Sandy Simpson - Solutions for Workers' Compensation and Liability Settlements

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31/Jan/2024

The January 18th, 2024 webinar hosted by Centers for Medicare & Medicaid Services (CMS) entitled Medicare Secondary Payer and Certain Civil Money Penalties (Non-Group Health Plan) is now available in the Download section of the What’s New page on CMS.gov. The webinar can be viewed in its entirety, or you may download the materials covered in PDF format by clicking here.

Medivest will continue to monitor news and updates from CMS and will keep its readers up to date when important announcements are made. For questions regarding the information presented in this webinar or any other recent CMS updates, please reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

22/Jan/2024

On January 10, 2024, the U.S. Department of Labor published a final rule, revising its guidance to employers and workers to help determine if a worker qualifies as an employee or an independent contractor (IC) under the Fair Labor Standards Act (FLSA). The final ruling explains that the economic reality test is comprised of six-factors that are a guide to conduct the totality-of-the circumstances analysis to determine economic dependence. The new ruling takes effect March 11, 2024. To view the final ruling, click here.

Misclassification Issues

Employers need to distinguish between employees and independent contractors when considering eligibility for workers’ compensation. Correctly distinguishing between employees and independent contractors is crucial for legal compliance, cost management, liability avoidance, and ensuring workers receive the appropriate benefits and protections. Misclassification can have significant financial and legal consequences for employers.

What is the Economic Realities Test?

The US Department of Labor uses an economic realities test to help employers comply with the law, reduce the risk of employee misclassification, and to help determine if a worker is classified as an independent contractor or as an employee. This test consists of six-factors that are all weighed against each other. All factors should be considered. No single factor determines a worker’s status. No one factor or combination of factors is more important than the other factors. This test considers the totality of the circumstances of the working relationship. Below are the six (6) factors.

Opportunity for profit or loss depending on managerial skill,
Investments by the worker and the employer,
Permanence of the work relationship,
Nature and degree of control,
Whether the work performed is integral to the employer’s business
Skill and initiative

About Medivest

Since 1996 Medivest has been helping our clients navigate the complexities of MSP compliance. We offer settlement solutions for workers’ compensation and liability settlements. Count on Medivest to help keep you up to date with the constant updates regarding Federal Register rulings, Medicare Secondary Payer legislation and changes related to CMS’s enforcement of the Medicare Secondary Payer. For questions, feel free to reach out to a Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

08/Jan/2024

It is getting close to that time of year when mailboxes begin to receive W-2 statements and 1099-INT statements. If an injured individual has either a Self-Administered Medicare Set-Aside (MSA) account or a Professionally-Administered MSA account, the individual will be sent a 1099-INT by January 31^st and a copy will be filed with the IRS. The 1099-INT shows interest earned in the account during the previous tax year.

Liability and Workers Compensations cases should follow the Workers Compensation Medicare Set-Aside (WCMSA)Reference Guide, until CMS publishes a Liability Medicare Set-Aside (LMSA) Reference Guide. Until then, the WCMSA Reference Guide should be considered a single point of reference for Liability and Workers Compensation cases. To download the WCMSA Reference Guide Version 3.8, Dated November 14, 2022, click here.

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.
The interest must be deposited into the MSA account to be used for MSA-covered expenses.
You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

A6. Assuming that there is adequate documentation for the amount of incremental tax that the claimant must pay for the interest earned on this set-aside account, the claimant or his/her administrator may withdraw an amount equal to the additional tax as a “cost that is directly related to the account” to cover the additional tax liability. Such documentation should be submitted along with the annual accounting.”

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare his/her tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return
Exclude the MSA interest income in the income tax return

In other words, if the Member must pay the IRS an increased income tax amount as a result of the interest earned from their MSA account, the additional income tax burden can be paid from the MSA account. This is considered a cost associated with having the MSA account and CMS allows this expense to be paid from the MSA account. Once a year, Medivest will send CMS an attestation for every applicable professionally-administered MSA account. Any MSA reimbursement of the additional income tax burden will be included in this attestation.

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Medivest’s highly trained representatives can help you figure out if Medicare may have an interest in your settlement. We assist all settling parties to navigate the MSP complexities and provide you with cost-saving strategies for your settlement. For questions about your account or setting up a new professional administration account please contact us here.

Sandy Simpson

20/Dec/2023

You have settled your injury case and have decided to self-administer your Medicare set-aside (MSA) arrangement. Whether you are just beginning to embark on this journey or if you have been self-administering your account for a while and need a refresher, here are a few tips you should know. These tips can help you navigate through this complicated process. They will ensure that you won’t jeopardize your Medicare benefits, help you preserve your MSA funds so they will be there when you need them the most, and will help you prepare to administer your MSA throughout 2024 and beyond.

