msa - Solutions for Workers' Compensation and Liability Settlements

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.

Aaron Winnell

24/Apr/2023

A Medicare Set-Aside (MSA) is a device intended to fund expenses in the future, but it’s a product of the here and now. MSAs are priced based on today’s costs. But inflation assures that tomorrow’s healthcare costs will outstrip today’s healthcare costs. So, it should be no surprise that MSAs are likely to run out of money earlier than projected. That usually means both Medicare and the beneficiary will be stepping in to pay when the money runs out.

Example 1: Lump Sum Funded MSA

Let’s consider a lump sum funded $87,500 MSA for an individual with a life expectancy of 10 years. That’s an average of $8,750 a year in funding to match expenses. The U.S. healthcare inflation rate in January 2023 was 3.06%. Assuming treatment matches the allocation and inflation remains constant, healthcare costs will be a little over 3% higher the next year, and each year following. The table below shows the impact that inflationary healthcare costs have on a Medicare Set-Aside arrangement that, by its standard projection methodology, assumes flat costs across a fixed period.

Lump Sum Funded MSA

Year	Funding	Expenses	Balance	Other Payers
1	$87,500	(8,750)	$78,750	-
2	0	(9,018)	$69,732	-
3	0	(9,294)	$60,439	-
4	0	(9,578)	$50,860	-
5	0	(9,871)	$40,989	-
6	0	(10,173)	$30,816	-
7	0	(10,485)	$20,332	-
8	0	(10,805)	$9,526	(1,279)
9	0	(11,136)	-	(11,136)
10	0	(11,477)	-	(11,477)
TOTAL:	87,500	(100,587)		(23,892)

As we can see, expenses will exceed the available balance by the eighth year and the MSA fund will permanently exhaust. Another payer, preferably Medicare, will become responsible for their share of the beneficiary’s medical expenses and the beneficiary will begin paying Medicare co-pays.

Example 2: Structure-Funded MSA

Let’s take the same MSA from Example 1 and schedule the funding through a structured settlement annuity. The expected average annual expenses and the healthcare inflation rate will be the same.

Structure-Funded MSA

Year	Funding	Expenses	Balance	Other Payers
1	$17,500	(8,750)	$8,750	-
2	$7,778	(9,018)	$7,510	-
3	$7,778	(9,294)	$5,994	-
4	$7,778	(9,578)	$4,194	-
5	$7,778	(9,871)	$2,100	-
6	$7,778	(10,173)	-	(295)
7	$7,778	(10,485)	-	(2,707)
8	$7,778	(10,805)	-	(3,028)
9	$7,778	(11,136)	-	(3,358)
10	$7,778	(11,477)	-	(3,699)
TOTAL:	$87,500	(100,587)	-	(13,087)

We observe two differences in Example 2: First, because the MSA fund is not fully funded up front, the toll of inflationary healthcare costs is felt earlier, but the impact is less severe. Instead of permanent exhaustion in year 8, we begin to see temporary exhaustion in year 6. In each year that follows, the structured annual payments are inadequate to cover the ever-higher healthcare costs. But over the life of the MSA, the total deficit is less than if the MSA was lump sum funded.

Perfect is Probably Not Good Enough

These examples demonstrate how aggressive a self-administering beneficiary will have to be to stretch their MSA funds over the course of their life. Even if their medical providers were to stick to the healthcare regimen contemplated by their MSA (uncommon) and the beneficiary only pays for Medicare allowable, injury-related expenses (thankfully, all beneficiaries are formulary experts) at the fee schedules used to price their MSA (beneficiaries know medical coding and billing, right?), healthcare inflation means they will eventually need Medicare coverage for their injury-related healthcare expenses, and that means Medicare co-pays up to 20%. Snarky parentheses aside, a beneficiary might have to dig into their own pockets for thousands of dollars in copays over their lifetime, even if the MSA administration is perfectly compliant.

Professional Administration Can Be a Hedge Against Healthcare Inflation

Many people think that professional administration is mostly a tool to ensure compliance and protect both Medicare’s interests and the beneficiary’s benefits. But a professional administrator can also obtain considerable savings on healthcare expenses over the life of the MSA. This secondary benefit enhances the first for both Medicare and the beneficiary because if the MSA stays solvent, neither the beneficiary nor Medicare will have to pony up for Medicare allowable, injury-related expenses.

