Beyond Structured Settlements

ACA and Future Medical Expenses - 3

Is the Affordable Care Act (ACA) good or bad for structured settlements? What impact will it have on settlement planning in personal injury cases?

Four years following the ACA's enactment, and two years after the U.S. Supreme Court upheld its primary provisions as constitutional, including the individual mandate and elimination of pre-existing condition restrictions which became effective nationally on January 1, 2014, those questions not only lack definitive unanswers - they have not yet been comprehensively addressed in any public forum.

One primary related issue is what impact the ACA will have upon future medical expenses in personal injury cases. The answer depends, however, not only on the terms and conditions of the ACA, but also on how the ACA interacts with other related laws and legal developments such as Medicaid (including the Bipartisan Budget Act of 2013), Medicare (including WCMSAs , liability MSAs and MMSEA) as well as state specific collateral source and subrogation rules.

To provide a point of reference for future S2KM reporting about the legal interplay involving the ACA, personal injury cases and structured settlements, S2KM is publishing a series of blog posts looking generally at the "ACA and Future Medical Expenses":

• Part 1 reviews an article written by Seth Cardeli, titled "Thwart the Assault on Future Medical Expenses", which appeared in the May 2014 issue of the American Association for Justice (AAJ) Trial Magazine.
• Part 2 summarizes ACA-related analysis by speakers at professional conferences S2KM has previously attended and includes excerpts from prior S2KM reviews of those conferences.
• Part 3 (this post) summarizes similar ACA analysis from articles and papers previously reviewed by S2KM and also features excerpts from those reviews.

Authors of Articles and Papers Addressing ACA Issues

NAELA Journal

NAELA devoted the entire Spring 2011 edition of its "NAELA Journal" to health care reform generally and the ACA more specifically. Available to NAELA members only, this NAELA analysis featured a detailed introduction by NAELA Journal's then Editor-in-Chief William J. Brisk plus eight articles and a supplement of online resources.

• Brisk's introduction addressed why health care reform is "too significant to ignore" and highlighted its most important features. His analysis identified what the ACA actually does and does not accomplish and emphasized the important roles Medicare, Medicaid, private health insurance companies and health maintenance organizations will play in implementing health care reform.
• Additional NAELA Journal topics and authors:
  • Health Care Changes: Challenges to Medicare - Vicki Gottlich, Patricia Nemore, and Alfred J. Chiplin Jr.;
  • The New CLASS Act - Morris Klein;
  • Nursing Home Regulations - Charles Perez Golbert;
  • Health Care Reform’s Impact on Small Businesses and Individuals - Ben A. Neiburger;
  • Health Care Reform and End-of-Life Issues - Fay Blix;
  • The Affordable Care Act’s Changes to Medicaid’s Coverage for Long-Term Services and Supports - Gene Coffey;
  • Health Insurance Reforms: Once In a Lifetime Change or Same as It Ever Was? - Lucinda E. Jesson;
  • Medicaid Expansion Under the 2010 Health Care Reform Legislation: The Continuing Evolution of Medicaid’s Central Role in American Health Care - Renée M. Landers and Patrick A. Leeman;
  • Online Resources Available to Supplement Health Care Reform Discussion - prepared by Claire DeMarco.

Alfred Chiplin, Jr. and Bethany Lilly

In addition to the Spring 2011 edition of the NAELA Journal, NAELA awarded its 2014 John Regan Writing Award, honoring the authors of the best article published in the "NAELA Journal" during the past year, to Alfred Chiplin, Jr. and Bethany Lilly, for their 2013 article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past" analyzing various ACA cost-saving components on Medicare.

Chiplin and Lilly begin their article with an extensive review of the historical debate concerning public health insurance in the United States including a summary of key components of the current Medicare system and current concerns about Medicare solvency.

This historical debate not only defines the current structure of the Medicare program but also, according to Chiplin and Lilly, "the on-going debate ... about the necessary elements of a comprehensive program, including health care financing and accessing the quality of necessary services."

Chiplin and Lilly provide statistical evidence to highlight the negative impact of rising health care costs on Medicare and Medicare beneficiaries as well as the United States economy. Following their historical and statistical summaries, Chiplin and Lilly address the central issue in their article: "how will the ACA reduce health care costs?"

The ACA's cost-containment programs, according to Chiplin and Lilly, are based upon the theory that costs can be reduced by demanding a higher quality of care and greater efficiency from providers and allowing providers to share in the savings. ACA programs the authors highlight include:

• Patient-Centered Medical Home
• Medicare Shared Savings Program
• The Independent Payment Advisory Board
• Quality Review Mechanisms.

Chiplin and Lilly view ACA as "a vast experiment in paying for high-quality health care while preserving the Medicare program and expanding access to health care for other population segments." Implementation will be a tough, but doable challenge so long as we "let the tools of the ACA work".

Among the implementation challenges: the "fiscal cliff", insurance exchanges, and integrating services for "dual-eligibles". Overtime, the authors believe the ACA's spending and cost-containment provisions should at least slow the health care spending curve.

Seth Cardeli

The impact of the ACA on future medical expenses, perhaps the most important ACA-related issue for personal injury stakeholders, including settlement planners and structured settlement professionals, was addressed most recently by plaintiff attorney Seth Cardeli in an article  featured in the May 2014 issue of the AAJ's Trial Magazine, and summarized by S2KM, titled "Thwart the Assault on Future Medical Expenses".

