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Aaron Winnell
17/Aug/2021
Medicare Set-AsideProfessional Administration

Common Pitfalls to Avoid When Pairing a Medical Provider with a Medicare Set-Aside

Medicare Set-Aside (MSA) arrangement beneficiaries have some very specific limitations when it comes to how their money is spent. When it comes to choosing a provider, the options are wide open. A beneficiary will often deal with who they know or a provider that is close to their home. As a cash payer with limited funds to cover all future Medicare allowable and injury related expenses, the wrong choice can put a beneficiary in a world of hurt. Here are some best practices when choosing a provider to treat an injury post settlement and using Medicare Set-Aside funds:

 

Choose a Medicare Certified Provider

While MSA funds can be used to pay any provider that supplies covered care related to the injury, not every provider is able to bill Medicare for these medical goods or services. If a beneficiary properly exhausts their MSA funds in a given year (when the MSA is funded with a structured annuity and receives deposits periodically) or the MSA funds have permanently exhausted, Medicare will assume responsibility to pay Medicare covered expenses related to the injury and coordinate with any other applicable insurance plan. If the provider is not Medicare certified, that provider will not be paid by Medicare even if the beneficiary has maintained Medicare coverage. This can leave the beneficiary as the responsible party if no other insurance benefit is available. We recommend choosing Medicare certified providers to avoid such situations.

 

Choose Providers Who Offer Discounted Cash Rates

A beneficiary with MSA funds is considered a cash payer by medical providers. There is no “in network” policy with set payment rates for cash payers. If the provider is not accustomed to dealing with patients without a primary medical insurance plan, the provider may charge its full retail rate. A beneficiary may have a difficult time negotiating a medical bill on their own or in advance of services being completed and this can add up to a significant expenditure of MSA funds. It is best to ask about cash rates and if any discounts are available when contacting a new provider.

 

Avoid Providers That Don’t Normally Bill Insurance

Billing insurance for medical services means increased access to patients because it agrees to a negotiated contract that reduces the average cost of services. Some providers opt to avoid insurance altogether. This allows these providers to charge higher rates for services because there is no set rate or maximum charge. Moreover, these providers will only take the beneficiary’s cash even if they have a group health plan or public benefit. This lack of flexibility is often costly for the beneficiary.

 

Choose Providers Experienced with Traumatic Injuries

This may seem obvious, but as a professional administrator, Medivest sees beneficiaries choosing providers that are not familiar with treating traumatic injuries post-settlement. This can be problematic from a communication standpoint (while the beneficiary and the administrator know the injury backwards and forwards, the doctor may see very few of these cases) and it can make billing and payment more difficult or present difficulties when seeking a referral to a specialists. The most efficient approach is to choose a provider that KNOWS the beneficiary’s type of injury from direct experience.

 

Choose a Flexible Provider

Here are a few common red flag phrases from providers that limit the beneficiary’s options:

“We only bill Medicare.”

“We don’t deal with liability injuries.”

“We never treat workers’ compensation injuries.”

“We only treat workers’ compensation injuries.”

“We don’t bill third parties.”

“We don’t take cash.”

Providers experienced with multiple scenarios provide the beneficiary with options when it comes to treatment and payment.

 

Beware of Signing Rate Agreements for Specific Services

A beneficiary that is not acquainted with the typical market rate or medical fee schedules is advised to run away from any agreement or contract that would lock them into a guaranteed payment rate. A rate agreement of this nature can put the beneficiary on the hook for significantly inflated cost. If they’re using a professional administrator (and they should be), it can negotiate with the provider directly on the beneficiary’s behalf. Don’t confuse this document with an authorization form to bill insurance or a notification that the beneficiary is responsible for any non-covered services. They’re not the same thing.

 

Avoid buying OTC Supplements or Supplies Directly from a Provider

Over-the-counter supplements or supplies that are sold directly by a provider typically come with a markup and can usually be found cheaper elsewhere. Your providers may recommend a device or a supplement that they conveniently stocks for sale. You should be aware that the providers may be looking to increase their margin per patient. Take your doctor’s advice and do your research.  If the recommended supply of supplement makes sense, shop around for a better price.

 

Do Not Be Discouraged if a Provider Rejects Payment from the MSA

Most providers within the US Healthcare system do not understand what a Medicare Set-Aside is or what it is for. They are frequently hesitant to accept it as a form of payment. They may mistake it for a Medicare Part C plan or out of network benefit. Sometimes, they are highly suspicious and cannot believe that Medicare is not the primary payer. It can be daunting for a beneficiary to be in the position of educating a provider’s billing office. A professional administrator is a great resource for coordinating benefits and having the MSA be the primary payment source, when applicable.