As a professional administrator, Medivest applies a number of strategies to contain the rising costs of healthcare faced by beneficiaries. These include, but are not limited to, pharmacy benefit management relationships, supply and equipment vendor relationships, healthcare networks, negotiation, and system tools that look for excessive rates, inaccurate rates, and double billing. Probably one of the most underappreciated aspects of professional administration is the administrator’s ability to negotiate and obtain payment terms through good communication and establishing rapport with healthcare providers.

Professional administration is more affordable today than it has ever been. And in the face of rising healthcare costs, it may be reasonable to argue that most Medicare set-asides can’t afford to do without it. If you would like to begin the process of setting up a MSA for professional administration or have additional questions about how, in most cases, Medivest is able to stretch the lifespan of a MSA please call us at 877.725.2467 or reach out to us here.

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.

Craig Pawley, Vice President of Business Development

06/Jun/2022

On Jan 11^th, 2022 Centers for Medicare & Medicaid Services (CMS) updated its WCMSA Reference Guide to include information related to non-submit MSA products and how it views them in terms of exposure for Medicare. Then on March 15, 2022, CMS updated its Reference Guide again. We blogged about each updated guide here: WCMSA Reference Guide Version 3.6 Updates of Significance.

In the Workers’ Compensation arena, there are a number of MSA products that do not adhere to standard CMS methodology for preparing a Medicare Set-Aside allocation as outlined in the WCMSA Reference Guide. Since these products do not follow CMS methodology, submitting these types of products for approval will typically result in CMS countering higher to an amount aligned with CMS methodology standards. If a non-submit MSA product is used in WC settlements, CMS has indicated it will not step in and become the primary payer once the MSA funds have been exhausted unless the beneficiary can prove the MSA was properly funded and that all of the MSA funds were used in accordance with CMS guidelines. If CMS determines that the MSA was underfunded, it has indicated it will or at least may deny payment for case related, Medicare covered items, services, and expenses, up to the Medicare beneficiary’s net settlement amount.

The recent WCMSA reference guide updates demonstrate that Medicare believes some non-submit WCMSA allocation reports are potentially shifting the burden of payment for future medical items, treatment, and prescriptions to Medicare. While non-submit WCMSAs that meet workload review thresholds are not automatically deemed to not protect Medicare’s interest, it seems that CMS has created a presumption of this unless the injured worker can show otherwise. In comes solid allocation methodology and perhaps more importantly, the professional administrator, offering tools and assistance to show that both the amount was reasonable and that the money set aside was properly exhausted.

Why is this important for liability settlements? In the liability arena, CMS has yet to issue any new guidelines with respect on to how to handle liability settlements for a Medicare beneficiary. The May 25, 2011, Stalcup Memo from a CMS Regional Office in Texas indicated that there should be no difference between how Medicare’s interests would be protected between liability and Workers’ Compensation. It indicated that “The law requires that the Medicare Trust Funds be protected from payment of future services whether it is a Workers’ Compensation or liability case. There is no distinction in the law.” The Stalcup Memo announced that “CMS does expect the funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is ever billed.” It further cautions that “each attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds.”

The new WCMSA Reference Guide has indicated that unless a prior memo is specifically referenced in the Reference Guide, it should not be relied upon. However, the Federal Statute, The Medicare Secondary Payer Statute, 42 U.S.C. Section 1395y(b) has itself not ever made a distinction between liability and Workers’ Compensation settlements and prohibits Medicare from making payment for any injuries compensated by a primary plan a/k/a Non Group Health Plan payment (including payments, settlements, judgments, awards, or other arrangements). Even though CMS has not promulgated specific regulations in the Code of Federal Regulations (CFR) for liability settlements and has not yet issued specific guidelines for liability settlements, liability is one of the primary plans outlined in the MSP statute that are considered primary to Medicare (Liability Insurance Including Self-Insureds (with the sub-set Automobile specifically mentioned in the CFR, No Fault, and Workers’ Compensation). In the Hinsinger v. Showboat Atlantic City, 420 N.J. Super. 15, 18 A.3d 229 (2011) case, the Superior Court of New Jersey found. . .

“. . . no reason to apply a different standard to set asides created with money obtained from third-party liability claims than it applies to set asides created with money obtained from workers’ compensation claims. The statutory and policy reasons for creating both of them are the same: to protect the government, and the Medicare system in particular, from paying medical bills for which the beneficiary has already received money from another source.”