In his article, Cardeli labels as "speculative and misleading" current defense efforts to convince courts the ACA changed how courts should calculate future medical expenses thereby transforming the ACA into "the latest tort 'reform' vehicle." Their efforts should fail, Cardeli maintains, because they wrongly attempt to circumvent states' collateral source and subrogation rules.

Cardeli's article cites cases from several state venues where courts have rejected defendants' attempts to limit plaintiff evidence of future medical expenses or to present their own evidence of ACA-related health care coverage. He urges plaintiff attorneys to aggressively oppose all related motions in limine by arguing:

• The effect of the ACA on a plaintiff's recoverable future medical expenses is speculative.
• Evidence of collateral sources is prejudicial to personal injury plaintiffs.
• Tortfeasors should bear the risk that any future medical expenses will not be covered by medical insurance.

Joshua Congdon-Hohman and Victor Matheson

A 2012 research paper titled "Potential Effects of the Affordable Care Act on the Award of Life Care Expenses" and written by economists Joshua Congdon-Hohman and Victor Matheson provides a notable counter argument to Seth Cardeli's Trial Magazine article. Contrary to Caredi, these economists maintain: "the ACA may well have indirectly resulted in a great deal of tort reform" and, as a result, "awards in personal injury cases could be dramatically impacted".

Their argument:

• When the ACA is fully implemented in 2014, all individuals will be required to purchase health insurance or pay a penalty.
• The ACA provides insurance premium subsidies for low income individuals who do not receive health insurance through the government or from a family member’s employer.
• The ACA prevents price discrimination based on health status and bans annual and lifetime expenditure limits.
• Most individuals will pay the same cost for health insurance before and after an accident.
• The legal maximum out-of-pocket expenses allowable under the ACA is $5,950 per year.
• The goal of tort law is to make the plaintiff "whole".
• Funding of health care through private insurance is a valid methodology for accomplishing this goal now that the ACA makes those markets available to injury victims.
• Therefore, the ACA:
  • Should simplify and reduce calculations of future medical damages;
  • By limiting those costs to "[health insurance] premiums and out-of-pocket limits less any pre-injury expected medical costs and penalties if uninsured."

Similar to Cardeli, and significantly, Congdon-Hohman and Matheson acknowledge a collateral source issue is "at play" and "remains of significant importance". Unlike Cardeli, however, they argue "there is reason to believe the ACA changes the underlying reason of excluding collateral source compensation from inclusion in tort cases."

More specifically, Congdon-Hohman and Matheson maintain: "removing existing health insurance coverage from exclusion under the collateral source rule would not significantly affect health insurance coverage rates reducing the economic rationale for having a collateral source rule in place for health insurance."

As a related result of the ACA, Congdon-Hohman and Matheson believe life care planners will play an increasingly important role in personal injury damage analysis.

• Prior to the ACA, life care planners were tasked with identifying medical and living expenses not otherwise required "but for" the accident.
• Under the ACA, the authors maintain life care planners must also identify which health care and living expenses will, and will not, be covered by the ACA's minimum insurance requirements. And, despite certain minimum federal standards, these requirements may also differ by state.

Rebecca Levenson and Ann Levin

During 2013, S2KM reviewed two law review articles which address whether and how the ACA will impact the collateral source rule (CSR):

• Rebecca Levenson (Levenson), "Allocating the Costs of Harm to Whom They are Due: Modifying the Collateral Source Rule after Health Care Reform" (Levenson article), University of Pennsylvania Law Review, Volume 160.
• Ann S. Levin (Levin), "The Fate of the Collateral Source Rule After Health Care Reform" (Levin article), UCLA Law Review, Volume 60.

Although every state and federal court recognizes the CSR in some form, many states have limited its scope or abolished it completely as a result of tort reform. Plaintiffs in different states and/or different courts therefore can receive widely different damage awards for the same injury because different courts measure medical costs differently.

Levenson and Levin each summarize traditional arguments favoring and opposing the common law CSR. However, neither Levin nor Levenson:

• Directly address whether and/or how the CSR will affect calculations of future medical damages, as opposed to past medical damages.
• Discuss how the ACA's restrictions against pre-existing conditions impact calculations of medical damages.

CSR proponents emphasize the deterrence theory of tort law which seeks to punish tortfeasors and deter them from injuring future plaintiffs:

• Defendants should not be unjustly enriched if a plaintiff purchases medical insurance.
• The CSR incentivizes plaintiffs to purchase medical insurance.
• Collateral sources never fully reimburse plaintiffs.
• Subrogation rights reduce and/or prevent double recoveries.
• The CSR promotes independence of jury determinations.

CSR opponents argue the purpose of tort law is compensation for harm not deterrence. They criticize the CSR for:

• Allowing some plaintiffs to recover twice.
• Generating different damage awards for the same injuries in different cases.
• Adding an unjustified element of punitive damages.
• Inflating awards.
• Encouraging claimants to go to trial.

Both Levenson and Levin agree the ACA's individual mandate weakens the traditional common law CSR rationale and that medical damages should now be calculated differently. However they do so for different reasons and propose different solutions.