 

Conclusion

A MSA beneficiary with a persistent injury deserves the best care possible, but also needs to be positioned to ensure the MSA funds last. And if they don’t last, that the beneficiary has a proper safety net in place. Part of this strategy includes finding the right providers to not only address the injury with competence but also provide affordable and flexible options to ensure continuity of care and protect the beneficiary from having to dip into other settlement or personal funds.  Even when Medicare is responsible for covering injury care, the beneficiary can be billed for any deductible, copay, or coinsurance balances.

Last, we’d be remiss if we didn’t point out that a professional administrator addresses these challenges every day and not only talks to a beneficiary’s provider on their behalf, but will also coordinate benefits with other insurance, communicate with CMS about the MSA, and negotiate rates in ways a patient will struggle to match. If you or your client is a current or future beneficiary of a Medicare Set-Aside, don’t hesitate to contact Medivest. We help thousands of beneficiaries avoid these and many other MSA pitfalls.

 

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Medivest
14/Jun/2021

Ohio Association for Justice 2021 Annual Convention

Medivest will be joining the Ohio Association for Justice June 14 -18 for the biggest event in Ohio plaintiff’s law, the 2021 OAJ Annual Convention. This year’s Convention is designed with flexibility in mind, with a hybrid option to attend in-person and virtually as well as a virtual-only option. Virtual participants will receive links to all live streaming options and complimentary access to the Annual Convention streaming library through the end of September. Tune in for your favorite sessions and earn the rest of your CLEs where you want, when you want. Earn up to half of your biennial CLEs while networking and building connections with plaintiff’s attorneys from around the state and midwest.

Director of Sales, Scott Mattingly will be in attendance. Please visit him at the Medivest booth for information regarding Professional Administration, Lien Resolution, Medicare Set-Aside Reports, and all of Medivest’s settlement solutions for workers’ compensation and liability cases.  For more information on the event please visit https://www.oajconvention.com/.

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Sandy Simpson
05/Apr/2021
lmsamedicaremsanews

Liability Settlement Alert Regarding Protecting Medicare’s Future Interests

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:

 

 

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.

 

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Sandy Simpson
21/Dec/2020
lmsamsa

Looking Forward to 2021 and a NPRM Update Regarding LMSA Regulation/Guidance

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.

 

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Sandy Simpson
22/Oct/2019
Medicare Set-Asidemsa

Updates on CMS’ Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements

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.

  1. 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.
  2. 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.

 

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Aaron Winnell
26/Feb/2019
Professional Administration

The Road to Settlement Funds Mismanagement is Paved with Good Intentions

It is perhaps cliché to say that life is made up of the decisions you make. But, overused maxims tend to communicate common truths, hence their ubiquity. Decision-making is mainly about choosing one of two or more options to achieve the most desirable outcome. Some decisions are straightforward and obvious. Many are not. Still more are tied up in the tension between what we want to do and what we should do. Values, discernment, and even willpower all factor into the process.

Decisions about money are among the most consequential. It therefore reasons that decisions involving large sums of money are highly consequential. Injury settlements are a prime example of how poor decision-making can produce unfortunate, even disastrous outcomes for both the injured and their families. Really no different than the lottery winner whose sudden wealth turns into debt and insolvency within a brief period, so the injured person who receives a cash settlement of any size is often just as unprepared and soon makes decisions that cannot be undone. Money, once spent, cannot be unspent.


“Where There Is No Vision, the People Perish”

Many people have very good intentions from the outset, but good intentions are not enough. General goals without specific plans to reach those goals will usually fall short. So, what are the missing plans that can cause settlement funds mismanagement?

  • a plan to get the most value out of every dollar spent
  • a plan to use the money for what it was intended
  • a plan to ensure the funds are insulated from poor decision-making

This type of planning helps set priorities and leads to the details needed to help the plan succeed. It is really no different than the priorities considered in good personal finance planning. Some settlement beneficiaries get this, but many do not. That’s because this is a problem common to almost all of us. Most of us do not fund our retirements as we should, do not save as we should, and often do not limit our spending as we should. Any bonuses we receive evaporate quickly. We live up to our means and, some how, when we receive a raise, we then live up to that new limit again. And for individuals with injuries who may not be able to work or whose treatment costs exceed expected costs over their lifetime, mismanagement of a fixed settlement amount will likely result in considerable hardship for the injured and their family.