The court reasoned that in the absence of specific liability regulations concerning the MSP, it was appropriate to analyze the regulations geared toward WC. This would seem like a reasonable starting point for CMS as it relates to futures. Of course, liability cases have different types of damages that can be awarded, most notably non-economic damages that are not awardable in WC cases. Causation issues and percentages of liability can limit the recovery for plaintiffs in liability cases with specific percentages being parsed out/negotiated in states with pure comparative negligence. Lastly, plaintiffs in liability can often argue that they were not Made Whole when the injuries and damages are present but the at fault party’s funding is limited by low policy limits.

These factors have not yet been addressed in any regulations or current guidance by CMS. However, when a WC settlement may not be reviewed by CMS because it is outside CMS workload review thresholds, CMS takes the position that parties must still consider Medicare’s interests in the settlement. Currently, liability settlements are still not being reviewed by CMS even though CMS had included reviews of liability MSA’s in a prior Request for Proposal when searching for its last WCRC MSA review contractor. Therefore, it makes sense that for liability settlements, parties should still be considering Medicare’s interests and especially so, when the settlement involves a Medicare beneficiary or one with a reasonable expectation of becoming a beneficiary within 30 months of the settlement. The WCMSA Reference Guide could contain part of the puzzle in helping an injured party being compensated for future medicals in planning their future care.

As of May 25, 2022, CMS has neither issued regulations nor new guidelines with respect to protecting Medicare’s interests when liability settlements compensate for future medicals covered by Medicare. CMS needs to provide such a roadmap if it is serious about protecting the Medicare Trust Funds for future generations. Because the MSP law itself sets the standard for the protection of Medicare, and the law and its regulations enable Medicare’s ability to deny payments and/or make conditional payment recovery, does it really make sense to ignore planning the injury related future care of your client even when the regulatory agency has been slow to act?

Each attorney should provide their clients with enough information to help them assess their risks and to determine if denial of injury related future medicals or the potential for recovery of future conditional payments by Medicare is a risk they are willing to take. There are a wide range of products being offered to address MSP exposure and to protect Medicare’s interests in liability settlements based on the varying risk tolerance levels of your client. Count on Medivest to help you spot these intricacies so you can deliver prudent advice to your clients.

Medivest

24/Mar/2022

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.6 on March 15, 2022. This Reference Guide replaces Version 3.5 on January 10, 2022. There are a few notable changes when comparing the two Reference Guides. The blue highlights below indicate the updated changes provided in Reference Guide Version 3.6.

To download the new WCMSA Reference Guide v3.6 click here.

Version 3.6 of this guide includes the following changes:

Clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3), as well as documentation and re-review tips (Sections 9.4.1.1, 10.2, and 16.1).

4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care – Additions and Replacements

A number of industry products exist for the purpose of complying with the Medicare Secondary Payer regulations without participation in the voluntary WCMSA review process set forth in this reference guide. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.”

42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.

As a matter of policy and practice, CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.

Notes: This official policy shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022; however, flags in the Common Working File for notifications received prior to that date will be set to ensure Medicare does not make payment during the spend-down period.

CMS does not intend for this policy to affect any settlement that would not otherwise meet review thresholds. This comment does not relieve the settling parties of an obligation to consider Medicare’s interests as part of the settlement; however, CMS does not expect notification or submission where thresholds are not met.

9.4.1.1 Most Frequent Reasons for Development Requests – Expanded Explanations

The five most frequent reasons for development requests by the WCRC:

1. Insufficient or out-of-date medical records. Medical records are required documents for all submissions, including situations where the parties are in dispute.
2. Insufficient payment histories, usually because the records do not provide a breakdown for medical, indemnity or expenses categories. Payment histories are required documents for all submissions, including situations where the parties are in dispute, and must include breakdowns for payment categories along with identification of any category codes.
3. Failure to address draft or final settlement agreements and court rulings in the cover letter or elsewhere in the submission. Draft or final settlement agreements and court rulings are required documents for all submissions, if they exist. For settlements where conditional payments are made as an element of the agreement, the WCRC will not accept a letter indicating that draft or final settlements do not exist.
4. Documents that are referenced in the file are not provided—this usually occurs with court rulings or settlement documents.
5. References to state statutes or regulations without providing sufficient documentation (i.e., to which payments the statutes/regulations apply or a copy of the statute or regulation, or notice of which statutes or regulations apply to which payments).