• Levin - Levin's primary argument for changing the traditional common law CSR is that it calculates medical damages based on medical provider bills instead of the lower negotiated reimbursement rate paid by most health insurers. To achieve fairness and accuracy post-ACA, Levin maintains courts should calculate medical damages using: 1) the negotiated reimbursement rate; and 2) a portion of the premium payments the plaintiff has paid for medical insurance.
• Levenson - The purpose of changing the CSR after the ACA, according to Levenson, should be to align the CSR's outcome with the underlying goal of the individual mandate. Whether and what changes will occur, however, will vary from jurisdiction to jurisdiction depending upon a number of factors which Levenson identifies including the current status of the CSR in a particular state. Levenson insists any changes in the CSR must account for the different groups affected: insured plaintiffs, willfully uninsured plaintiffs and exempt plaintiffs.

Conclusion

For personal injury and settlement planning professionals who are attempting to understand how the ACA impacts personal injury damage analysis, future medical expenses, negotiation strategy, work product, and funding options, this S2KM blog series hopefully captures some of the complexity of the related laws, issues and perspectives and encourages continuing and more comprehensive analysis.

The impact of the ACA on structured settlements, and settlement planning more generally, depends not only upon the terms and conditions of the ACA itself, but also upon the new and evolving legal construct for future medical expenses in personal injury cases created by the interaction of the ACA with these related laws and legal developments.

For S2KM's continuing coverage of ACA-related issues, see the structured settlement wiki.

ACA and Future Medical Expenses - 2

The Affordable Care Act (ACA) refers to two controversial laws enacted in March 2010, the Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act, which restructure the fundamental relationship among government, health care providers and health care recipients and profoundly impact persons with disabilities.

Although legal challenges, political debate and disputes about future insurance premiums and health care costs continue, the Supreme Court upheld almost all of the ACA's provisions in June 2012, including the individual mandate and elimination of pre-existing condition restrictions, which became effective nationally on January 1, 2014.

With the ACA's primary constitutional framework now largely operational, various "experts"  increasingly are discussing and debating what impact the ACA will have upon future medical expenses in personal injury cases - as well as its related impact on structured settlements.

In a prior blog post, S2KM re-introduced these issues by summarizing an article written by Seth Cardeli, titled "Thwart the Assault on Future Medical Expenses", which appeared in the May 2014 issue of the American Association for Justice (AAJ) Trial Magazine.

The new and evolving legal construct for future medical expenses in personal injury cases created by the ACA is complicated, controversial and important. Continuing discussions and analysis should not proceed within an intellectual vacuum. In additional to the ACA, related laws and legal developments such as Medicaid (including the Bipartisan Budget Act of 2013), Medicare (including WCMSAs , liability MSAs and MMSEA) and/or state specific collateral source and subrogation rules must be considered.

This blog post summarizes ACA-related analysis by speakers at professional conferences S2KM has previously attended and includes excerpts from prior S2KM reviews of those conferences. The purpose is to provide a point of reference for future S2KM reporting about the legal interplay involving the ACA, personal injury cases and structured settlements. A subsequent blog post (ACA and Future Medical Expenses - 3) will summarize similar ACA analysis from articles and papers previously reviewed by S2KM.

Conference Speakers Addressing ACA Issues

Academy of Special Needs Planners (ASNP) - Among the professional association conferences S2KM has attended since 2010, the ASNP has provided the most consistent and comprehensive ACA reporting.

Cynthia Barrett - During the 2011 ASNP Annual Conference, Cynthia Barrett highlighted the following questions she anticipated plaintiff attorneys would most likely ask about health care reform and the ACA on behalf of their personal injury clients:

• Will my disabled client be able to get health insurance now?
• For settlement purposes, can future medicals be reduced to estimated lifetime insurance premiums until my client becomes eligible for Medicare or Medicaid?
• Do private health plans have “set-aside” or special needs trust requirements?
• If my client can get private health coverage, will he/she still need public benefits?
• If my client can obtain private health insurance, why do I need a special needs attorney or a special needs trust?
• As a plaintiff attorney, is there anything else I need to know about health care reform or related legislation?
• Barrett also advised special needs attorneys to:
  • Exclude from their services health coverage options advice;
  • Screen claimants to determine whether needs-based Medicaid will be important.

David Lillesand - Based upon his experience in Florida, where the Affordable Care Act (ACA) prohibition against pre-existing exclusions already existed in 2010, David Lillesand offered the following preliminary observations during the ASNP 2012 Annual Conference:

• The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims.
• Existing self-settled (first party) special needs trusts should be reviewed, in the context of the ACA's prohibition against pre-existing condition exclusions and available medical insurance options, and in many cases terminated.
• Damages for future medical costs in personal injury lawsuits could be reduced assuming the premium costs of newly available insurance premiums become admissible in proving and/or defending damages.

ASNP 2013 Annual Conference

Scott Solkoff - Continuing its analysis of the ACA, the ASNP 2013 Annual Conference featured Scott Solkoff who predicted:

• Reduced personal injury verdicts and settlements.
• A different calculus for determining future medical damages based upon health insurance costs.
• Fewer first party special needs trusts (SNTs).
• Reduced demand for Medicare and Medicaid for persons with disabilities under age 65.
• New opportunities for special needs attorneys because of the complexity of the ACA.

Social Security Administration Representatives - During a subsequent question and answer session at the ASNP 2013 Annual Conference, moderated by Kevin Urbatsch and featuring representatives of the Social Security Administration, the following exchange occurred:

• Question: will the SSA allow early termination of SNTs to comply with ACA?
• SSA Answer: right now, any early termination of a SNT will require payment of reversionary interest.

ASNP 2014 Annual Conference

The ASNP 2014 Annual Conference expanded previous ASNP educational programs about the ACA and coincided with news the ACA had exceeded enrollment expectations and achieved its primary objective of substantially expanding healthcare in America.

