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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
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- Chapter I: Introduction and Overview
- Chapter II: Registration Procedures
- Chapter III: Policy Guidance
- Chapter IV: Technical Information
- Chapter V: Appendices
- 270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guide for Mandatory Reporting NGHP Entities, Version 5.8
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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.
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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.
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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).
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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).
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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).
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270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guide for Mandatory Reporting NGHP Entities, Version 5.8 – Changes for this Release
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).
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.
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:
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- 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
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- 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.
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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:
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- 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.
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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:
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- 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.
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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:
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- 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).
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- 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
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- Facility fee: Generally, this procedure is handled in an outpatient setting. The appropriate APC should be included based upon surgery type.
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- 5462, Stimulator Trial
- 5464, Stimulator Placement
- 5464, Stimulator Replacement Consider the number of leads to be used.
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- 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.
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- 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.
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- 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.
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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
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.
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.
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:
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Lump-Sum – a single lump sum payment to fund your MSA account.
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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.
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Deposit MSA funds into its own account, separate from any other accounts you may have
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The account must earn interest and the interest must stay in the account
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The account should be insured by Federal Deposit Insurance Corporation (FDIC)
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Choose a bank or an account that does not charge fees if you have a low balance
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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
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Funds can only be used to pay for future care that is Medicare covered and related to your injury.
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Cost of copying documents
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Mailing fees/postage
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Any banking fees related to the account
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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
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Fees for trustees, custodians, or other professionals hired to help administer the account
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Expenses for administration of the MSA other than those listed above
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Attorney costs for establishing the MSA
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Cannot use to purchase a Medicare supplemental insurance policy or a Medigap policy
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Medicare premiums, co-payments, and deductibles
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Acupuncture
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Routine dental care
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Eyeglasses
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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:
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Transaction date
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Check number
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“Payable to” or provider’s name
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Date of service
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Description – procedure, service or item received, deposit, interest, other allowable expenses
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Amount paid
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Deposit amount
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Account balance
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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.
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Total spent for medical services
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Total spent for prescription drugs
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Grand total of expenditures
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Total of interest income the account earned if any
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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.
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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.
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Temporary Exhaustion occurs when the MSA account funds have exhausted before the next annuity has been deposited into the account.
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Final Depletion or Permanent Exhaustion is where the MSA account has no money left and no future deposits of funds are expected.
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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.
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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”.
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Loses Medicare Entitlement
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Re-Establishes Medicare Entitlement
How to Submit Your Attestation to CMS’ BCRC
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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.
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Mail-in Submission / Paper Copy
MSA Proposal/Final Settlement
PO Box 138899
Oklahoma City, OK 73113-8899
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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:
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Streamlined reporting and compliance
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Savings on treatment, equipment, and pharmaceuticals
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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:
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Detailed Booklet
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Unlimited Phone
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Medical Bill Review
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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.
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 31st 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:
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MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.
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The interest must be deposited into the MSA account to be used for MSA-covered expenses.
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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:
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Include the MSA interest income in the income tax return
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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.
Medivest will be joining the Ohio Association for Justice from November 2 - 4 for its annual Winter Convention. This year's Winter Convention kicks off the OAJ Advocate's Academy, a four-event sequence specifically designed as a training ground to accelerate the performance of newer plaintiffs' attorneys.
On October 13, 2022, in a surprise move, CMS withdrew its Notice of Proposed Rulemaking (“NPRM”) pertaining to the protection of Medicare’s future interests in liability and other Non Group Health Plan (“NGHP”) settlements, judgments, awards, payments, or other arrangements (“Settlements”) without any official or unofficial comment. Many people in the Medicare Secondary Payer Compliance industry felt that this NPRM, most recently announced in 2018 and continued for several years, was finally going to add CMS’s clarifying “take” on how it would suggest settling parties reasonably consider and protect Medicare’s future interests in liability Settlements and that CMS would issue regulations or guidance specific to Liability Medicare Set-Asides (“LMSAs”).
The most recent 2018 iteration of the NPRM was designed to address protection of Medicare’s future interests in any NGHP Settlement, including removing what it considered obsolete regulations. For the past several years, stakeholders in the MSP compliance community have been waiting and speculating how such regulations could be devised to account for all the convoluted factors that exist in liability claims while adding clarity to steps CMS might suggest to be taken to protect Medicare’s interests in liability settlements.
Earlier in 2022, there had been a stakeholder meeting as well as a letter from the MARC coalition urging CMS to not move forward with the NPRM. It seems that the MSP compliance stakeholder community once again rallied and provided enough reason to give CMS pause. Some have called into question whether the MSP as enacted, gives CMS authority to issue regulations regarding liability futures, and some court decisions discussing liability MSAs and the need for an exhaustion of administrative remedies prior to a court of competent jurisdiction being able to review a LMSA proposal, may have also contributed to CMS’s decision to not move forward with this NPRM at this time.
