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CLASSIC LIST

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25/Mar/2024

On Tuesday April 16, 2024, Centers for Medicare & Medicaid Services (CMS) will be hosting a second webinar regarding the expansion of Section 111 Non-Group Health Plan (NGHP) Total Payment Obligation to Claimant (TPOC) reporting to include Workers’ Compensation Medicare Set-Aside (WCMSA) information. After the first webinar in November, CMS received additional questions and feedback from the industry. The intent of this webinar is to ensure that RREs will be prepared for the change once implemented.

With that in mind, this webinar will include a background recap, summary of technical details, updated timelines and CMP impacts. The presentation will be followed by a question and answer session. Because this expansion impacts reporting of WCMSAs, it is strongly recommended that Responsible Reporting Entities (RREs) that report Workers’ Compensation settlements attend.


 

Date:  April 16, 2024
Time:  2:00 PM EST

Webinar Link: https://cms.zoomgov.com/s/1610015349?pwd=NHcza3NhcDlCdjM0cVhENWlNcFBjZz09
Passcode:  750766

Or to connect via phone:

Conference Dial In:  1-833-568-8864
Conference Passcode:  161 001 5349


 

Additional information about the most recent updates from CMS can be found here. If you have questions on how topics discussed in this webinar may affect your clients or your company, please contact Medivest or call us at 877.725.2467.


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08/Jan/2024

It is getting close to that time of year when mailboxes begin to receive W-2 statements and 1099-INT statements.  If an injured individual has either a Self-Administered Medicare Set-Aside (MSA) account or a Professionally-Administered MSA account, the individual will be sent a 1099-INT by January 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:

  • MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.
  • The interest must be deposited into the MSA account to be used for MSA-covered expenses.
  • You can use the MSA account to pay for the income tax on the interest income.
For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject:  Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.
“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?
A6. Assuming that there is adequate documentation for the amount of incremental tax that the claimant must pay for the interest earned on this set-aside account, the claimant or his/her administrator may withdraw an amount equal to the additional tax as a “cost that is directly related to the account” to cover the additional tax liability. Such documentation should be submitted along with the annual accounting.”

 

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare his/her tax return two ways to determine the increased income tax burden, if any:
  1. Include the MSA interest income in the income tax return
  2. 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.

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20/Dec/2023

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

 

Helpful Self-Administration Tips:  

Set Up your MSA Correctly

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

 

Learn the Process and Develop Good Habits Now

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

 

Know What Expenses Your MSA Covers

  • MSA account can be used to pay for the following: 
    • Cost of copying documents 
    • Mailing fees/postage 
    • Any banking fees related to the account 
    • Income tax on interest income from the account
  • You may not use the MSA account to pay for:  
    • Fees for trustees, custodians, or other professionals hired to help administer the account 
    • Expenses for administration of the MSA (other than those listed above) 
    • Attorney costs for establishing the MSA 
    • Medicare premiums, co-payments and deductibles

 

What to Do When Your MSA is Exhausted or Depleted

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

 

What Happens it Self-Administering is Too Difficult?

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


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07/Jun/2023

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

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

Who Must Report

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

What’s New – 7.2 Version

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

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

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

  1. 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.

  1. 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).

  1. Chapter IV: Technical Information – Updates

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

  1. 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).

  1. 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.


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31/May/2023

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

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

CMS’s Version 3.9 Reference Guide

Section 1.1 includes the following changes:

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

 

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

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

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

 

CMS Regional Offices No Longer Responsible for Approving Initial Determinations

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

9.0 Updates: Process Language and Contract Information

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

 

9.5 Updates: Regional Office Receipt to Determinations

  • 3.8 version: Regional Office Receipt

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

  • 3.9 version: Determinations

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

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

     