Helpful Self-Administration Tips:

Set Up your MSA Correctly

Know how your Medicare Set-Aside account will be funded. There are two ways to fund MSA account either with a lump-sum payment or a structured annuity. If your settlement says that it will be funded as a lump sum, one check will be issued. Or, if your settlement says that it will be funded with a structured annuity, then an initial deposit is made to establish the account, followed by annual deposits.
Open a separate bank account to deposit your MSA funds. Do not co-mingle your MSA funds with your personal funds.
Deposit your MSA funds into an interest-bearing bank account, insured by FDIC.
It is recommended to find a bank that does not charge fees when you have a low balance and preferably to find an account that you could write checks on.

Learn the Process and Develop Good Habits Now

Keep your settlement paperwork in a safe place.
Know your date of settlement. Any expense that is injury related, Medicare covered, and has occurred after the date of settlement can be paid out of your Self-Administered Medicare Set-Aside account.
Only use the MSA funds from your account to pay for Medicare covered medical treatment and prescription costs related to your injury, even if you are not yet enrolled in Medicare.
Keep accurate records of the expenses you’ve paid out of your account. You will not submit these records annually, but Medicare may request these records as proof that you are using the account correctly.
- Transaction date
- Check number (if any, or transaction number if present)
- “Payable to” or health care provider name
- Date of service
- Description (procedure, service, or item received; deposit; interest; other allowable expense)
- Amount paid
- Any deposit amount
- Account balance
- Keep itemized receipts
- Banks statements
- Tax records
You will need to send an annual attestation form every year to Medicare, no later than 30 days after the anniversary date of your Workers Compensation settlement regarding funds remaining in the account after expenses have been paid.

Know What Expenses Your MSA Covers

MSA account can be used to pay for the following:
- Cost of copying documents
- Mailing fees/postage
- Any banking fees related to the account
- Income tax on interest income from the account

You may not use the MSA account to pay for:

- Fees for trustees, custodians, or other professionals hired to help administer the account
- Expenses for administration of the MSA (other than those listed above)
- Attorney costs for establishing the MSA
- Medicare premiums, co-payments and deductibles

To learn what expenses are considered Medicare covered. Get the free annual publication called Medicare & You from your Social Security office, or at: https://www.medicare.gov/medicare-and-you/medicare-and-you.html

What to Do When Your MSA is Exhausted or Depleted

If you are a Medicare beneficiary and your funds have been depleted, you can forward your bills to Medicare for payment as long as the expense is Medicare covered and injury related.
If you are not Medicare covered and your funds have been depleted, you will need to coordinate benefits with your other health insurance providers or pay out of pocket.
When your account is permanently exhausted or depleted, which means there is no money left in the account and there will be no future deposits, you will need to submit within 60 days of the date your account is depleted a final attestation letter stating the account is ‘completely exhausted’.
Notify Medicare’s Benefits Coordination & Recovery Center (BCRC) if death has occurred before the WCMSA is permanently exhausted.
If you lose your Medicare entitlement, you are not entitled to release the MSA funds.

What Happens it Self-Administering is Too Difficult?

If learning how to self-administer your MSA on your own is too difficult to navigate, contact Medivest to learn more about our Self-Administration Kit with assistance. Or, if you’re interested in a more hands-off solution, Medivest Professional Administration Services can remove potential risks and the cumbersome tasks associated with administrating your Medicare Set-Aside funds, and in most cases can even stretch the lifespan of a MSA. Please call us at 877.725.2467 or reach out to us here.

Sandy Simpson

25/Jul/2023

On July 19, 2023, the Centers for Medicare & Medicaid Services (CMS) released their list of the Top 10 Section 111 Non-Group Health Plan Reporting Errors between January 1 – June 30, 2023. The chart with the list of errors and their rank can be viewed below. A downloadable PDF of this chart cane be found at the CMS website here.

Medivest will continue to monitor news and updates from CMS, and will keep its readers up to date when important announcements are made. For questions about this chart or any other recent updates, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

07/Jun/2023

On June 5, 2023 Centers for Medicare & Medicaid Services (CMS) updated the MMSEA Section 111 NGHP User Guide version 7.2. It has been posted to the NGHP User Guide page on CMS.gov. The NGHP User Guide version 7.2 replaces Version 7.1 which was released on April 4, 2023.

To download the updated MMSEA Section 111 NGHP User Guide 7.2 click here.

Who Must Report

An organization that must report under Section 111 is referred to as a responsible reporting entity (RRE). In general terms, NGHP RREs include liability insurers, no-fault insurers, and workers’ compensation plans and insurers. RREs may also be organizations that are self-insured with respect to liability insurance, no-fault insurance, and workers’ compensation.