The Advantages of a Professional Custodian

Once one considers how important it is to have a detailed plan for competent management of  settlement funds, the use of a professional custodian begins to make a lot of sense. Vesting a professional custodian with the responsibility for settlement funds decisions addresses the major problems created by the introduction of a large sum of money into an injured person’s finances.

We’ll look at the advantages of a professional custodian, but first, let’s consider the major factors that often negatively affect the decision-making process for a beneficiary handling their own funds:

  • Lack of Expertise – Inability to seek or negotiate for the best price on products and services due to a lack of knowledge about fee schedules, rates, coordination of benefits, medical billing department practices and policies, and negotiation.
  • Dependence on Willpower – Decisions are at the mercy of the beneficiary’s self-control.
  • Outside Influences – Life circumstances, or the needs or even manipulation of family members or friends creates pressure to spend imprudently.

 

Again, these are pitfalls relatively common to all of us. It is easy for emotion and even rationalization to play into spending decisions. This is why there is certainly wisdom in building a wall around all or at least portions of a settlement to protect the funds and beneficiary alike.

Consider how a professional custodian’s decision-making process addresses the issues we’ve discussed:

  • Professional Expertise – Knowledge and experience in reviewing and repricing claims down to applicable fee schedules, and negotiating reductions in claims where possible.
  • Limited by Agreement – Discretion in spending decisions is limited by agreement. The custodian is not permitted to use the funds in any fashion not explicitly contemplated by the contract. Emotionality is factored out of the decision-making process.
  • Contingency Planning – In the event of specific circumstances, special exceptions can be planned for and facilitated.


Custodial Arrangements: Not just for Medicare Set-Asides

Medicare set-aside accounts, which are created as mechanisms to comply with federal law by protecting Medicare from paying when it should not, and which contain funds specifically limited to the Medicare allowable and injury-related expenses, are commonly administered by a professional custodian (or “professional administrator”). But, other settlement funds should be placed with a professional custodian as well. It’s also worth mentioning that the best way to ensure that settlement funds are used according to the dictates of a settlement is to place those funds with a third party that is bound to comply with the terms that establish their custodianship.

At Medivest, we frequently receive calls from beneficiaries who are interested in seeking some flexibility in how their professionally administered funds are spent. The most common reason for this request is that they have already spent their remaining settlement funds and the monies under our company’s charge are all that remain. It is not difficult in those circumstances to surmise what would have happened with those custodial funds had we not been “in the picture.”

As example has shown time and again, managing large sums of money is not a simple task, and requires proper planning ahead of time to prevent problems down the road. In each settlement, it makes sense to consider using a professional custodian if concerns about fund mismanagement are warranted. Medivest has been providing custodial services to injured beneficiaries for over twenty years. We’ve helped thousands of  individuals spend their settlement funds in a strategic and prudent manner in order to help stretch those funds to their benefit and the benefit of their families. If you have questions about how to integrate a custodial arrangement into a settlement, please do not hesitate to contact us.

 

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Medivest
12/Feb/2019
msa

How to Use a Medicare Set-Aside Allocation (and, how NOT to)

Administering Medicare Set-Aside (MSA) funds properly is a daunting task for most. Nuance in the Medicare formulary, ignorance about MSAs in the provider’s billing department, and complexity in medical coding all conspire to frustrate even the most diligent and well-meaning of beneficiaries. Truly, the successful MSA custodian has to be part educator, part negotiator, part coding wizard, and part accountant.

Conflated Ideas

In this area of compliance, it is not surprising that misunderstandings abound. One common misconception involves what can actually be paid for from a MSA account. This mistake sometimes has its origin in the failure to understand the MSA allocation report’s actual purpose. It probably does not help that the term “MSA” is sometimes used to describe both the funds in a MSA account and a MSA allocation report (“MSA allocation” or “MSA report”).

The properly prepared MSA report’s value lies in its final dollar amount. Medicare is given consideration through the establishment of an amount of money to be used to treat the injury, thereby shielding Medicare from premature payments on behalf of the beneficiary. This is necessitated by the fact that, by law[1], Medicare is secondary to workers’ compensation and liability injuries, pre and post-settlement. The amount established in the MSA allocation is intended to be spent prior to Medicare becoming primary. But also, the settlement is able to establish a limit to how much of the settlement proceeds must be isolated for the sole purpose of stepping in front of Medicare. According to the latest version of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, where no arrangement is made for how future medicals shall be paid, Medicare may consider the entire settlement as primary[2].