ASNP's 2014 conference featured two ACA presentations:

• A multi-professional "ACA Panel" consisting of: David Lillesand (attorney); Ann Koerner (life care planner); and Scott McDonald (investment adviser).
• "Special Needs Trust (SNT) Taxation" discussion by Bradley Frigon - focusing on strategies for maximizing health care coverage and minimizing costs.

Both of ASNP's 2014 ACA presentations highlighted the importance of health insurance education and the need for health insurance expertise as part of the settlement planning and/or special needs planning team. Some of the ACA resources and issues addressed:

• ACA's definition of "health insurance" - 10 key requirements.
• The ACA's definition of "modified adjusted gross income" (MAGI) - to determine eligibility for ACA premium tax credits and Medicaid expansion.
• Calulating MAGI - and whether structured settlements are included or excluded.
• ACA assessment questions - and how they expand "needs analysis".
• ACA flowchart - for determining the proper plan under the ACA.
• When to use a SNT vs. purchasing ACA insurance - four alternative strategies.
• Defining the settlement planning process.
• ACA's financial impact on settlement planning.
• Lump sums vs. structured settlements under the ACA.
• Coverage comparisons - based upon types of provider networks, services and authorization requirements.
• Coverage gaps - in states that do not adopt Medicaid expansion.

NAELA and SSP 2014 Annual Conferences

With permission from ASNP and acknowledgments to David Lillesand, Kevin Urbatsch, National Director of ASNP and 2014 Editor-in-Chief of the "NAELA Journal' repeated for both the National Academy of Elder Law Attorneys (NAELA) 2014 Annual Conference and the Society of Settlement Planners (SSP) 2014 Annual Conference substantial portions of ASNP's 2014 ACA Panel summarized above.

In addition, NAELA awarded its 2014 John Regan Writing Award, honoring the authors of the best article published in the "NAELA Journal" during the past year to Alfred Chiplin, Jr. and Bethany Lilly, for their article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past" analyzing various ACA cost-saving components on Medicare.

NAMSAP 2014 Conferences

Roy Franco, a featured speaker at the National Alliance of Medicare Set-Aside Professionals (NAMSAP) 2014 Regional Conference, addressed the settlement planning changes likely to result from the Bipartisan Budget Act of 2013, implementation of the ACA and anticipated CMS rules for liability MSAs.

Franco predicted "workers' compensation, liability and no-fault insurers will all become primary payers vis a vis Medicare, Medicaid and ACA health providers" as part of integrated settlement planning models similar to WCMSAs. He added, however, that different state-specific models may develop as state Medicaid agencies begin responding October 1, 2014 to the new Medicaid reimbursement rules promulgated by the Budget Act of 2013.

Medicare Set-Aside Arrangements (MSAs) represent one strategic link between Medicare cost savings and future medical costs in both workers compensation and personal injury cases as well as the primary defining topic of every NAMSAP educational conference including NAMSAP's 2014 Annual Meeting.

The Center for Medicare & Medicaid Services (CMS) has calculated WCMSA amounts totaling approximately $1.8 billion in FY 2013. CMS published a WCMSA Reference Guide (WCRG) on March 29, 2013 plus a WCRG Version 2.0 on November 7, 2013. The WCRG's intended purpose: to help WCMSA professionals, beneficiaries and other stakeholders "understand CMS' [WCMSA] amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval."

Both the CMS policy memoranda and the WCRG address structured settlement issues and provide guidelines for their utilization in funding WCMSAs. WCMSAs represent one of the few submarkets where structured settlements sales have increased since 2008 - in large part because the method CMS requires for calculating WCMSA present values provides an inherent cost advantage for annuities compared with lump sum alternatives.

CMS has not yet published definitive rules for using MSAs in liability cases (LMSAs). CMS did publish an Advanced Notice for Proposed Rule Making (ANPRM) on June 14, 2012 in the Federal Register which included seven different option to satisfy obligations for future medicals in liability cases. CMS also published RIN: 0938-AR43 in Spring of 2013 outlining a timetable for the proposed rule. No such LMSA rule, however, has yet been published.

For S2KM's complete reporting about the ACA and structured settlements, see the structured settlement wiki.

NAELA 2014 Annual Conference

"Avanti sempre avanti" - forward always forward!

Michael Amoruso, provided this impromtu theme for the National Academy of Elder Law Attorneys (NAELA) 2014 Annual Conference while accepting NAELA's Theresa Award in recognition of his advocacy and support of individuals with disabilities. Other 2014 NAELA award winners:

• Powley Award: Marielle Hazen - in recognition of her commitment to promote a greater understanding of the rights and needs of the elderly and people with special needs and of how Elder Law attorneys advocate for those rights.
• John Regan Writing Award: Alfred Chiplin, Jr. and Bethany Lilly - honoring the author(s) of the best article published in the NAELA Journal during the past year. S2KM reviewed their article about the impact of the Affordable Care Act (ACA) on Medicare in a prior blog post.

Amoruso's conference theme seemed appropriate as NAELA quickly celebrated its accomplishments, then focused the majority of its May 21-24 Scottsdale, Arizona educational program addressing multiple strategic challenges.

Accomplishments and Resources

NAELA was the first and remains the largest U.S. professional association focused on the needs of elder and special needs law attorneys. NAELA was founded in 1986 and now consists of more than 4300 attorney members. 250 members attended NAELA's 2014 Annual Conference which also featured 22 exhibitors.