10.2 Section 10 – Consent to Release Note – Additions

The Consent to Release note is the claimant’s signed authorization for CMS, its agents and/or contractors to discuss his or her case/medical condition with the parties identified on the authorization in regard to the WC settlement that includes a WCMSA. When you submit your WCMSA, you are required to include the signed consent, plus any applicable court papers if the consent is signed by someone other than the claimant (for example, a guardian, power of attorney, etc.). Do not include unsigned consents or consents to obtain medical records from a provider.

All consent-to-release notes must include language indicating that the beneficiary reviewed the submission package and understands the WCMSA intent, submission process, and associated administration. This section of the consent form must include at least the beneficiary’s initials to indicate their validation.

Consent to Release documents must be signed (by hand or electronically) with the full name of either the claimant, matching the claimant’s legal name, or by the claimant’s authorized representative, if documentation establishing the relationship is also provided. It must be a full signature, not just initials. For electronic standards, only the use of an E-SIGN Act-compliant e-signature or initials are considered valid.

If there is a change in submitter, please see Section 19.4 for more information.

16.1 Re-Review – Additions

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

1. 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
2. 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.”

Analysis

The removal of the reference to indemnification in the first part of Section 4.3 seems to have been CMS’s way of expressing its realization that the intent of settling parties in using non-submit WCMSAs is to protect Medicare’s interests as opposed to being designed merely to protect against MSP exposure via a shift of risk from one company’s errors and omissions coverage to another’s.

[Old Section 4.3 phrase]: “with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries.” [New Section 4.3 phrase]: “for the purpose of complying with the Medicare Secondary Payer regulations without participation in the voluntary WCMSA review process set forth in this reference guide.”

Does the additional language about expectations for WC settlements that do not meet workload review threshold in Section 4.3 now really clarify what the plan for future care should be when the two examples in Section 8.1, titled Review Thresholds still describe recoveries by CMS for payments and care related to the injury up to the total value of the settlement if the settling parties fail to consider Medicare’s future interests/fail to establish “some plan for future care” ? The referenced examples are listed below for ease of access:

Example 1: A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim is offered settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00).

Example 2: A 47 year old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement.

Stay Up To Date

Count on Medivest to help you navigate your risk tolerance in light of the new CMS WCMSA Reference Guide language to see if we can’t find the right balance to reasonably protect Medicare’s interests in your settlement. Medivest will continue to monitor changes in the guidance and regulations published by CMS and will keep its readers up to date when such changes are announced/made. For questions regarding these updates, please reach out to a Medivest representative in your area by clicking here or by calling us direct at 877.725.2467.

Medivest

23/Feb/2022

On November 16, 2021, the State of California’s Medicaid Agency, the Department of Health Care Services (DHCS or Medi-Cal), issued an All County Welfare Directors Letter (ACWDL or Letter) number 21-26 as a memo to all counties and people who administer various state based benefits, including all Medi-Cal Program Specialists/Liaisons.

The Letter provides clarification on Medicare Set-Aside (MSA) funds, as defined by CMS in the Workers’ Compensation realm. The primary message is that “MSAs, also called Workers’ Compensation Medicare Set-Aside Arrangement Accounts (WCMSA), are not countable as income and property on the basis of their unavailability when determining an individual’s eligibility for Medi-Cal.”

This can be significant for several reasons outlined in the Takeaways section. Traditionally, an injured party that was otherwise eligible for need based benefits would be advised by their attorney to have a 1^st Party Special Needs Trust of some type (individual or Pooled Trust – together referred to here as an SNT) established to help assure the eligibility of those benefits at that time or in the future. However, there may be times when the cost of establishing such an SNT might be cost prohibitive compared to the value of the benefits to be protected.

Summary

The Letter describes that because the funds in the MSA account are to be used for their intended purpose, covering the costs of future medical needs [that are injury related and Medicare covered], they should be considered unavailable income and not countable when determining an individual’s eligibility for Non-Modified Adjusted Gross Income (MAGI) programs. However, the Letter indicates that it is important to note that interest or dividends generated by the interest-bearing account should be considered available income for MAGI eligibility determination.

The Letter explains that MSAs had previously been determined to not be countable as property pursuant to a previous All County Welfare Directors letter numbered 90-01 from 1990. “MSA funds are considered unavailable property under ACWDL 90-01 (January 5, 1990), Section 50402 of that letter.”

The Letter also provides guidance to California counties on MSAs regarding:

- MAGI eligibility
- Non-MAGI eligibility concerning:
  - Property
  - Income
- Tasks that are County responsibilities
- Tasks that are NOT County responsibilities

The full ACWDL 21-26 Letter with additional details and information is available here.

