In the complex world of litigation, accurately forecasting future medical costs is crucial. Whether you are dealing with catastrophic injuries, lifelong disabilities, or ongoing medical needs, choosing the right cost planning approach can significantly impact the case’s outcome. In this blog, we delve into the various types of cost plans, the science of data sourcing, and the role of experts in crafting defensible projections.
Key Types of Cost Plans
Medical Cost Projections
Medical cost projections are condensed reports tailored to cases with straightforward care needs. They focus on specific treatments, such as surgeries or medications, and are often used for mediation or reserve settings. However, they lack the comprehensiveness required for court admissibility.
Life Care Plans
Life care plans are comprehensive in scope covering medical and non-medical needs over a patient’s lifetime. These plans are well-suited for complex cases and include detailed evaluations, interviews, and multiple costing sources. Life care plans provide robust support for litigation, especially when trials are likely.
Life Care Plan Projections
Life care plan projections sit between medical cost projections and full life care plans. These reports are ideal for cases where mediation is expected but trial preparation remains a possibility. They offer cost efficiency while maintaining methodological rigor and can be adapted into full life care plans if needed.
Data Sourcing for Cost Plans
Accurate cost planning relies on diverse data sources, each with its strengths and challenges.
- National Databases: National databases like Fair Health provide percentile-based pricing and geographic adjustments. These resources are indispensable for ensuring defensibility in court.
- Internet Searches: Particularly useful for durable medical equipment (DME), internet searches help identify providers and price ranges. However, care must be taken to compare similar items to ensure consistency.
- Chargemasters: Hospitals are mandated to provide price transparency, offering insights into procedure costs. Chargemasters are valuable but can be difficult to access and interpret.
- Phone Calls to Providers: Direct communication with treating providers yields localized cost insights. This method requires specific codes and meticulous documentation to ensure accuracy.
- Past Bills: Although past bills cannot be used directly for cost calculations, they provide valuable insights into treatment frequency and billing codes, aiding in future cost estimations.
The Science of Costing
Cost planning involves more than data collection—it requires careful analysis and application.
- Understanding Percentiles: The 80th percentile is a standard for “usual and customary” charges in life care planning. This ensures that costs are neither underestimated nor inflated.
- Geographic Adjustments: Costs vary widely across regions. Tools that factor in local cost differences ensure accuracy and fairness in pricing.
- Complex Cost Calculations: For example, calculating costs through the VA database involves navigating multiple tables, geographic factors, and relative value units. This process highlights the importance of expert knowledge and precision.
The Role of Economists in Cost Planning
Economists play a vital role in translating raw costs into future projections, ensuring that all calculations align with the financial realities of both the present and future. Their expertise is instrumental in several key areas:
- Inflation Analysis: Economists apply inflation rates to estimate future costs accurately. They understand that medical costs, like those for services, treatments, and equipment, often grow at rates distinct from general economic inflation. Their ability to analyze these trends ensures that cost estimates remain realistic over time.
- Present Value Calculations: Determining the present value of damages is a critical task. Economists use specialized formulas to discount future costs back to today’s dollars, ensuring that settlements or awards are grounded in current financial terms.
- Addressing Lost Wages: Beyond medical costs, economists are often tasked with calculating lost wages or earning potential. This involves analyzing the claimant’s career trajectory, potential promotions, and salary growth, which can be heavily influenced by economic conditions.
- Legal and Court-Ready Expertise: In litigation, economists provide defensible calculations that can withstand scrutiny in court. Their understanding of complex financial data and ability to communicate it clearly makes them invaluable during trials or mediations.
Practical Challenges in Cost Planning
Creating accurate cost plans is not without obstacles. Data availability can be a significant issue, particularly in rural areas with limited providers. Additionally, legal restrictions in some states, such as California, prohibit the use of past bills for calculations.
To overcome these challenges, life care planners often use a combination of data sources to ensure accuracy. Balancing feasibility with thoroughness is key to producing reliable cost plans.
Qualifications of Costing Experts
Choosing the right expert is a cornerstone of creating defensible and accurate cost plans. Professionals with medical expertise, such as nurses and physicians, bring invaluable insights into the nuances of diagnoses and treatment pathways. Their hands-on experience ensures that the care recommendations align with the real-world needs of patients. Beyond clinical knowledge, these experts must understand the continuum of care—how injuries or conditions progress over time and the evolving medical and non-medical needs that arise. This understanding is critical in predicting future costs with accuracy.
Moreover, experienced cost planners possess a deep knowledge of medical coding and cost methodologies, which are essential for interpreting complex medical billing systems. They navigate national databases, chargemasters, and provider-specific data with precision, ensuring the numbers presented are both accurate and applicable. Their ability to bridge medical expertise with financial acumen makes them uniquely qualified to create cost plans that stand up to legal scrutiny.
Practical Takeaways for Legal Professionals
For legal professionals, understanding the intricacies of cost planning can significantly enhance case outcomes. Aligning the type of cost plan—whether a medical cost projection, a life care plan, or a hybrid—to the specific needs of the case is paramount. Each type of plan offers distinct advantages and is suited to different scenarios. Selecting the most appropriate approach ensures that the projections meet the demands of litigation whether for mediation, trial, or settlement negotiations.
Relying on experienced consultants is another critical step in achieving defensible and precise results. Costing experts bring a wealth of knowledge that enables them to address challenges such as regional cost variations and evolving treatment protocols. By leveraging their expertise, legal professionals can present robust, evidence-based cost projections. Additionally, adopting a hybrid approach, which blends the efficiency of condensed reports with the depth of comprehensive plans, offers a balanced solution. This strategy ensures that both cost efficiency and thoroughness are maintained without compromising the integrity of the data.
MLCC’s Services and Expertise
At MLCC, we specialize in delivering accurate and defensible cost plans. Our services include:
- Comprehensive Life Care Plans: Tailored for complex cases with lifelong needs.
- Medical Cost Projections: Efficient solutions for straightforward care scenarios.
- Additional Services: Including Medicare Set-Asides, Future Care Estimates, and Medical Chart Reviews.
Our team’s expertise ensures that your case is backed by reliable data and robust methodologies. Consultations are always complimentary, allowing us to guide you toward the best solution for your needs.
Navigating the complexities of medical cost projections and life care plans requires expertise, precision, and a deep understanding of the medico-legal landscape. By leveraging the right tools and professionals, you can ensure accurate and defensible outcomes in litigation. Contact MLCC today to learn how we can support your next case with expert guidance and services.