The argument follows if federal courts have determined it is premature to review proposed LMSAs due to the failure of a party to exhaust their administrative remedies with CMS, then how could CMS insert its own administrative review process via guidance or regulation, unless the MSP were amended to provide for that authority. Examples of court cases discussing these issues, include Silva v. Burwell, 2017 WL 5891753 (D. N.M. 2017); Sipler v. Trans Am Trucking, Inc., 881 F.Supp. 2d 635 (D. N.J. 2012); Bruton v. Carnival Corporation, 2012 WL 1627729 (S.D. Fla. 2012); Abate v. Wal-Mart Stores East, L.P., 2020 WL 7027481 (W.D. Pa. November 30, 2020); and Stillwell v. State Farm, et. al., 2021 WL 4427081 (M.D. Fla., September 27, 2021).
TAKE AWAYS:
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The MSP still forbids Medicare from making payment when a primary plan is in place meaning if there is a Settlement from a NGHP plan including from a liability carrier or self-insured defendant, Medicare has a statutory lien right under the MSP to recover its conditional payments minus procurement costs and can charge high interest and potentially even double damages for non-compliance.
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If a current Medicare beneficiary settles a liability case, they should be informed about the MSP and a plan for future care should be set in place. The federal law is clear that conditional payments could arise prior to or after a settlement, so a risk tolerance cost benefit analysis should be performed between attorney and plaintiff as to the best steps to ensure Medicare is not prematurely billed.
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Medicare has the right under the MSP to deny payment for injury related future Medicare covered medicals (items, services, and expenses, including Prescription Drug Expenses). Will it? We have seen times when it has flagged liability cases even while a liability claim or portion of a liability claim is pending (often because it believes the matter was settled but it was only settled with one of several defendants/carriers). While CMS does not seem to regularly do this, the goal for an attorney representing an injured plaintiff is to provide a settling plaintiff with enough information to make an informed decision regarding what is the best course of action for them and to document what decision was made after such informed consent was provided.
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Only two federal circuits (3rd and 11th) have held Medicare Part C – Medicare Advantage Plans (MAPs) to have identical recovery rights as traditional Medicare under the MSP. However, those MAPs still have contractual subrogation rights, and attorneys representing Defendants, as well as attorneys representing their plaintiff clients, should evaluate whether any MAP plan or Medicare Part D – Prescription Drug Plan (PDP) have a subrogation/lien interest to be reimbursed for pre-settlement payments that were compensated by the Settlement.
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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.
As background, the Medicare Secondary Payer Statute, found at 42 U.S.C. Section 1395y(b)(2), or most commonly known as the MSP, is the federal law enacted in 1980 that amended the Social Security Act and its Medicare specific amendments to make health plans other than Workers’ Compensation to be primary to Medicare. Workers’ Compensation plans were primary to Medicare from Medicare’s enactment into law in 1965. The MSP was Congress’ mandate to Medicare and The Centers for Medicare & Medicaid Services (“CMS”), the subagency that administers Medicare, forbidding Medicare from making payments when a primary plan was in place to promptly make payment. The primary plans are liability including self-insureds (and automobility BI), No Fault, and Worker’s Compensation and are known as the Non Group Health Plans (NGHP) to be distinguished from Group Health plans that offer health care insurance. While No Fault claims and Workers’ Compensation claims are typically paid immediately upon a claim being filed and accepted for Ongoing Responsibility for Medicals (“ORM”), liability carriers rarely accept responsibility to make payments early on in the life of a liability case. Liability carriers may choose to offer a settlement but almost never accepts liability.
Because the regulations under the MSP define prompt payment as within 120 days, the MSP also allows Medicare to make payments for medical services when a Medicare beneficiary will be compensated by a defendant in a liability case or their/its primary plan carrier under the condition that Medicare be able to recover those conditional payments it made that were claim related and compensated by a settlement, judgment, award, or other arrangement (collectively, “Settlement”). The MSP makes the primary plan Defendant, and any person or entity who receives a part of the Settlement proceeds, jointly and severally liable for repayment of conditional payments. The law also allows for interest and potentially double damages against liable people and entities that fail to make payment promptly.
The payment by any NGHP plan is what triggers the MSP’s recovery rights under the law regardless of whether liability is accepted or not. The protection of exposure to the MSP’s recovery rights is also commonly referred to as protecting Medicare’s past and future interests in a Settlement. Protecting Medicare’s past interests in a settlement includes providing notification of a claim and checking with CMS to determine whether it is claiming any payments it has made from the date of an injury up to the date of settlement are conditional payments to be reimbursed. Plaintiff attorneys typically provide this type of notification or hire third parties to confirm whether there are any conditional payments and then report settlement details to obtain a discount from the conditional payment amount and obtain a demand from CMS reflecting a deduction for pro-rated fees and expenses allowed under the regulations to the MSP.