What’s New – 7.2 Version

New information regarding Mandatory Insurer Reporting for Non-Group Health Plans (NGHPs) and NGHP Town Hall Events is posted here as it becomes available.

MMSEA III – June 6, 2023 – NGHP User Guide 7.2 Version Updates

1. Chapter I: Introduction and Overview
2. Chapter II: Registration Procedures
3. Chapter III: Policy Guidance
4. Chapter IV: Technical Information
5. Chapter V: Appendices
6. 270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guide for Mandatory Reporting NGHP Entities, Version 5.8

Chapter I: Introduction and Overview – Updates

The updates listed below have been made to the Introduction and Overview Chapter Version 7.2 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the user guide as necessary. There are no version updates to this chapter.

Chapter II: Registration Procedures – Updates

The update listed below has been made to the Registration Procedures Chapter Version 7.2 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the user guide as necessary. There are no version updates to this chapter.

Chapter III: Policy Guidance – Updates

The updates listed below have been made to the Policy Guidance Chapter Version 7.2 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the user guide as necessary. The guidance on determining the ORM termination date based on a physician statement has been clarified (Section 6.3.2). Guidance on what triggers the need to report ORM has been clarified (Sections 6.3 and 6.5.1.1).

Chapter IV: Technical Information – Updates

The updates listed below have been made to the Technical Information Chapter Version 7.2 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the user guide, as necessary. The NGHP Unsolicited Response File format has been simplified, and filename formats have been added (Section 7.5 and Chapter 10). For liability claims, it is now optional to report ‘NOINJ’ codes in certain circumstances (Section 6.2.5.2).

Chapter 5: Appendices – Updates

The updates listed below have been made to the Appendices Chapter Version 7.2 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the user guide as necessary. The end-of-line character has been clarified for files using HEW software (Appendix E). The NGHP Unsolicited Response File layout has been simplified (Appendix F).

270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guide for Mandatory Reporting NGHP Entities, Version 5.8 – Changes for this Release

For Additional Information

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

31/May/2023

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.9 on May 15, 2023. This Reference Guide replaces Version 3.8 which was released on November 14, 2022. There are a few notable changes when comparing the two Reference Guides.

To download the new WCMSA Reference Guide v3.9 Click Here.

CMS’s Version 3.9 Reference Guide

Section 1.1 includes the following changes:

- All WC letters currently signed with CMS’ Director of Financial Services Group name and signature image have been updated to reflect the current CMS customer service contact information (Appendix 5).
- The CMS Regional Offices are no longer responsible for approving initial determinations. Process language and contact information have been updated throughout the guide (Sections 9.0, 9.4.6, 9.5, and 18.0, and Appendix 5).
- Clarification has been provided regarding intrathecal pump, spinal cord stimulator, and peripheral nerve stimulator replacement frequency calculation (Section 9.4.5).
- The maximum time limit for eligibility has been removed from the Amended Review process (Section 16.3).
- The 94585 ZIP code has been added to the Walnut Creek Medical Center in the table listing major medical centers (Appendix 7).
- The CDC Life Table link was updated (Section 10.3)

Appendix 5: CMS Customer Service Contact Signature Image Updated to All WC Letters

All WC letters currently signed with CMS’ Director of Financial Services Group name and signature image have been updated to reflect the current CMS customer service contact information (Appendix 5). The following letters have been updated:

Approval Letter
Zero Set-Aside Letter
Below Threshold Letter
Beneficiary Below Threshold Letter
Development Letter
Closeout Letter

CMS Regional Offices No Longer Responsible for Approving Initial Determinations

The CMS Regional Offices are no longer responsible for approving initial determinations. Process language and contact information have been updated throughout the guide (Sections 9.0, 9.4.6, 9.5, and 18.0, and Appendix 5). Clarification has been provided regarding intrathecal pump, spinal cord stimulator, and peripheral nerve stimulator replacement frequency calculation (Section 9.4.5). The maximum time limit for eligibility has been removed from the Amended Review process (Section 16.3). The 94585 ZIP code has been added to the Walnut Creek Medical Center in the table listing major medical centers (Appendix 7). The CDC Life Table link was updated (Section 10.3).

9.0 Updates: Process Language and Contract Information

WCMSA Submission Process Overview

3.8 version: The WCRC applies the CMS’ criteria in reviewing proposals and forwards the proposals along with a recommendation on the appropriate funding amount to the assigned CMS Regional Office (RO) for a final determination.
3.9 version: The WCRC applies CMS’ criteria in reviewing proposals and making a determination, forwards the final determination on the appropriate funding amount to CMS.