9.6 Updates:  From Final Determination to Case Completion

  • 3.8 version: Final Determination

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

  • 3.9 version: Case Completion

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

9.4.5 Clarifications: Medical Review Guidelines

Intrathecal Pumps
  • 3.8 version: Permanent placement of IT pump devices are included every 7 years: the claimant’s life expectancy is divided by 7, decimals are dropped, and the whole number Is used for determining replacement over the life expectancy.
  • 3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement.  The routine replacement interval for IT pump devices is every seven years from the most recent placement date.  If the IT pump is not already placed, one year is removed from the life expectancy before the replacement calculation occurs to account for that initial replacement.  To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.
Examples:
        • Beneficiary life expectancy is 21 years and no IT pump is yet placed. Take the 21 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
        • (21-1)/7 = 20/7 = 2.86
        • One initial placement is needed, plus 2 replacements.
        • Beneficiary life expectancy is 12 years and an IT pump was placed three years prior. Take the 12 years, subtract four years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
        • (12-4)/7 = 8/7 = 1.14 One replacement is needed.

         

 Spinal Cord Stimulators
  • 3.8 version: Permanent placements of SCS devices are included every 7 years for non-rechargeable and every 9 years for rechargeable: the claimant’s life expectancy is divided by the frequency of replacement of type, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.
  • 3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement.  The routine replacement interval for SCS devices is every seven years for non-rechargeable and every nine years for rechargeable from the most recent placement date.  If the SCS is not already place, one year is removed from the life expectance before replacement calculation occurs to account for that initial placement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven (or nice, depending on the unit type), decimals are dropped, and the whole number is used for determining replacement over the life expectancy.
Examples:
        • Beneficiary life expectancy is 33 years and no SCS is yet placed, but a non-rechargeable unit is appropriate. Take the 33 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
        • (33-1)/7 = 32/7 = 4.57
        • One initial placement is needed, and 4 replacements are needed.
        • Beneficiary life expectancy is 17 years, subtract six years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
        • (17-6)/7 = 11/7 = 1.57
        • One replacement is needed.

         

Pricing for Peripheral Nerve Stimulator (PNS) Surgery

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

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

         

16.3 Updates: Amended Review

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

 

For Additional Information

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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24/Apr/2023

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

Example 1: Lump Sum Funded MSA

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

Lump Sum Funded MSA

YearFundingExpensesBalanceOther Payers
1$87,500(8,750)$78,750-
20(9,018)$69,732-
30(9,294)$60,439-
40(9,578)$50,860-
50(9,871)$40,989-
60(10,173)$30,816-
70(10,485)$20,332-
80(10,805)$9,526(1,279)
90(11,136)-(11,136)
100(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

YearFundingExpensesBalanceOther 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.

 


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06/Feb/2023

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

What is Self-Administration?

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

What is Professional Administration? 

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

Two Ways to Fund Your MSA Account

Before the settlement has occurred, the settling parties will discuss the ways a MSA account can be funded. Typically, there are two options:
  1. Lump-Sum – a single lump sum payment to fund your MSA account.
  2. Structured Settlement Annuity Funding – an initial deposit to fund your account and smaller annual deposits in the following years. The initial deposit covers the first two years of annual funding for treatments plus any cost for proposed first surgeries. If the MSA funds are not spent down in a given year, the funds must remain in the account and carry forward into the next year.

Establishing a Self-Administration Bank Account

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

 

Know What Is Covered

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

Expenses That Can Be Paid

  • Funds can only be used to pay for future care that is Medicare covered and related to your injury.
  • Cost of copying documents
  • Mailing fees/postage
  • Any banking fees related to the account
  • Paying income tax on the interest income earned in the account*
*Note – The MSA funds are not considered taxable income, but the interest earned is taxable. Each year your bank will issue an IRS 1099-INT form for the interest earned in the account.

Expenses That Cannot Be Paid

  • Fees for trustees, custodians, or other professionals hired to help administer the account
  • Expenses for administration of the MSA other than those listed above
  • Attorney costs for establishing the MSA
  • Cannot use to purchase a Medicare supplemental insurance policy or a Medigap policy
  • Medicare premiums, co-payments, and deductibles
  • Acupuncture
  • Routine dental care
  • Eyeglasses
  • Hearing aides
For a more extensive list of what Medicare will pay, click here to obtain a copy of the free handbook “Medicare & You”.