In their respective speeches, outgoing NAELA President Howard Krooks and incoming President Bradley Frigon highlighted NAELA's most recent accomplishments: historically strong financial financial surplus including a well-funded NAELA Foundation; re-vamped educational programs including new online tools and interactive learning; a public policy advocacy program more focused and linked with member practices; two NAELA sponsored congressional bills: the Special Needs Trust Fairness Act (H.R. 2123 and S. 1672) and Disabled Military Child Protection Act (H.R. 2249 and S. 1076).

NAELA's resources are extensive and provide exceptional membership value. In addition to the NAELA Foundation, they include: the NAELA Journal plus additional publications; Aspirational Professional Standards modeled on the ABA Model Rules of Professional Conduct; a website featuring a comprehensive library and hosting NAELA's active online community; seven practice sections; 23 committees; state chapters; multiple educational conferences and certification programs; frequent webinars; multiple annual awards, plus a large and efficient staff.

Strategic Challenges

Despite its historic success, NAELA and its members face several strategic challenges.

• Although NAELA's client communities continue to grow, so does competition from non-NAELA member elder law and special needs attorneys as well as non-attorneys and websites offering legal forms. Most state bar associations have formed "elder law" sections which also compete with NAELA.
• NAELA was slow to embrace special needs as a separate strategic market. As a result, NAELA members formed the Special Needs Alliance (SNA) and the Academy of Special Needs Planners (ASNP). Many ASNP and SNA members, however, remain NAELA members.
• Additional challenges and changes: 1) the still uncertain impact of the ACA; 2) a permanent increase in the federal estate tax exemption to $5.34 million reducing the need for estate-tax related planning; 3) continuing decreases in traditional non-ACA government benefit (funding) resources; and 4) "commoditization" of several traditional elder law practice areas.

NAELA 2014 Annual Conference Educational Program

Responding to these strategic challenges, NAELA organized its 2014 Annual Conference to address two primary issues: 1) the future needs of persons with disabilities; and 2) the future of elder law. Both issues were featured is general sessions and supported with multiple break out sessions.

Two articles featured in the most recent issues of the NAELA Journal also addressed these issues:

• "The Future of Planning for Persons with Disabilities" - by Kevin Urbatsch and Michele Fuller.
• "NAELA Report and Recommendations: Preparing the Academy for a Rapidly Changing Future" - co-authored by several NAELA Board members and past Presidents.

General Sessions - Topics and Speakers

• Kruse Ethics Lecture - Ethics of Ancillary Practices - Margaret Lodis
• Alzheimer's Research Findings - William J. Burke, MD
• Future Needs of People with Disabilities - Michele Fuller and Kevin Urbatsch
• The Future of Elder Law - Thomas Begley, Jr. and Colleen Caruso
• An Outsider's (Sponsors') Perspective - Chad Fotheringham and Bridget O'Brien Swartz
• Case Law Update - Professor Rebecca Morgan, Edwin Boyer, Craig Reaves, Howard Krooks, William Browning
• Multiple Sclerosis and other Neurological Disorders - Stephen Dale and Bonnie Danowski

Breakout Sessions - Topics and Speakers

• Middle Class Estate Planning - Bernard Krooks
• Fiduciary Litigation - Sharon M. Rivenson Mark
• Medicaid Fair Hearings, Federal Court Proceedings and Appeals - William J. Browning, Shirley Berger Whitenack, Patricia E. Kefalas Dudek
• Trust Review Process - Michele Fuller
• ACA and Special Needs Planning - Kevin Urbatsch
• Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act - Catherine Anne Seal and David M. English
• Incorporating Financial Planning and Services into Elder Law Practice - Andrew Hooks and Mark Munson
• Acting as a Fiduciary - Robert Fleming and Robert Fechtman
• Special Needs Planning - Mary Schmitt Smith and Theresa Varnet
• The Future of Estate Planning - Jonathan Blattmachr
• Life Care Planning - Jerold E. Rothkoff, Esq., Beth A. Prather
• Domestic Asset Protection - Jonathan Blattmachr

Structured Settlements

With few exceptions (e.g. S2KM blog author Patrick Hindert's presentation at the NAELA 2013 Annual Conference) neither structured settlements nor personal injury settlement planning receive much attention at NAELA conferences.

The words "structured settlement" were mentioned one time during NAELA's 2014 conference presentations - by Thomas Begley Jr. in reference to changes resulting from the ACA.

Unfortunately, many NAELA members view structured settlements negatively despite familiarity with the concept and a general affinity for annuities. More specific reasons:

• Many NAELA members
  • Believe defense brokers "over-structure" settlements before actual settlement planning can occur.
  • View Qualified Settlement Funds (QSFs) as positive and under utilized as a result of defense broker resistance.
• Many NAELA members view structured settlement brokers generally as:
  • Product and transaction focused instead of planning and client focused.
  • Annuity sales persons rather than professionals interested in understanding issues and solving problems.
  • Failing to adhere to professional standards such as full disclosure, product suitability and informed consent.
• For many NAELA members, the secondary market contributes to their negative view of structured settlements.

Special Needs Planning

When NAELA members discuss special needs planning, many tend to think about developmental (as opposed to personal injury) disabilities. Examples: 2014 NAELA conference presentations discussed Alzheimer's Research, Multiple Sclerosis and Autism statistics - without discussing serious tort-related injuries such as spinal chord or brain damage injuries.

