MSA Accounts for Workers’ Compensation Patients
Workers’ Compensation Medicare Set-Aside Allocations (WCMSAs) are the vehicle most often used to protect Medicare’s interests concerning future medical costs. Pursuant to the Medicare Secondary Payer Statute (MSP) 42 U.S.C Section 1395 y(b) (2), Medicare may not make payment when payment has been made or can reasonably be expected to be made under a Workers’ Compensation plan.
The Centers for Medicare and Medicaid Services (CMS) is the government agency authorized to enforce Medicare’s Secondary Payor status. On July 23, 2001, the CMS Central Office issued its first Directive Memorandum, known as the “Patel” Memo, to the CMS Regional Offices. This stated that Medicare’s interests must be considered in all Workers’ Compensation settlements involving Medicare beneficiaries. The Memo also implied that Medicare’s interests must be considered in cases where the Claimant has a reasonable expectation of being on Medicare in the future. The document further stated that Medicare’s interests could be protected by establishing a “Medicare Set-Aside.” CMS has since issued a series of Directive Memos that govern Workers’ Compensation MSA projections and submissions.
The WCMSA is a projection of the cost of future medical treatment for the work injury that would otherwise be covered by Medicare. The WCMSA amount is then deposited into an interest-bearing account. Once the WCMSA account is established, the injured worker pays bills for the work injury that would otherwise be paid by Medicare from the WCMSA account. If the account is depleted and medical treatment is still needed, Medicare will begin paying bills for the work injury as long as the funds were properly spent and correctly reported to Medicare. Please note that your client will still incur co-payments for treatment paid by Medicare.
WCMSAs are only used in commutation cases where the settlement award is intended to compensate the injured worker for future medical expenses for the work injury. Compromised cases where the settlement award is only compensating the injured worker for past medical expenses do not require a WCMSA. To protect your clients’ future Medicare benefits, a WCMSA must be properly allocated, funded, and administered.
A WCMSA is a projection of the injured worker’s future medical costs, including but not limited to:
- Doctor’s visits
- Hospital stays
- Surgical procedures
- Diagnostic tests
- Laboratory studies
- Physical therapy
- Some durable medical equipment
A WCMSA is based solely on anticipated medical treatment for the work-related injury. Additionally, only services, supplies, and prescriptions that would otherwise be covered by Medicare are included. Non-Medicare covered expenses are not included in the MSA projection. CMS usually reviews only the last two years of medical treatment as set forth on the payment ledger of the Insurance Carrier. As a result, your clients’ denied treatment will not be included. CMS also currently allows WCMSAs to be priced using the lowest reported price for medications. Many times, medications may not be purchased at this price, resulting in the underpricing of medications and the underfunding of MSAs. Don’t forget to negotiate the cost of underpriced medications, non-Medicare covered expenses, and denied treatment when settling your clients’ future medical benefits. The WCMSA is not a true valuation of your client’s future medical treatment; it is only the allocation CMS is willing to accept as compliance with the Medicare Secondary Payer Statute. If you represent injured workers and need help calculating these additional expenses, contact MSA Meds today!
CMS provides a process to submit a WCMSA allocation to CMS for approval. While the submission process is voluntary, “Non-Submit MSAs” involve substantial risk to the injured worker. CMS has taken the position that if CMS approval is not obtained, the Claimant will need to show that the entire amount of the “net settlement” was properly spent on injury-related care before Medicare will pay bills. To learn more about the perils of “Non-Submit MSAs,” click here.
Beware of an Insurance Carrier that insists on non-submission of a MSA Account to CMS and then requires your Client to use the professional administrator of their choice. There may be back-end deals to underfund the MSA Account and then administer the account to ensure the funds are never depleted. This ensures that CMS never reviews whether the MSA was adequate in the first place and may result in arbitrary denials of your clients’ future treatment.
MSA Appeals Process
There is not a formal process to appeal a Determination by CMS regarding the amount of the MSA. However, there is a process for Re-Review to correct mistakes in the CMS Determination and a one-time process for Amended Review to ask for the MSA to be reduced based on improvements in the injured worker’s medical condition. In addition, Medicare’s denial of payment of medical bills may be appealed in a 5 step process.
WCMSAs may be funded by either a lump sum or annuity payments (structured settlements). Annuity payments are commonly used as they provide cost savings to the Insurance Carrier. If your client’s MSA is funded by an annuity, beware of reversionary interest which allows the Insurance Carrier or life company to recapture any funds remaining in the WCMSA at your client’s death. For more information regarding the use of structured settlements, click here.
WCMSA funds must be placed into an interest-bearing account. Interest earned on the funds must accrue in the account and may only be used for WCMSA allowable expenses. CMS must be provided with documentation that the WCMSA Account has been funded or CMS may deny payment for services related to the work injury up to the full amount of the settlement.
For Medicare to pay bills after WCMSA funds are exhausted, all of CMS’s rules and regulations must be strictly complied with, including:
- Bills must be paid according to the CMS-approved price;
- Only medical bills related to the work injury may be paid;
- Only Medicare-covered expenses may be paid;
- Records of all paid bills must be kept; and
- Annual accounting must be submitted to CMS
CMS also has strict rules regarding administrative expenses that may be paid from a WCMSA. Allowable expenses include:
- photocopying charges
- mailing fees/postage
- banking fees directly related to the account
- incremental tax paid on the interest income earned by the WCMSA Account
Legal fees and Professional Administration fees are not allowable expenses. If payments from the WCMSA are used to pay for non-allowable expenses, Medicare will not pay bills for the work injury until the funds are restored to the WCMSA Account and then properly exhausted.
If the Claimant is self-administering the WCMSA Account, he/she should submit a “self-attestation” form stating that payments from the WCMSA account were made appropriately for work-related injuries that would otherwise be reimbursed by Medicare. “Self-attestation” forms should be submitted annually beginning one year from the establishment of the WCMSA. The Claimant should keep a copy of all medical bills paid from the WCMSA account. Detailed records of each transaction should be maintained for seven years. If the WCMSA is professionally administered, a detailed accounting must be submitted on an annual basis. CMS understands that the rules regarding Professional Administration are too complicated for injured workers to self-administer and recommend Professional Administration for MSA Accounts.
WCMSAs should be administered by a competent administrator (a Professional Administrator, the representative payee, the Claimant, etc.). When a Claimant designates a representative payee, appointed guardian/conservator, or has otherwise been declared incompetent by a court; the settling parties must include that information in their WCMSA proposal to CMS. CMS highly recommends Professional Administration where a Claimant is taking controlled substances that CMS determines are “frequently abused drugs” according to CMS’ Part D Drug Utilization Review (DUR) policy. That policy and supporting information are available on the web. Click here.
Claimants may also administer their own WCMSAs if State law allows. Claimants should submit annual self-attestation, just as a Professional Administrator would. This arrangement is subject to the same rules and reporting requirements as any other WCMSA. See section 17.5 for more on this annual attestation. Although beneficiaries may act as their administrators, it is highly recommended that settlement recipients consider the use of a Professional Administrator for their funds.
MSA Meds is different than other Professional Administrators
- We are Patient Advocates
- We don’t accept referrals from Insurance Carriers
- We don’t have back-end deals with the Insurance Carriers to save them money at your client’s expense
- We will review the Defense Vendor’s MSA proposal to help you negotiate additional funds to cover underpriced medications and services, non-Medicare covered expenses, and denied treatment.
If you need a full WCMSA proposal and/or submission to CMS, contact MSA Meds today! We partner with experienced Allocators, who are also unaffiliated with any Insurance Carrier.