9.5 Updates: Regional Office Receipt to Determinations

3.8 version: Regional Office Receipt

When the WCRC completes its review and recommendation, the case is sent to the RO assigned to the case based on the claimant’s state of residence and CMS’ state and region logic. Although the RO assignment is based on the state of residence of the beneficiary, a case may be transferred from one RO to another based on the case’s legal state of venue, or because the RO that the case was originally assigned to no longer processes WCMSA cases. When the RO receives the case, they review the WCRC recommendation and make a final determination in the case.

3.9 version: Determinations

*The update pertains to cases may not progress to approvals for a number of reasons, basically switches the responsibility from the Regional Office (RO) over to the Workers’ Compensation Review Contractor (WCRC).

New Language Added

- - The WCRC may determine that the case should be closed. This can happen for a number of reasons, included: the parties are not longer settling, the case should be Black Lung instead of WC, the case is Liability rather than WC case, or the submitted has failed to submit necessary information after repeated development requests. The submitted is notified of the case closure for ineligible cases closed for insufficient information.
  - When the WCRC completes its review and recommendation, CMS issues its determination in the form of an Approval letter to the submitter with copies sent to any eligible parties. Then the case is transferred to the Consolidated Regional Office to await receipt of the settlement documents so that the case may move to Final Determination/Case Completion.

9.6 Updates: From Final Determination to Case Completion

3.8 version: Final Determination

If the claimant is living, the case meets workload review threshold, any needed development has been received, and the case is not closed for other reasons, the RO reviews the WCRC’s recommendation and makes a determination as to the final CMS-approved WCMSA amount.

3.9 version: Case Completion

If the claimant is living, the case meets workload review thresholds, any needed development has been received, the case is not closed for other reasons, and the WCRC’s recommendations have been provided, then an approval letter is issued to the submitter with a determination as to the final CMS-approved WCMSA amount.

9.4.5 Clarifications: Medical Review Guidelines

Intrathecal Pumps

3.8 version: Permanent placement of IT pump devices are included every 7 years: the claimant’s life expectancy is divided by 7, decimals are dropped, and the whole number Is used for determining replacement over the life expectancy.
3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for IT pump devices is every seven years from the most recent placement date. If the IT pump is not already placed, one year is removed from the life expectancy before the replacement calculation occurs to account for that initial replacement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.

Examples:

- - - Beneficiary life expectancy is 21 years and no IT pump is yet placed. Take the 21 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (21-1)/7 = 20/7 = 2.86
    - One initial placement is needed, plus 2 replacements.
    - Beneficiary life expectancy is 12 years and an IT pump was placed three years prior. Take the 12 years, subtract four years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
    - (12-4)/7 = 8/7 = 1.14 One replacement is needed.

Spinal Cord Stimulators

3.8 version: Permanent placements of SCS devices are included every 7 years for non-rechargeable and every 9 years for rechargeable: the claimant’s life expectancy is divided by the frequency of replacement of type, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.
3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for SCS devices is every seven years for non-rechargeable and every nine years for rechargeable from the most recent placement date. If the SCS is not already place, one year is removed from the life expectance before replacement calculation occurs to account for that initial placement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven (or nice, depending on the unit type), decimals are dropped, and the whole number is used for determining replacement over the life expectancy.

Examples:

- - - Beneficiary life expectancy is 33 years and no SCS is yet placed, but a non-rechargeable unit is appropriate. Take the 33 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (33-1)/7 = 32/7 = 4.57
    - One initial placement is needed, and 4 replacements are needed.
    - Beneficiary life expectancy is 17 years, subtract six years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
    - (17-6)/7 = 11/7 = 1.57
    - One replacement is needed.

Pricing for Peripheral Nerve Stimulator (PNS) Surgery

(PNS) Surgery PNS surgery involves the placement of an electrode(s) in the direct vicinity of a specific peripheral nerve located outside the brain or spinal cord, thereby directly stimulating the painful peripheral nerve. CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for PNS devices is every seven years for non-rechargeable and every nine years for rechargeable from the most recent placement date. If the PNS is not already placed, one year is removed from the life expectancy before replacement calculation occurs to account for that initial placement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven (or nine, depending on unit type), decimals are dropped, and the whole number is used for determining replacement over the life expectancy. PNS replacement calculations are done the same as for SCS surgeries.