The regulations to the MSP include some regulations that are generally applicable to any of the NGHP plans and some that are specific to Workers’ Compensation claims and Settlements. CMS has never promulgated regulations that are specific to liability claims or No Fault claims and Settlements. CMS has also issued guidance regarding the protection of Medicare’s future interests in Workers’ Compensation claims and Settlements via its Workers’ Compensation Medicare Set-Aside Arrangement (“WCMSA”) Reference Guide, now in version 3.7 issued June 6, 2022.
In 2012, CMS issued a Notice of Proposed Rulemaking regarding the protection of Medicare’s future interests in settlements intended to extend from the already regulated area of Workers’ Compensation (“WC”) Settlements to the other NGHP areas and even solicited comments from the MSP stakeholder community. After many entities pointed out the extreme differences between liability claims and WC claims such as issues of comparative or contributory negligence, the fact that liability claims often contain awards for Pain and Suffering, Loss of Enjoyment of Life, Loss of Consortium for married plaintiffs, etc., CMS ultimately withdrew that NPRM in 2014.
We’ve all heard how important it is to establish a plan for how our affairs are to be handled after we die. It also comes as no surprise that this plan is best established before we die. Though I have not died yet, all evidence seems to indicate that I will have an exceedingly difficult time addressing these details once I’m dead. Despite this evidence, it is estimated that around half of all Americans have no estate planning whatsoever. So, it should not come as a surprise that those with a Medicare Set-Aside account likewise have no clear plan established for what happens to any funds that may remain once they die. Not having a clear plan can create confusion and aggravation for those responsible to sort out or benefit from the settling of an estate. Addressing these questions at the outset can avoid a lot of trouble. So, what are the main considerations?
Reversionary Interest
Sometimes a settlement will establish a reversionary interest for any remaining Medicare-Set Aside funds. For instance, it may have been agreed that a percentage or all unused funds at the time of the claimant/applicant’s death are to be returned to the funding party. If true, this is a detail that the executor of the estate will want to know. Reversionary Interest arrangements are becoming more popular as a tool in settlements, as more and more Medicare Set-Asides are professionally administered with better cost controls and preservation.
Medicare Set-Asides held within Trusts may be Subject to Specific Rules
If the Medicare Set-Aside was placed in a Special Needs Trust (SNT) to protect access to means tested benefits like Medicaid, or was placed in some other type of trust, there may be a special arrangement already in place that governs what happens to the Medicare Set-Aside funds once the trust beneficiary passes away. If unsure, consult the trust officer as to whether they require any specific guidance, or if the final destiny of the MSA funds have been already decided by agreement or statute.
Tell the Professional Administrator Your Intentions
One advantage of professional administration is that it is more likely that some funds will survive the claimant/applicant due to the strategies a professional administrator leverages. Another advantage is that a professional administrator will disburse all funds it administers directly to the beneficiary designated by the claimant/applicant. Most professional administrators will request that the claimant/applicant designate their beneficiary in writing at the time the account is established. Still, it is not rare for a professional administrator to never receive the claimant/applicant’s written intent. This sometimes causes issues when the final MSA balance is disbursed to the claimant/applicant’s estate.
Also, sometimes life situations will change the intended beneficiary of the Medicare Set-Aside funds. If this changes, it is vitally important to record that change in writing with the professional administrator, to ensure that the claimant/applicant’s wishes are followed. Remember, the professional administrator can only follow the most recent guidance provided by the claimant/applicant.
Medicare’s Interest Must Be Considered
Family members and/or the executor of a claimant/applicant’s estate are typically motivated to settle arrangements as quickly as possible. However, it is important to remember that the Medicare Set-Aside was established to pay for Medicare allowable and injury-related expenses post settlement. Medical providers have a filing window in which to bill for medical services rendered or medications and supplies dispensed or sold. Often, allowable medical claims are received within the first 12 months following a claimant’s death, and the Centers for Medicare & Medicaid Services (CMS) expects the Medicare Set-Aside to pay as primary to Medicare for those claims, even if those claims are received after the claimant/applicant’s death. A best practice is to reserve the MSA funds for a period of twelve months (or until it is confirmed that final billing has taken place) to pay for allowable expenses before disbursing the MSA funds to the designated beneficiary(ies).
Conclusion
Medicare Set-Aside funds are a special type of asset that must be treated differently. They’re intended to protect a claimant/applicant’s access to Medicare benefits, as well as protect the Medicare Trust Funds from unlawfully paying when other funds are primary. But, like other assets, it’s important to declare and/or confirm where these funds are to go once the claimant/applicant passes away to avoid confusion and/or dispute over where those funds eventually go.
You can count on Medivest to help guide you through the complexities of Medicare Set-Aside arrangements. If you have questions about preparing or administering a MSA or you need consultation on any of our settlement services, call us at 877.725.2467 or reach out to us online here.
On Jan 11th, 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.