Keep Accurate Records of All Transactions

Bank statements, receipts, and tax records should all be kept and recorded.  Self-administering parties will not need to submit these records annually, but Medicare may request them as proof that the account is being used correctly. It is also recommended that settlement documents showing the date the case was settled, diagnosed injury, and date of injury are also kept. Consider keeping accurate records for each transaction such as:
  • Transaction date
  • Check number
  • “Payable to” or provider’s name
  • Date of service
  • Description – procedure, service or item received, deposit, interest, other allowable expenses
  • Amount paid
  • Deposit amount
  • Account balance
  • Interest earned

What is Coordination of Benefits for a MSA?

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

What is the MSA Attestation?

If the MSA proposal was approved, CMS requires the attestation form to be signed, attesting that the injured party has used the account correctly and to report the amounts spent. If Medicare is satisfied that the right amount of money has been spent appropriately, Medicare will pay for future treatments for this work injury. Below is the information found on the attestation form.
  • Total spent for medical services
  • Total spent for prescription drugs
  • Grand total of expenditures
  • Total of interest income the account earned if any
  • Balance of MSA account at the end of the calendar year

Annual Attestation or Expenditure Letters Reporting

CMS’ Benefit Coordination & Records Center (BCRC) is responsible for monitoring and receiving the submitted attestations forms. The attestation informs Medicare that they are now primary payer when your funds have exhausted.  Note, once the account funds are exhausted you must continue to pay your Medicare monthly premiums, co-pays, and deductibles in order for Medicare to pay your claims. CMS has the right to demand and receive a complete accounting of payments made from the account at its discretion. The following only applies if the MSA proposal has been approved by CMS.
  • Annual Attestations must be submitted every year, no later than 30 days after the end of each reporting period (beginning one year from the date of establishment of the MSA account). Annual attestations should continue through final exhaustion of the account.
  • Temporary Exhaustion occurs when the MSA account funds have exhausted before the next annuity has been deposited into the account.
  • Final Depletion or Permanent Exhaustion is where the MSA account has no money left and no future deposits of funds are expected.
  • Death Occurs / Inheritance before the MSA account is permanently exhausted you will need to notify the BCRC of death. This may require the MSA account to stay open for some time to pay outstanding claims.
  • Completely Exhausted within 60 days of the date the MSA account is depleted, send the BCRC a final attestation that the account is ‘Completely Exhausted”.
  • Loses Medicare Entitlement
  • Re-Establishes Medicare Entitlement

How to Submit Your Attestation to CMS’ BCRC

  1. 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.
  2. Mail-in Submission / Paper Copy

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

  1. Call BCRC

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

Medivest’s Solutions

If handling a Self-Administrated account becomes too difficult of a task, Medivest can help. We provide the following options that may reduce the burden of keeping track of the details:
1. Switch to Medivest’s Professional Administration Service
For over 25 years, Medivest has been helping clients navigate the complexities of the MSP and protecting their Medicare benefits. Our services guarantee the most comprehensive and cost-effective professional administration program available and provides:
  • Streamlined reporting and compliance
  • Savings on treatment, equipment, and pharmaceuticals
  • Expert support and service
2. Purchase Medivest’s Self-Administration Kit
Medivest offers a Self-Administration Kit that equips individuals who opt to manage their own Worker’ Compensation or Liability settlement with many of the tools and services available to Professionally Administers settlements. The Medivest Self-Administration Kit has been designed to give the individual the flexibility in determining just how “hands-on” they wish to be in managing their medical funds, while providing to the settling parties the piece of mind that comes from knowing due diligence has been considered.   Below are the services that are included Medivest’s Self-Administration Kit Services:
  • Detailed Booklet
  • Unlimited Phone
  • Medical Bill Review
  • Pharmacy and Durable Medical & Equipment (DME) Discounts

 

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

 


28/Oct/2022

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. 


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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:

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.

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