Examples:

- - - Beneficiary life expectancy is 27 years and no PNS is yet placed, but a non-rechargeable unit is appropriate. Take the 21 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (27-1)/7 = 26/7 = 3.71
    - One initial placement is needed, and three replacements are needed.
    - Beneficiary life expectancy is 15 years and a rechargeable PNS was placed two years prior. Take the 15 years, subtract two years for the most recent placement, divide the remainder by seven, and use the whole number with that result. (15-2)/7 = 13/7 = 1.86
    - One replacement is needed.
    - Surgery pricing includes physician fees, facility fees, and anesthesia fees, if applicable.
    - Physician fees: CPT codes are identified and priced based on the appropriate state fee schedule (or usual and customary charges from a state).
      - 64555, Percutaneous implantation of neurostimulator electrode; peripheral nerve
        
        64555, Percutaneous implantation of neurostimulator electrode array; peripheral nerve (excludes sacral nerve)
        
        64590, Insertion or replacement of peripheral or gastric neurostimulator generator
        
        01941, Anesthesia
    - Facility fee: Generally, this procedure is handled in an outpatient setting. The appropriate APC should be included based upon surgery type.
      - 5462, Stimulator Trial
        
        5464, Stimulator Placement
        
        5464, Stimulator Replacement Consider the number of leads to be used.
    - Analysis Services: CPT 96972 can be billed every 30 days and more frequently in the first month. It should be priced four times in the first 30 days, monthly for the first year, and twice a year after the first year.
      - 95972 – Electronic analysis of implanted neurostimulator pulse generator system (e.g., rate, pulse amplitude, pulse duration, configuration of wave form, battery status, electrode selectability, output modulation, cycling, impedance, and patient compliance measurements); complex spinal cord, or peripheral (i.e., peripheral nerve, sacral nerve, neuromuscular, except cranial nerve) neurostimulator pulse generator/transmitter, with intraoperative or subsequent programming.
    - Anesthesia fee: The anesthesia fee is calculated by multiplying the time-value unit by a base value. The time-value unit is the reasonable time for a procedure. The base value is either established by the fee schedule, or by Medicare and conversion factors.
    - Trials: If an associated trial takes place before the surgery, the trial is assumed to be successful and included with the cost of surgery. PNS is one time after trial, if successful. If a trial fails, a repeat trial is usually not appropriate unless there are extenuating circumstances that led to the trial failure (equipment malfunction, early lead migration, etc.), technological advances, or an alternative neuromodulary technique that may lead to a more successful second trial (see LCD L34328). If submitters give a detailed breakdown of their proposed surgery prices, the reviewer will consider the proposed amounts.

16.3 Updates: Amended Review

3.8 version: CMS has issued a conditional approval/approved amount at least 12 but no more that 72 months prior.
3.9 version: CMS has issued a conditional approval/approved amount at least 12 months prior.

For Additional Information

Sandy Simpson

27/Feb/2023

In what has become a familiar sight for Medicare Secondary Payer (MSP) rule watchers, CMS has released a notice to delay a proposed rule. This time it is in regard to Section 111 civil money penalty regulations that were announced three years ago. The final rule has now been pushed back for an additional year.

The Proposed Rule

On February 18, 2020, the Proposed Rule regarding MSP and Certain Civil Monetary Penalties (CMPs) 85 Fed. Reg. 8793 was released, and the agency opened a public comment period to allow for feedback until April 20, 2020. CMS was expected to complete and release its final rule within the standard three-year period for release, which in this instance would be sometime on or before February 2023. The proposed rule can be found here.

Section 111 Background

The Section 111 penalty provision, which allows the Centers for Medicare and Medicaid Services (CMS) to impose Civil Monetary Penalties against NGHP RREs as follows:

- Up to $1,000 for each day of noncompliance with respect to each claimant.
- Up to $1,000 penalty amount will be adjusted annually for inflation under 45 CFR part 102.
- Current maximum penalty amount as adjusted for inflation is $1,247.
- As part of its NPRM, CMS outlines proposed situations when it could impose a CMP, along with specific instances when it would not impose a CMP.
Summary

This final proposed rule specifies how and when CMS must calculate and impose civil money penalties (CMPs) when group health plan (GHP) and non-group health plan (NGHP) responsible reporting entities (RREs) fail to meet their MSP reporting obligations in any one or more of the following ways: When RREs fail to register and report as required by MSP reporting requirements; when RREs report as required, but report in a manner that exceeds error tolerances established by the Secretary of the Department of Health and Human Services (the Secretary); when RREs contradict the information the RREs have reported when CMS attempts to recover its payments from these RREs. This proposed rule would also establish CMP amounts and circumstances under which CMPs would and would not be imposed.

Extension Timeline for Publication of Final Rule

On February 18, 2023 the Federal Register published the Medicare Secondary Payer of Certain Civil Money Penalties, Extension of Timeline of Final Rule. Along with the filing, CMS admitted it was “not able to meet the initial targeted 3-year timeline for publication due to delays related to the need for additional, time-consuming data analysis resulting from public inquiry.” The agency has extended the timeline for another year and has until February 18, 2024 to release the announcement. Click here to read the memo.

