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CMS Updates Language Affecting WCMSA Beneficiaries with Medicare Entitlement/Enrollment Changes
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CMS Updates Language Affecting WCMSA Beneficiaries with Medicare Entitlement/Enrollment Changes

New language has been added to the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide that updates CMS’ explanation of how changes in Medicare entitlement and/or enrollment impacts (or rather, doesn’t impact) WCMSA administration. The July 10, 2017 update to Section 17.4 of the WCMSA Reference Guide (version 2.6) seems to require WCMSA beneficiaries to provide additional proof of proper WCMSA administration any time their Medicare entitlement or enrollment status changes. This may simply be a clarification of an existing standard rather than the addition of a new one. We’ll explore both possibilities, but first, let’s provide some context to explain.

Not all WCMSA beneficiaries are enrolled in the Medicare program. Sometimes, a Medicare Set-Aside account is established before the beneficiary has reached entitlement status. Or, if the WCMSA beneficiary doesn’t think the cost of the premiums are worth the coverage or has other coverage already, they may opt out of Medicare for a time. In such situations, a WCMSA beneficiary may attempt to apply the following logic: “I am not on Medicare, therefore there is no risk of a burden shift to Medicare for my workers’ compensation injury. Therefore, I do not need to administer my WCMSA according to CMS’ guidelines.” CMS counters that logic with some logic of their own: WCMSA beneficiaries who decide to not administer their accounts according to CMS guidelines because they’re not Medicare enrollees may eventually become Medicare enrollees with no WCMSA funds left to prevent a burden shift to Medicare. So, CMS requires that Medicare beneficiary or not, a WCMSA beneficiary must administer the WCMSA properly. In the event that the WCMSA exhausts of funds, Medicare will only cover injury related expenses if the WCMSA funds have been spent down appropriately.

This is where the update to the WCMSA Reference Guide comes into play. CMS added a clause to a key sentence in Section 17.4 – Medicare Entitlement and WCMSAs. The new language is underlined below:

The CMS will not pay for any expenses related to the WC claim or settlement until a self-attestation document with full accounting of all monies expended from the WCMSA is sent to the BCRC upon Medicare entitlement or re-establishment of Medicare entitlement.

There are at least two possible reasons this clause was added by CMS to this section. The first possibility is that because CMS does not monitor WCMSAs until the beneficiary is entitled to Medicare (See WCMSA Reference Guide v2.6, Section 18), CMS needs verification of proper administration when a WCMSA beneficiary becomes entitled to Medicare. Therefore, a simple self-attestation letter won’t do. CMS wants a “full accounting” of expenditures as soon as entitlement is gained or re-established.

The second possibility is that this is a clarification of an already existing CMS requirement that is applicable during periods of temporary or permanent exhaustion. Annual attestation is a requirement for anyone administering a WCMSA. CMS even provides a copy of the self-attestation letter with its WCMSA approval letter. As long as the WCMSA is being used to pay for injury-related expenses that would otherwise be covered by Medicare, and is solvent, a self-attestation letter is sufficient. However, when a WCMSA exhausts, CMS will pay for injury-related expenses, provided they can verify that the WCMSA has been appropriately spent down. This is where the “full accounting” comes into play. So, this is not exclusive to situations where Medicare entitlement changes. It is CMS’ standard process when assuming responsibility for injury related expenses during times of WCMSA exhaustion. Therefore, it is possible that CMS is not adding a “full accounting” requirement for WCMSA beneficiaries that wasn’t there before, but is rather correcting the former language that seemed to infer that a self-attestation letter was sufficient for CMS to assume responsibility for the injury after or during exhaustion.

So, what does this mean for anyone administering a WCMSA?  In either case, it is critical that an administrator keep very good records of how they’ve spent down a WCMSA, because a) CMS reserves the right to audit the account at any time, and b) should the WCMSA ever exhaust, CMS will require the administrator to demonstrate they’ve spent the WCMSA funds down properly before Medicare will pick up the tab.

As the nation’s first professional administrator, Medivest has dealt with this situation numerous times. Whenever we notify CMS of the exhaustion of a WCMSA (usually only temporarily when the WCMSA is structured with an annuity), we provide a full ledger that details every expenditure.  In the many years Medivest has been submitting an accounting of WCMSAs we administer, CMS has never refused to assume responsibility for injury-related expenses it would otherwise normally pay. This is likely why CMS has recently described professional administration of WCMSAs as “highly recommended.”