Part of the reason: many first generation special needs attorneys entered this field because of their own child's developmental disability. Life insurers have contributed to this special needs dichotomy (developmental vs. personal injury) by creating completely separate departments for: 1) special needs; and 2) structured settlements.

Conclusion

NAELA has performed an important member service by incorporating its strategic planning into its educational programs and publications. Structured settlement and settlement planning professional associations would benefit their own members by following NAELA's example.

For S2KM summaries of other 2014 professional conferences, see the structured settlement wiki.

2014 Educational Conferences

Personal injury settlement planning conferences will start early in 2014 when the National Alliance of Medicare Set-Aside Professionals (NAMSAP) hosts a Regional Meeting in Miami, Florida on January 10.

Here is a preliminary listing of 2014 educational conferences and events which historically have addressed personal injury settlement planning and structured settlement issues, some of which limit attendance to members while others are open to non-members:

• January 10 - NAMSAP Miami Regional Meeting - open to non-members.
• February 8-12 - American Association for Justice (AAJ) Winter Meeting - members only.
• February 11-13 - National Structured Settlement Trade Association (NSSTA) Structures 101 - members only.
• March 18 - American Association of People with Disabilities (AAPD) Leadership Gala - open to non-members.
• March 27-29 - Academy of Special Needs Planners (ASNP) Annual Conference - open to non-members.
• April 1-3 - NSSTA Annual Conference - members only.
• April 27-29 - Society of Settlement Planners (SSP) Annual Conference - open to non-members.
• May 8-9 - NAMSAP Annual Meeting - open to non-members.
• May 15-17 - National Academy of Elder Law Attorneys (NAELA) Annual Meeting - members only.
• July 26-30 - AAJ Annual Meeting - members only.
• November 4-7 - National Association of Settlement Purchasers (NASP) Annual Conference - open to non-members.

One of the issues common to all of these associations' members and clients will be the impact of the Patient Protection and Affordable Care Act (ACA), the most important provisions of which (including the individual mandate and pre-existing injury coverage) became effective January 1, 2014.

The following S2KM blog posts address ACA issues that should concern settlement planning and structured settlement professionals - and hopefully will be discussed during their 2014 educational conferences:

• Impact of Health Care Reform - highlighting articles and authors featured in the Spring 2011 Issue of NAELA Journal.
• Medicare Cost-Savings Components - review of Spring 2013 NAELA Journal article written by Alfred J. Chiplin Jr. and Bethany J. Lilly.
• Impact on Personal Injury Damage Awards - review of research paper written by Joshua Congdon-Hohman and Victor A. Matheson.
• Impact on the Collateral Source Rule - review of law review articles by Rebecca Levenson and Ann Levin.

For background reporting about significant 2013 structured settlement and settlement planning developments, see these S2KM blog posts:

• Primary Market
• Settlement Planning
• Secondary Market
• ELNY and Reliance Liquidations

For historic S2KM reporting about structured settlement and settlement planning professional association educational conferences, see the structured settlement wiki.

Affordable Care Act - 4

The Patient Protection and Affordable Care Act (ACA) represents a comprehensive expansion and restructuring of the United States health care system whose most important and controversial provisions for personal injury settlement planning, including the individual mandate and elimination of pre-existing condition restrictions, will become effective nationally on January 1, 2014.

Among the most fundamental and contentious ACA issues are whether, when and how the ACA will reduce health care costs.

In their Spring 2013 NAELA Journal article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past" (see Affordable Care Act - 3), authors Alfred J. Chiplin Jr. and Bethany J. Lilly analyze various ACA cost-saving components.

Overtime, the Chiplin and Lilly believe the ACA's spending and cost-containment provisions should at least slow the health care spending curve. As this New York Times article points out, there is mounting evidence to support Chiplin and Lilly's belief that a sustainable slowdown in health care costs is possible. 

Health Insurance Exchanges

Chiplin and Lilly acknowledge ACA implementation will be a tough but doable challenge so long as we "let the tools of the ACA work". Among the implementation challenges they highlight are the new health insurance exchanges , which states are authorized to establish for individuals and small businesses. 26 states have refused to establish an exchange, thereby defaulting to a federally-facilitated exchange.

Based on conflicting actuarial projections, many insurance experts and commentators have predicted these insurance exchanges will produce higher insurance rates, especially among younger, healthier participants. Under the new ACA requirements, insurers who participate in the exchanges are not permitted to refuse individuals. Price variations and the right to rescind coverage are restricted and annual and lifetime limits are eliminated. Individuals can select one of four comparable plans (bronze, silver, gold, platinum) with few out-of-pocket expenses.

California Exchange Report

On May 23, 2013, Covered California, California's new insurance exchange, published a Report ("Health Plans and Rates for 2014: Making the Individual Market in California Affordable") that identified premium rates submitted by the participating health insurance companies. Surprisingly, these premium rates appear to be significantly less expensive than most forecasters projected.

"We’ve hit a home run for consumers,” announced Peter V. Lee, the executive director of the California exchange.

Many ACA proponents agree. For example, in his May 24, 2013 New Republic article ("California will be Spared the Obamacare Apocalypse: No Sticker Shock Here - Just Affordable Insurance Premiums"), Jonathan Cohn writes:

"Based on the premiums that insurers have submitted for final regulatory approval, the majority of Californians buying coverage on the state's new insurance exchange will be paying less—in many cases, far less—than they would pay for equivalent coverage today. And while a minority will still end up writing bigger premium checks than they do now, even they won't be paying outrageous amounts. Meanwhile, all of these consumers will have access to the kind of comprehensive benefits that are frequently unavailable today, at any price, because of the way insurers try to avoid the old and the sick."