Stay Informed

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Sandy Simpson

06/Feb/2023

When an individual has a Medicare Set-Aside (MSA) account, they have the option to either self-administer the funds or have them professionally administered. If self-administration is chosen, it can be a difficult and trying task to comply with the CMS’ rules; opening a MSA checking account, learning what type of expenses can be paid and cannot be paid out, coordinating health insurance benefits, keeping accurate records, and when to send reporting to CMS. This blog will discuss what you need to know if you choose Self-Administration, and if self-administering your MSA is the right choice for you.

What is Self-Administration?

Self-administration is the process of managing the medical portion of your settlement, compromise and release, judgment, award or other payment/arrangement (“Settlement”) arising from an incident on the job and/or due to the negligence of another party. After a settlement, the individual is responsible for paying the medical claims following the process and guidelines set forth by the Centers for Medicare & Medicaid Services until the funds have been permanently depleted.

What is Professional Administration?

Professional administration is the practice of using a qualified third party to oversee and manage funds for future medical expenses following a liability or Workers’ Compensation settlement. Though not required, Medicare strongly suggests the professional administration of a MSA. However, for those who choose self-administration, the individual is still responsible for using their MSA account to pay for injury-related and Medicare covered expenses in accordance with the Medicare Secondary Payer (MSP) Statute. The MSP provisions protect Medicare Trust Funds by ensuring that Medicare does not pay for items and services that certain health insurance or coverage, such as a MSA account, is primarily responsible for paying.

Two Ways to Fund Your MSA Account

Before the settlement has occurred, the settling parties will discuss the ways a MSA account can be funded. Typically, there are two options:

Lump-Sum – a single lump sum payment to fund your MSA account.
Structured Settlement Annuity Funding – an initial deposit to fund your account and smaller annual deposits in the following years. The initial deposit covers the first two years of annual funding for treatments plus any cost for proposed first surgeries. If the MSA funds are not spent down in a given year, the funds must remain in the account and carry forward into the next year.

Establishing a Self-Administration Bank Account

Below is a list of CMS’ requirements regarding opening up a separate bank account for the MSA funds.

Deposit MSA funds into its own account, separate from any other accounts you may have
The account must earn interest and the interest must stay in the account
The account should be insured by Federal Deposit Insurance Corporation (FDIC)
Choose a bank or an account that does not charge fees if you have a low balance
Select an account that allows you to write checks

Know What Is Covered

It is important to recognize that not every medical bill or service can be paid out of the MSA account. For individuals self-administering their account, it is highly important to be aware of qualified expenses. Below is a partial list of the expenses that can and cannot be paid out of the account:

Expenses That Can Be Paid

Funds can only be used to pay for future care that is Medicare covered and related to your injury.
Cost of copying documents
Mailing fees/postage
Any banking fees related to the account
Paying income tax on the interest income earned in the account*

*Note – The MSA funds are not considered taxable income, but the interest earned is taxable. Each year your bank will issue an IRS 1099-INT form for the interest earned in the account.

Expenses That Cannot Be Paid

Fees for trustees, custodians, or other professionals hired to help administer the account
Expenses for administration of the MSA other than those listed above
Attorney costs for establishing the MSA
Cannot use to purchase a Medicare supplemental insurance policy or a Medigap policy
Medicare premiums, co-payments, and deductibles
Acupuncture
Routine dental care
Eyeglasses
Hearing aides

For a more extensive list of what Medicare will pay, click here to obtain a copy of the free handbook “Medicare & You”.

Keep Accurate Records of All Transactions

Bank statements, receipts, and tax records should all be kept and recorded. Self-administering parties will not need to submit these records annually, but Medicare may request them as proof that the account is being used correctly. It is also recommended that settlement documents showing the date the case was settled, diagnosed injury, and date of injury are also kept. Consider keeping accurate records for each transaction such as:

Transaction date
Check number
“Payable to” or provider’s name
Date of service
Description – procedure, service or item received, deposit, interest, other allowable expenses
Amount paid
Deposit amount
Account balance
Interest earned

What is Coordination of Benefits for a MSA?

The MSP program is in place to ensure that Medicare is aware of situations where it should not be the primary payer of claims. Sometimes a Medicare beneficiary with a MSA account, public benefits, and other health insurance; the Coordination of Benefits (COB) rule decides which entity should pay first on a claim. In certain situations, if Medicare has paid a claim by mistake, CMS will take action to receive the mistaken Medicare payment.

What is the MSA Attestation?

If the MSA proposal was approved, CMS requires the attestation form to be signed, attesting that the injured party has used the account correctly and to report the amounts spent. If Medicare is satisfied that the right amount of money has been spent appropriately, Medicare will pay for future treatments for this work injury. Below is the information found on the attestation form.

