companies.
Who loses? The American tax payor now must cover the expenses for the Injured Worker’s future medical care by paying more in taxes to support Medicare.
Talk about a different version of "dine and dash." But the dashing is not being done by a bunch of silly High School kids, but by the billion-dollar workers’ compensation insurance industry.