An Estimate, not a Formulary

The mistake is in a literal application, not of the MSA report’s final dollar amount, but of the itemized detail of medical services and medications. It is common for a beneficiary, those counseling them, or those settling with them, to believe that only the specific items listed in the MSA report are covered by the MSA funds. It’s imagined that the beneficiary, when paying their bills, will reference the MSA allocation to determine whether a given medical expense is listed there, and if not, arrange to have it paid by other means. But, the MSA allocation is not an injury-specific formulary of allowed items any more than it is a prescription for care.

In actuality, anyone who has written a MSA allocation or administered MSA funds for a relatively short period of time knows that, at its best, the MSA allocation report is an educated guess. Moreover, the stock MSA allocation, if written to the government’s review standards, may project treatments in frequencies that would not ordinarily be expected, ballooning its amount, or completely ignore the inflationary nature of healthcare costs over time, deflating the final amount below reality’s expectation of the future. (That back x-ray costs $65 today. Do you imagine it will cost that in 10 or 15 years?) In the end, the final number is recognized as an adequate consideration of Medicare’s interests, but a supposition unlikely to hit future costs with absolute accuracy.

Consider all of the ways that actual injury expenses could differ from those in the MSA allocation report. Take prescription drugs as an example. A drug priced into a MSA report references a single NDC (National Drug Code), but that particular drug may have dozens of codes, representing different manufacturers, doses, forms, etc. It’s very likely your corner store pharmacy is going to fill your drug under a different code, and different price. The other corner store pharmacy right across from your corner store pharmacy may use still another code and price. A drug prescribed to treat a condition may become ineffective or create side effects undesired by the beneficiary and/or the prescribing physician. It is not uncommon for a physician to drop one medication in favor of another, or add or remove medications. This all changes the spend.

Also, the Medicare formulary changes annually. Something covered by Medicare today may not be covered in the future, and just because an expense was contemplated in a MSA report, it does not mean that the MSA funds should continue to cover it if that particular expense is no longer covered by Medicare. In summary, a beneficiary’s needs may change over time and the MSA allocation report is not designed to and cannot contemplate all of those changes at the time it is prepared.

What to Pay

So, what is actually to be paid from MSA funds? The answer is any and all Medicare allowable, injury-related expenses incurred on or after the date of settlement until the MSA funds are properly exhausted. Administration is all about stepping in front of Medicare to prevent any payment by it for injury-related expenses until MSA funds are gone. This is not accomplished by checking expenses against the list in the MSA allocation report. It is about identifying injury related expenses that Medicare would otherwise pay for and paying them at rates consistent with or below the applicable fee schedule. It is inaccurate to say that Medicare is responsible for any injury-related expenses not specifically contemplated by the MSA allocation. Such an assumption (though made more frequently than you may expect), if resulting in payments by Medicare for the injury while MSA funds still exist, represents an unlawful shift of burden to Medicare that may prompt a request for reimbursement if discovered.

In the event that real life is more expensive than the MSA report expected, what then? Medicare will assume primary responsibility for the injury’s Medicare allowable expenses once the MSA funds have been spent, provided those funds are spent properly. They will do this annually, in the case of temporary exhaustions, or from the point of permanent exhaustion onward. The key is the ability to demonstrate that the funds were spent according to the Centers for Medicare & Medicaid Service’s (CMS) guidelines. And what if the MSA report seems to have expected more expense than is actually realized? CMS wants those funds to remain in the MSA account in the event one of those unforeseen complications, hospitalizations, or changes in treatment comes along.

In conclusion, a MSA allocation is a valuable resource to any administrator of MSA funds to understand at a glance the nature of the injury and any co-morbid conditions that are specifically excluded. However, it should be used for what it was intended, namely, to arrive at an amount. Understanding the proper use of the MSA funds is critical to administering the funds correctly. A beneficiary who uses their MSA allocation report as a litmus test for what the MSA account can and cannot pay for may end up draining other settlement funds unnecessarily or end up shifting the burden to Medicare prematurely. Ultimately, improper administration places the beneficiary’s Medicare benefits at risk, as Medicare has the right to suspend benefits until it has recovered payments that should have been made by other primary funds.

[1] Medicare Secondary Payer Statute, 42 U.S.C. §1395y(b) a/k/a the MSP.

[2] See Section 8.1 titled Review Thresholds, Example 2 –“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.”

 

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