Total spent for medical services
Total spent for prescription drugs
Grand total of expenditures
Total of interest income the account earned if any
Balance of MSA account at the end of the calendar year

Annual Attestation or Expenditure Letters Reporting

CMS’ Benefit Coordination & Records Center (BCRC) is responsible for monitoring and receiving the submitted attestations forms. The attestation informs Medicare that they are now primary payer when your funds have exhausted. Note, once the account funds are exhausted you must continue to pay your Medicare monthly premiums, co-pays, and deductibles in order for Medicare to pay your claims. CMS has the right to demand and receive a complete accounting of payments made from the account at its discretion. The following only applies if the MSA proposal has been approved by CMS.

Annual Attestations must be submitted every year, no later than 30 days after the end of each reporting period (beginning one year from the date of establishment of the MSA account). Annual attestations should continue through final exhaustion of the account.
Temporary Exhaustion occurs when the MSA account funds have exhausted before the next annuity has been deposited into the account.
Final Depletion or Permanent Exhaustion is where the MSA account has no money left and no future deposits of funds are expected.
Death Occurs / Inheritance before the MSA account is permanently exhausted you will need to notify the BCRC of death. This may require the MSA account to stay open for some time to pay outstanding claims.
Completely Exhausted within 60 days of the date the MSA account is depleted, send the BCRC a final attestation that the account is ‘Completely Exhausted”.
Loses Medicare Entitlement
Re-Establishes Medicare Entitlement

How to Submit Your Attestation to CMS’ BCRC

Electronical Attestation is a Medicare web portal that allows submission of either yearly or final attestations electronically. For more information about how to submit an attestation electronically, please see the MSAP User Guide.
Mail-in Submission / Paper Copy

MSA Proposal/Final Settlement
PO Box 138899
Oklahoma City, OK 73113-8899

Call BCRC

855-798-2627 or TTY/TDD
855-787-2627 for the hearing and speech impaired
Opened: Monday – Friday, from 8am – 8pm | Eastern Time

Medivest’s Solutions

If handling a Self-Administrated account becomes too difficult of a task, Medivest can help. We provide the following options that may reduce the burden of keeping track of the details:

1. Switch to Medivest’s Professional Administration Service

For over 25 years, Medivest has been helping clients navigate the complexities of the MSP and protecting their Medicare benefits. Our services guarantee the most comprehensive and cost-effective professional administration program available and provides:

Streamlined reporting and compliance
Savings on treatment, equipment, and pharmaceuticals
Expert support and service

2. Purchase Medivest’s Self-Administration Kit

Medivest offers a Self-Administration Kit that equips individuals who opt to manage their own Worker’ Compensation or Liability settlement with many of the tools and services available to Professionally Administers settlements. The Medivest Self-Administration Kit has been designed to give the individual the flexibility in determining just how “hands-on” they wish to be in managing their medical funds, while providing to the settling parties the piece of mind that comes from knowing due diligence has been considered. Below are the services that are included Medivest’s Self-Administration Kit Services:

Detailed Booklet
Unlimited Phone
Medical Bill Review
Pharmacy and Durable Medical & Equipment (DME) Discounts

For additional information regarding Medivest’s Professional Administration Services or Self-Administration Kits or to get started with one of these options today call us at 877.725.2467 or contact us here.

Sandy Simpson

15/Nov/2022

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.8 on November 14, 2022. This Reference Guide replaces Version 3.7 which was released on June 6, 2022. There are a few notable changes when comparing the two Reference Guides.

CMS’s Version 3.8 Reference Guide, Section 1.1 includes the following changes:

Changes in This Version of the Guide Version 3.8 of this guide includes the following changes: Clarification has been provided regarding re-review requests when errors exist in the submission documentation, as well as re-review limitations (Sections 16.1 and 16.2). Note: These re-review changes are only available for approvals from September 1, 2022 forward.

To download the new WCMSA Reference Guide v3.8 Click Here.

For your convenience, we have included the entirety of Section 16.1 and 16.2, so you will have the most up to date information regarding the process of re-review:

16.1 Re-Review

When CMS does not believe that a proposed set-aside adequately protects Medicare’s interests, and thus makes a determination of a different amount than originally proposed, there is no formal appeals process. However, there are several other options available. First, the claimant may provide the WCRC with additional documentation in order to justify the original proposal amount. If the additional information does not convince the WCRC to change the originally submitted WCMSA amount and the parties proceed to settle the case despite the lack of change, then Medicare will not recognize the settlement. Medicare will exclude its payments for the medical expenses related to the injury or illness until WC settlement funds expended for services otherwise reimbursable by Medicare use up the entire settlement. Thereafter, when Medicare denies a particular beneficiary’s claim, the beneficiary may appeal that particular claim denial through Medicare’s regular administrative appeals process. Information on applicable appeal rights is provided at the time of each claim denial as part of the explanation of benefits.