Takeaways

This Letter does not discuss settlements that exceed the WCMSA amount. Settlements that exceed the WCMSA amount meaning they exceed the injury related Medicare covered medical items, services, and expenses reasonably expected for the injured party and that are paid outside the WCMSA, might disqualify the injured party from Medi-Cal benefits.
The Letter also does not discuss that the injured party’s need based benefits may be jeopardized if the injured party moves to another state without taking steps to address the eligibility of the new state’s Medicaid benefits via the use of an SNT within the required time frame to afford such protection.
The information in this Letter may come in handy for certain cases where the cost of a SNT is a prohibitive factor that would affect whether a smaller Workers’ Compensation settlement could proceed.
The letter does not make it clear how Medi-Cal would view a liability MSA (LMSA), i.e., an MSA allocation report and arrangement for administration pursuant to the settlement of a liability case.
As always, you should consult with an attorney licensed in the state where the settlement occurs (as well as disclose to the injured party to consult with an attorney specializing in the protection of need based benefits for the state where the settlement occurs and in any state they plan to move to ahead of their move) to confirm their rights, their entitlement to any specific benefits, and so that they understand that state need based benefit eligibility varies and other states’ laws likely do not afford this same protection.

Count on Medivest to help guide you through some of the complexities associated with Workers’ Compensation and liability settlements that involve some evaluation of Medicare Secondary Payer Act (MSP) compliance, when you are not sure whether a Medicare Set-Aside arrangement should be utilized, or when need based benefits are in the picture or may be in the injured party’s future.

Medivest

18/Jan/2022

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.5 on January 10, 2022. This Reference Guide replaces Version 3.4 which was released on October 4, 2021. When comparing the two Reference Guides, a new section 4.3 and new language has been added. Below indicates the new section and language added in the (WCMSA) Reference Guide Version 3.5.

To download the new WCMSA Reference Guide v3.5  Click Here.

CMS’s Version 3.5 Reference Guide, Section 1.1 includes the following changes:

Clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3).

Section 4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care

A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.” 42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.

As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.

Keep in mind the WCMSA Reference Guide states:

There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.

Take Aways

While CMS added Section 4.3, this language is not entirely new or at least not entirely unexpected. Similar currently existing Reference Guide language has for years included warnings about what could happen if parties failed to adequately consider Medicare’s future interests in WC settlements. For example, language from previous Reference Guide versions indicated in Section 8.0 that even for examples where a settlement did not meet CMS workload review thresholds “The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement” (Example 1) and “Not establishing some plan for future care places the settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement” (Example 2).

Also in prior versions of the Reference Guide in Section 4.1.4, CMS has warned of its ability and intention to deny injury-related medical services when it said that “If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the entire dollar amount of the entire WC settlement. Medicare may also assert a recovery claim, if appropriate.”

On a positive note, CMS has now clarified in the new language in Section 4.3 that it will allow for a procurement cost reduction when there is a denial of service when there was no approved WCMSA submission. The new language clearly explains that the denial of service amount will not exceed the gross settlement minus procurement costs. This is more reasonable than denying services up to the entire amount of the settlement as it had previously listed or perhaps denying services up to double the amount of services. The double damages concept has been sometimes misstated in industry circles. (In court cases, even double damages claims have first determined the recovery damages by determining the conditional payment amount after applying a procurement cost reduction and then doubling that amount). The new language actually helps with this issue.

However, perhaps even more troubling is whether funds earmarked to help protect Medicare’s future interests as WCMSA funds are actually used for the intended purpose. According to the National Council on Compensation Insurance, Inc. (NCCI) 2018 research brief updating its 2014 survey on WCMSAs, approximately ninety-eight percent (98%) of the Workers’ Compensation cases settled with the injured worker choosing to self-administer their MSA funds. This 2018 NCCI update published research brief included a sample of over 11,500 WC settlements between 2010 and 2015.

Perhaps to address this gap between what is said will be done (i.e. WCMSA allocation reports) and what actually is done (the administration of settlement dollars to pay for injury-related medical items, services, and expenses including prescription drug expenses, CMS already has the following language recommending professional administration in its Reference Guide in Section 17:

“CMS highly recommends professional administration where a claimant is taking controlled substances that CMS determines are “frequently abused drugs” according to CMS’ Part D Drug Utilization Review (DUR) policy. That policy and supporting information are available on the web at https://cms.gov/Medicare/Prescription-Drug- Coverage/PrescriptionDrugCovContra/RxUtilization.html.