Conservative Reaction

Perhaps predictably, the conservative political reaction to the California insurance exchange report was dramatically different as evidenced by these headlines:

• "Rate Shock: In California, Obamacare to Increase Individual Health Insurance Premiums by 64-146%" - May 30, 2013 Forbes article by Avik Roy.
• "ObamaCare Bait and Switch" - June 3, 2013 editorial in the Wall Street Journal.
• "Obamacare is Raising Insurance Costs" - June 3, 2013 op-ed article in the Wall Street Journal by Daniel Kessler.

Both Wall Street Journal articles predicate their analysis and conclusions on Avik Roy's article.

How can the same California insurance exchange report produce such radically different interpretations?

Proponents' Rebuttal

Jonathan Chait, an ACA proponent, provides an answer in his June 5, 2013 blog post titled "Is Obamacare a War on Bros?":

"Roy compared California’s plans to the teaser rates available on ehealthsurance.com. Those teaser rates turn out to bear little resemblance to actually available health-insurance rates — they exclude swaths of potential consumers for even minute health problems. Possibly the most misleading part of Roy’s astonishingly dishonest screed is the entry point for his pseudo-investigation...These columns keep citing a healthy 25-year-old man as if they are offering up a randomly chosen example of how the exchanges will work. Healthy non-smoking 25-year-old males have very different health profiles than the average person."

Chait's comments echo similar criticism of Roy's analysis by Ezra Klein in his June 1, 2013 blog post titled "The Shocking Truth about Obamacare's Rate Shock":

• "I ran the same search Roy did.....Click to buy the plan and eventually you’ll have to answer pages and pages of questions about your health history. Ever had cancer? How about an ulcer? How about a headache? Do you feel sad when it rains? When it doesn’t rain? Is there a history of cardiovascular disease in your family? Have you ever known anyone who had the flu? The actual cost of the plan will depend on how you answer those questions.”
• "Comparing the pre-underwriting price of this plan to those in Obamacare’s exchanges is ridiculous. The plans in Obamacare’s exchanges have to include those people. They can’t turn anyone away or jack up rates because of a history of arthritis or heart disease. ...They also have to offer insurance that meets a certain minimum standard."

In a follow-up to his May 24, 2013 New Republic article (cited above), Jonathan Cohn added his own rebuttal ("Anatomy of a Bogus Obamacare Argument: How an Irresponsible Forbes Writer Distorted the Debate") to Roy's article:

"Writers like me who have supported the [ACA] treated [the California exchange report] as a big deal. But I would like to think we were candid about the downsides....and noted that California was just one state—and, in some respects, a best-case scenario, because its officials are committed to the law’s success and enjoy broad support from corporate, medical, and consumer leaders. We also noted—as we had noted before—that some young and healthy people would have to pay more. Again, a health insurance system that no longer discriminates against the old and sick can no longer discriminate in favor of the young and healthy. We also acknowledged that getting the insurance bids is just one step in the process. As many of us have written, plenty of things could go wrong with Obamacare—and at least a few of them surely will."

ACA and Settlement Planning

The future of the ACA - and whether, when and how it will reduce health care costs - remains uncertain in the context of continuing political debate and threats to prevent its implementation. However, as key ACA provisions, including the individual mandate and elimination of pre-existing condition restrictions, are set to take effect January 1, 2014, settlement planning and structured settlement stakeholders should prepare themselves for a vastly different professional landscape.

For S2KM's complete reporting about health care reform and the ACA, see the structured settlement wiki.

Affordable Care Act - 3

The Patient Protection and Affordable Care Act (ACA) represents the most comprehensive government expansion and legal restructuring of the United States healthcare system since the passage of Medicare and Medicaid in 1965.

Enacted in March 2010 and upheld by the Supreme Court in 2012, most of the ACA's important and controversial provisions, including the individual mandate and elimination of pre-existing condition restrictions, will become effective nationally on January 1, 2014.

Prior S2KM blog posts addressing ACA issues from a settlement planning perspective:

• Health Care Reform - highlighting the Spring 2011 edition of the NAELA Journal which features a comprehensive ACA review.
• Health Care Law Upheld - summarizing the Supreme Court's 2012 decision in National Federation of Independent Business v. Sebelius.
• Affordable Care Act - 1 - reviewing Joshua Congdon-Hohman and Victor A. Matheson's article about the ACA's impact on future medical damages in personal injury cases.
• Affordable Care Act - 2 - reviewing separate law review articles by Rebecca Levenson and Ann Levin about the ACA's impact on the collateral source rule.
• ASNP 2013 Annual Meeting - referencing Scott Solkoff's presentation about the ACA's impact on special needs planning.
• Future of Elder and Special Needs Law - summarizing the Spring 2013 issue of the NAELA Journal which includes a Medicare article by Alfred J. Chiplin Jr. and Bethany J. Lilly detailing various cost-saving components of the ACA.

This S2KM blog post looks more closely at the ACA analysis in Chiplin and Lilly's Spring 2013 NAELA Journal article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past."