A request for re-review may be submitted based one of the following:

Mathematical Error: Where the appropriately authorized submitter or claimant disagrees with CMS’ decision because CMS’ determination contains obvious mistakes (e.g., a mathematical error or failure to recognize medical records already submitted showing a surgery, priced by CMS, that has already occurred), or

Missing Documentation: Where the submitter or claimant disagrees with CMS’ decision because the submitter has additional evidence, not previously considered by CMS, which was dated prior to the submission date of the original proposal and which warrants a change in CMS’ determination.

- Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

- Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.
- Should no change be made upon response to a re-review request (i.e., no error was identified), additional requests to re-review the same error will not be entertained.

Submission Error: Where an error exists in the documentation provided for a submission that leads to a change in pricing of no less than $2500.00, a re-review request may be made by submitting updated documents free of errors that caused the original review outcome. Amended documents must come from the originators with appropriate notation to identify that the error was corrected, along with the date of correction and no less than hand-written “wet” signature of the correcting individual. Note: This submission option is only available for approvals from September 1, 2022 forward.

- Examples include, but may not be limited to; medical records with incorrect patient identifying information or rated ages where the rated-age assessor provided incorrect information in the rated-age document.

16.2 Re-Review Limitations

Note: The following re-review limitations are only available for approvals from September 1, 2022 forward.

Re-review shall be limited to no more than one request by type.

Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

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Misclassification Issues

What is the Economic Realities Test?

About Medivest

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.

The interest must be deposited into the MSA account to be used for MSA-covered expenses.

You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare his/her tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return

Exclude the MSA interest income in the income tax return

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Helpful Self-Administration Tips:

Set Up your MSA Correctly

Learn the Process and Develop Good Habits Now

Know What Expenses Your MSA Covers

What to Do When Your MSA is Exhausted or Depleted

What Happens it Self-Administering is Too Difficult?

Who Must Report

What’s New – 7.2 Version

MMSEA III – June 6, 2023 – NGHP User Guide 7.2 Version Updates

Chapter I: Introduction and Overview – Updates

Chapter II: Registration Procedures – Updates

Chapter III: Policy Guidance – Updates

Chapter IV: Technical Information – Updates

Chapter 5: Appendices – Updates

270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guide for Mandatory Reporting NGHP Entities, Version 5.8 – Changes for this Release

For Additional Information

CMS’s Version 3.9 Reference Guide

Appendix 5: CMS Customer Service Contact Signature Image Updated to All WC Letters

CMS Regional Offices No Longer Responsible for Approving Initial Determinations

9.0 Updates: Process Language and Contract Information

WCMSA Submission Process Overview

9.5 Updates: Regional Office Receipt to Determinations

New Language Added

9.6 Updates: From Final Determination to Case Completion

9.4.5 Clarifications: Medical Review Guidelines

Intrathecal Pumps

Examples:

Spinal Cord Stimulators

Examples:

Pricing for Peripheral Nerve Stimulator (PNS) Surgery

Examples:

16.3 Updates: Amended Review

For Additional Information

The Proposed Rule

Section 111 Background

Summary

Extension Timeline for Publication of Final Rule

Stay Informed

What is Self-Administration?

What is Professional Administration?

Two Ways to Fund Your MSA Account

Before the settlement has occurred, the settling parties will discuss the ways a MSA account can be funded. Typically, there are two options:

Lump-Sum – a single lump sum payment to fund your MSA account.

Establishing a Self-Administration Bank Account

Below is a list of CMS’ requirements regarding opening up a separate bank account for the MSA funds.

Deposit MSA funds into its own account, separate from any other accounts you may have

The account must earn interest and the interest must stay in the account

The account should be insured by Federal Deposit Insurance Corporation (FDIC)

Choose a bank or an account that does not charge fees if you have a low balance

Select an account that allows you to write checks

Know What Is Covered

It is important to recognize that not every medical bill or service can be paid out of the MSA account. For individuals self-administering their account, it is highly important to be aware of qualified expenses. Below is a partial list of the expenses that can and cannot be paid out of the account:

Expenses That Can Be Paid

Funds can only be used to pay for future care that is Medicare covered and related to your injury.

Cost of copying documents

Mailing fees/postage

Any banking fees related to the account

Paying income tax on the interest income earned in the account*

*Note – The MSA funds are not considered taxable income, but the interest earned is taxable. Each year your bank will issue an IRS 1099-INT form for the interest earned in the account.