Claimants may also administer their own WCMSAs, if State law allows. Claimants should submit annual self-attestations, just as a professional administrator would. This arrangement is subject to the same rules and reporting requirements as any other WCMSA. See Section 17.5 for more on this annual attestation. Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”

Perhaps CMS felt that its existing high recommendation language for professional administration was sufficient to encourage settling parties to avoid pitfalls of incompetent administration of WCMSAs. But has CMS or any other entity ever done research to see what percentage of self-administered MSA funds were properly and fully exhausted before any injury-related medical bills were submitted to Medicare? If a non-submit WCMSA comes in at 80% of the CMS methodology submitted and approved WCMSA (80% because it follows an evidence-based drug tapering program guideline often seen in a state-based Workers’ Compensation medical protocol like the MTUS in California for example) but the WCMSA funds are professionally administered, wouldn’t that seem to protect Medicare’s real-world interests rather than a CMS submitted and approved WCMSA allocation report but self-administered by an injured claimant?

Stay Up To Date

Count on Medivest to help you navigate your risk tolerance in light of the new CMS WCMSA Reference Guide language and see if we can’t find the right balance to reasonably protect Medicare’s interests in your settlement. Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions regarding these updates, please reach out to a Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

05/Apr/2021

NPRM: Miscellaneous Medicare Secondary Payer Clarifications and Updates (CMS-6047)

The Office of Information and Regulatory Affairs Office of Management and Budget (OIRA/OMB) issued a Notice of Proposed Rulemaking (NPRM) for the Centers for Medicare & Medicaid Services (CMS) dated 03/00/2021 found here.

Essentially the proposed rule would clarify existing Medicare Secondary Payer Act (MSP) obligations associated with payment for future injury related and Medicare allowable medical items, services, and expenses, including prescription drug expenses (Future Medicare Allowable Medicals) related to settlements, judgments, awards, payments, or other arrangements (Settlements) paid by primary plans such as liability insurance plans (including self-insureds), No Fault plans, or Workers’ Compensation plans. Specifically, this rule would clarify that an individual Medicare beneficiary is responsible to satisfy Medicare’s interests with respect to Future Medicare Allowable Medicals related to such Settlements, in addition to the already well known and regulated obligation for Medicare beneficiaries and their attorneys to satisfy Medicare’s past interest in such Settlements by verifying the existence of and resolving any conditional payments (i.e. “Medicare liens”) stemming from Settlements.

This proposed rule would also remove obsolete regulations. While it is projected to focus on the protection of Medicare’s interests in the previously unregulated liability and No Fault Settlement market, the new NPRM could provide additional clarification regarding protecting Medicare’s future interests in Workers’ Compensation Settlements as well

Is this NPRM update laying the groundwork to issue the long awaited LMSA Regulations/Guidance? Only time will tell. Medivest will continue to monitor the OIRA/OMB website for any NPRM updates to keep you informed. You can be assured that Medivest is here to help guide you through some of the complexities associated with MSP compliance.

OIRA/OMB has issued similar proposed release date Notices of Proposed Rule Making (NPRM) for CMS regarding this RIN 0938-AT85 as follows:

Proposed Release Date: 03/00/2021 – https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202010&RIN=0938-AT85
Proposed Release Date: 08/00/2020 – https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201910&RIN=0938-AT85
Proposed Release Date: 02/00/2020 – https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201910&RIN=0938-AT85
Proposed Release Date:10/00/2019 – https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=0938-AT85
Proposed Release Date: 09/00/2019 – https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201810&RIN=0938-AT85

To stay up to date regarding any changes with LMSA Regulations/Guidance, please visit Medivest’s blogs:

Take Aways

Considering and protecting Medicare’s past interests has become the industry standard and a “no brainer” for all NGHP settlement types – liability, self-insurance, No Fault, and Workers’ Compensation.
Whether the announced guidance comes this August or not, it makes sense to help ensure that Medicare’s future interests are protected in accordance with existing federal law, i.e. the MSP.
Helping to ensure that Medicare is not prematurely billed for injury related futures for any settlement type is the right thing to do and helps protect the Medicare Trust Funds.