Chiplin and Lilly begin their article with an extensive review of the historical debate concerning public health insurance in the United States. This historical debate not only defines the current structure of the Medicare program but also, according to Chiplin and Lilly, "the on-going debate ... about the necessary elements of a comprehensive program, including health care financing and accessing the quality of necessary services."

After summarizing key components of the current Medicare system, Chiplin and Lilly address current concerns about Medicare solvency. Their conclusions:

• Solvency - "[T]he current state of the Medicare Trust Funds is not as dire as both major political parties and news media outlets indicate." Medicare, according to the authors, "... has enough money to pay all of its bills through 2024 and to pay 87 percent of its costs for many years thereafter."
• Financial challenges- Medicare nonetheless faces two specific financial challenges:
  • The insolvency of the Federal Hospital Insurance (HI) Trust Fund in 2024; and
  • Rising health care costs.

Unlike the Supplemental Medical Insurance (SMI) Trust Fund, which the authors maintain is not in danger of insolvency because it is funded by specific percentages every year, the HI Trust Fund expenses have exceeded income and are expected to continue to do so. The authors' solution: Congress must either raise the payroll tax or reduce Medicare payments for medical costs. 

Chiplin and Lilly provide statistical evidence to highlight the negative impact of rising health care costs on Medicare and Medicare beneficiaries as well as the United States economy. For example:

• In 2011, the Federal Budget equaled 24 percent of Gross Domestic Product (GDP) and experienced a deficit of more than $1 trillion. Medicare accounted for 13.5 percent of the entire budget.
• Medicare enrollment has increased from 34 million (1990) to 39 million (2000) to 47 million (2010).
• Due to our aging population, the Congressional Budget Office (CBO) estimates Medicare enrollment will increase to 64 million by 2020 and 81 million by 2030.
• As a percentage of GDP, Medicare spending has increased from 1.7 percent in 2002 to 3.7 percent in 2012 with projected increases to 4.2 percent in 2022, and 6 percent in 2037.
• The CBO estimates that 40 percent of Medicare’s future growth will result from “excess cost growth” compared with 60 percent attributable to increases in the number of Medicare beneficiaries.
• A 2012 report from the Institute of Medicine (IOM) attributes increased Medicare costs to several factors including: high re-hospitalization rates, lack of coordination among physicians and failure to pay for quality.
• Because Medicare cost increases are expected to outpace average Social Security benefits, elderly Medicare beneficiaries will likely pay a higher percentage of their income for health care.
• However, because private insurance pays more than Medicare for the same benefits, the costs of health care generally would likely increase much more if Medicare benefits were eliminated.

Following their historical and statistical summaries, Chiplin and Lilly address the central issue in their article: "how will the ACA reduce health care costs?"

​The ACA's cost-containment programs, according to Chiplin and Lilly, are based upon the theory that costs can be reduced by demanding a higher quality of care and greater efficiency from providers and allowing providers to share in the savings. ACA programs the authors highlight include:

• Patient-Centered Medical Home (PCMH). The purpose of this program, currently being tested in CMS-designed demonstration models, is to “redesign the health care delivery system to provide targeted, accessible, continuous and coordinated, family-centered care to high-need populations.” To qualify, a participate must be enrolled in Medicare Parts A and Part B and have at least one eligible chronic disease as defined by CMS.
• Medicare Shared Savings Program (MSSP). The purpose of this program is "to promote accountability for a defined patient population, coordinate items and services under traditional Medicare Parts A and B, and encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery." Under the MSSP, groups of providers and suppliers that meet criteria defined by the Department of Health and Human Services (HHS) can work together to manage and coordinate care for Medicare fee-for-service beneficiaries through Accountable Care Organizations (ACOs). ACOs will be eligible to share cost savings if they meet HHS-defined quality performance standards.
• The Independent Payment Advisory Board (IPAB). The IPAB is a 15-member board of health care experts appointed by the President whose mission is to develop recommendations to "reduce the per capita rate of growth in Medicare spending.” The IPAB cannot make recommendations "to ration health care, raise revenues, raise Medicare beneficiary premiums, increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria.” The IPAB reports will be submitted to MedPAC, HHS, the President and Congress. The report will explain each recommendation and include both a legislative proposal and a CMS actuarial opinion. HHS will adopt IPAB recommendations unless Congress votes to prevent implementation.
• Quality Review Mechanisms- The ACA features several quality measurement initiatives that restrict payments for services and procedures that do not meet care standards:
  • Incentive payments for hospitals.
  • Limiting payment for hospital-acquired conditions.
  • National strategy to improve health care quality.
  • Interagency working group on healthcare quality.
  • Quality measurement development.
  • Health information technology.
  • Data collection to reduce health care disparities.
  • The Center for Medicare and Medicaid Innovation.
  • Preventive services.

Chiplin and Lilly view ACA as "a vast experiment in paying for high-quality health care while preserving the Medicare program and expanding access to health care for other population segments." Implementation will be a tough, but doable challenge so long as we "let the tools of the ACA work". Among the implementation challenges: the "fiscal cliff", insurance exchanges, and integrating services for "dual-eligibles".

Overtime, the authors believe the ACA's spending and cost-containment provisions should at least slow the health care spending curve. As this New York Times article points out, there is mounting evidence to support Chiplin and Lilly's belief that a sustainable slowdown in health care costs is possible.

For a liberal political perspective on the ACA-related health care debate in the context of the budget deficit debate, see this May 29, 2013 blog post by Jonathan Chait titled "Yuval Levin Dissembles Madly".