Sandy Simpson

21/Dec/2020

As we enter the final weeks of 2020, Medicare Secondary Payer Act (MSP) stakeholders will have to continue to wait for Liability Medicare Set-Aside (LMSA) Regulation/Guidance to be released. The last time the Centers for Medicare & Medicaid Services (CMS) mentioned the LMSA Regulation/Guidance it was scheduled to be released in August 2020. Professionals in the MSP industry have speculated that new regulations or guidelines are not likely to be published until March 2021, however as of December 17, 2020 no announcement date has been set. CMS first announced a Notice of Proposed Rulemaking (NPRM) to be issued in September of 2019 but has delayed the announcement multiple times over the past two years. The NPRM would “clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items and services related to liability (including self-insurance), no fault insurance, and workers’ compensation settlements, judgements, awards or other payments. Specifically, this rule would clarify that an individual or a Medicare Beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgements, awards, or other payments. This proposed rule would also remove obsolete regulations.”

Injured individuals, their attorneys, and entities settling liability claims, including consultants that assist in the settlement process such as structured settlement and MSP compliance planners/consultants (Settlement Professionals) interested in complying with the MSP and ensuring that Medicare will not make payments for injury related and Medicare covered medicals post settlement, have regularly read and interpreted the CMS Stalcup Handout dated 05/25/2011, characterizing the obligation of considering and protecting Medicare’s interests in liability and Workers’ Compensation settlements as being one and the same (see below). Furthermore, in the absence of specific regulations or guidance directed toward liability settlements, Settlement Professionals have also read and interpreted the guidance issued by CMS in its Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide v 3.2.

The WCMSA Reference Guide of course only gives examples of situations where Workers’ Compensation settlements fall outside the workload review thresholds allowing for review by CMS but in the two examples it provides in Section 8.1 titled Review Thresholds, it indicates that “not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the Settlement.” In the same section of the Reference Guide, CMS indicates in another example, “The settling parties must consider CMS’ future interests even though the case would not be eligible for review.” Because of the double damages provision allowed for recovery actions under the MSP, and regardless of what CMS’ enforcement position has been in the past, insurance carriers, Self-Insureds, and attorneys representing injured plaintiffs have taken precautions to reduce the likelihood of any recovery against them for future conditional payments. Many have surmised that this is only a plaintiff issue and have argued insurance companies and Self-Insured need not worry about Medicare covered futures. Nobody knows exactly where the future guidance in this area is going to fall but it is clear that Medicare’s Trust Funds need protecting because as recently as 2018, Congress predicted Medicare’s Part A Trust Fund to be depleted in 2026.*

Highlights from the CMS Stalcup Handout 05/25/2011

…“Medicare’s interests must be protected; however, CMS does not mandate a specific mechanism to protect those interests. The law does not require a ‘set-aside’ in any situation. The law requires that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or Liability case. There is no distinction in the law.”

…here is no formal CMS review process in the liability arena as there is for Workers’ Compensation. However, CMS does expect the funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is ever billed. CMS review is decided on a case by case basis.

…“Each attorney is going to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds.”

Click here to download entire memo

Office of Management and Budget (OMB) issued the following Notices of Proposed Rule Making (NPRM) regarding RIN 0938-AT85:

To stay up to date regarding any changes with LMSA Regulations/Guidance, please visit Medivest’s blogs::

Take Aways:

Considering Medicare’s interests in any settlement with some type of analysis regarding the protection of those interests has become the industry standard for all NGHP settlement types – liability, self-insurance, No Fault, and Workers’ Compensation.
Whether the announced guidance comes out soon or not, doesn’t it make sense to help ensure that Medicare’s future interests are considered and protected in accordance with existing federal law – i.e. the MSP?
Helping to ensure that Medicare is not prematurely billed for injury related future Medicare covered medicals for any settlement type is the right thing to do and helps protect the Medicare Trust Funds.

Medivest will continue to monitor the OMB website for any NPRM updates in order to keep you informed. Count on Medivest to help guide you through some of the complexities associated with MSP compliance.

* Medicare has two Trust Funds. One for Part A that covers hospital insurance for the aged and disabled and one for both Part B that mainly covers doctors’ visits and Part D that covers prescription medications, for the same population of Medicare enrollees. It was announced in June 2018 that the Part A Hospital Insurance (HI) Trust Fund is projected to be depleted in 2026, three years earlier than predicted just a year ago. The Part B and D Trust Fund is not as bad off due to a financing system with yearly resets for premium and general revenue income and is projected to have adequate funding for the next ten years and beyond.

Total Medicare expenditures were reported to be $710 billion in 2017. Medicare expenditures were projected to increase at a faster pace than either aggregate workers’ earnings or the economy, and to increase from approximately 3.7 percent in 2017 to between 6.2 percent and 8.9 percent as a percentage of Gross Domestic Product (GDP) by 2029, causing substantial strain on our nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.

A 2018 Annual Report of the Boards of Trustees of the two Medicare Trust Funds recommended a legislative response [2] to help protect the Part A Trust Fund. However, instead of waiting years for Congress to act, if parties to third party or workers’ compensation settlements involving Medicare beneficiaries [3], proactively address both past and future interests of Medicare, that could help slow Medicare Trust Fund depletion, in line with the above-described intent of the MSP.

Sandy Simpson

22/Oct/2019

The Centers for Medicare & Medicaid Services released Version 1.3 of the Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) on October 10, 2019. The latest Self-Administration Toolkit Version 1.3 is now available to download here. Furthermore, the newest version 5.9 of the WCMSAP User Guide was updated on October 7, 2019. That can be accessed here. It contains updates similar to those found in the updates to the Self-Administration Toolkit discussed in this article.

The three most notable changes included in Version 1.3 are as follows:

1. A new method for submitting annual attestations electronically via the WCMSA portal (WCMSAP).

Section 8: Annual Attestation – of the Self-Administration Toolkit conformed its language to that of the WCMSA Reference Guide, Section 19.2 titled Death of The Claimant, and can be viewed here. Now, self-administering claimants can access and submit attestations via the same WCMSAP web portal that professional administrators use.

If you are a beneficiary administering your own account, you can submit your year attestation online by accessing the WCMSA Portal through the MyMedicare.gov website.

If you are a representative or other identified administrator for the account, you can log in directly to the WCMSA Portal to submit the yearly attestation. To access, go to https://www.cob.cms.hhs.gov/WCMSA/login

The WCMSAP User Guide, available under the Reference Materials header once you log in to the site, has details regarding the submission of attestations online.

CMS will be hosting two (2) webinars regarding the recent WCMSAP enhancements which will allow Medicare beneficiaries or their representatives to submit annual attestations electronically for approved WCMSAs.

Workers’ Compensation Medicare Set-Aside (WCMSA) Electronic Attestation Enhancement Webinar. Click here for more information regarding this seminar taking place on Wednesday, October 30, 2017 at 1:00pm EST.
Workers’ Compensation Medicare Set-Aside (WCMSA) Electronic Attestation Enhancement for Professional Administrators. Click here for more information regarding this seminar
taking place on Wednesday, November 6, 2019 at 1:00pm EST.

2. A more detailed description of why WCMSA accounts are kept open for a period of time after the death of the Medicare beneficiary when WCMSA funds have not permanently exhausted.

Section 10: Inheritance – Added language regarding notifying the BCRC when death of the Medicare beneficiary occurs before the WCMSA is permanently exhausted. A summary follows: In such cases, the respective Medicare Regional Office (RO) and the BCRC will coordinate to help ensure all timely filed bills related to the WC claim have been paid. This may involve keeping the WCMSA account open for some time after the date of death, as health care providers can submit their bills to Medicare up to 12 months after the date of service. Any remaining WCMSA funds may be paid in accordance with the respective state law and administration agreement if applicable, once Medicare’s interests have been protected. Often the settlement itself will state how to spend funds after the death of the claimant and payment of care-related expenses.

3. Updated mailing addresses for the Benefits Coordination and Recovery Center (BCRC)

Section 12: Where to Get Help – The mailing address to where WCMSA Proposals, Final Settlements, and Re-Review Requests are to be sent was updated to be consistent with the current WCMSA Reference Guide. That address is:

WCMSA Proposal/Final Settlement
P.O. Box 13889
Oklahoma City, OK 73113-8899

On Page 18 of the Self-Administration Toolkit

The mailing address for situations when the WCMSAP or MyMedicare.gov portals are not being used, self-administering claimants may submit attestations yearly account attestations and expenditure letters to the following address:

NGHP
P.O. Box 138832
Oklahoma City, OK 73113

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.

Older Posts

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

Example 1: Lump Sum Funded MSA

Lump Sum Funded MSA

Example 2: Structure-Funded MSA

Structure-Funded MSA

Perfect is Probably Not Good Enough

Professional Administration Can Be a Hedge Against Healthcare Inflation

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.

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

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?

What is the MSA Attestation?

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

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

To download the new WCMSA Reference Guide v3.6 click here.