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CMS’ Latest WCMSA Reference Guide: Professional Administration “Highly Recommended.”

The Centers for Medicare & Medicaid Services (CMS) just signaled their support for the professional administration of Medicare Set-Aside (MSA) funds. The July 10, 2017 release of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 2.6 appends Section 17.1, the section covering MSA administrators, with a single sentence:

Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.

This addition is strong advice for anyone who is the beneficiary of settlement funds intended to pay for future Medicare-allowable expenses related to their injury or illness.

So, why is CMS calling professional administration “highly recommended”? One reason at least (and perhaps the most important) is that it’s in the beneficiary’s best interest. A self-administering beneficiary whose MSA has exhausted must be able to demonstrate to CMS that those funds were spent down in an appropriate way before Medicare will assume any responsibility for medical expenses. CMS seems to understand that for almost all MSA beneficiaries, the responsibility to properly administer an MSA is not a do-it-yourself task.

Consider what’s involved to make sure MSA funds are appropriately spent down.  The beneficiary must first negotiate an arrangement with their medical provider to not only accept cash payment for services, but also accept a repricing of those services by the patient themselves, an almost impossible task.

If this hurdle can be jumped, the beneficiary must then identify what services they received were Medicare-allowable and which were not. This requires an itemized bill with detail sufficient to evaluate the charges against allowable rates of compensation. Having parsed the services into Medicare-allowable and non-allowable, they must apply applicable fee schedules (fee schedules they must pay for or otherwise find access to) in order to reprice each service to an allowable rate. If this results in a reduction of the claim, they must then provide a justification for this reduction. The medical provider must then accept this as payment in full.

The beneficiary must then pay for these services from two separate accounts: Medicare-allowable expenses from the MSA account, and non-allowable expenses from other funds.  A proper accounting must be kept to sufficiently demonstrate the job has been done right.

Unfortunately, it’s no insignificant thing that hinges on this process being successfully followed. A beneficiary with an exhausted MSA can find themselves without a healthcare benefit to cover their ongoing injury-related care.

CMS understands that the situation is drastically different for a beneficiary who’s hired a professional administrator to handle their MSA funds. Communication with the medical provider about covered services, billing, re-pricing, and coordination of benefits are handled by the professional administrator.  The beneficiary simply seeks treatment. Furthermore, the professional administrator keeps an accurate and comprehensive accounting of all expenditures, and is able to effectively communicate with CMS during period of exhaustion, ensuring that CMS accepts responsibility for injury-related expenses.

CMS likely recognizes the exposure a poorly administered MSA can create for a beneficiary, and is thus advising them that when it comes to MSA administration, its recommended to leave it to the professionals.

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CMS Issues a Final Rule on Conditional Payment Appeals

On February 27, 2015, CMS issued a final rule in the Federal Register that implements a required provision of the Strengthening Medicare and Repaying Taxpayers Act (the SMART Act). This provision establishes a formal right of appeals process for applicable plans regarding conditional payments.

This new appeals process applies to initial CMS determinations issued on or after April 28, 2015 where CMS is pursuing conditional payment recovery from applicable plans. Instead of adopting a new process, this new rule adopts the same multilevel appeals process for applicable plans that is currently allowed for conditional payment recovery claims from beneficiaries.

This multilevel appeals process for applicable plans includes these steps:

  • A redetermination by the contractor issuing the recovery demand
  • A reconsideration by a Qualified Independent Contractor (QIC)
  • An Administrative Law Judge (ALJ) hearing.
  • A review by the Departmental Appeals Board’s (DAB) Medical Appeals Council (MAC)
  • An eventual judicial review

For further analysis see the notice in the February 27, 2015 Federal Register.

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CMS Posts Section 111 User Guide Version 1.0

The Centers for Medicare and Medicaid Services (CMS) has posted its highly anticipated User Guide, which outlines how RREs are to handle their reporting responsibilities. This guide will serve as CMS’ first attempt to clarify the issues surrounding the reporting requirements brought forth by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). As the title of this guide suggests, there will certainly be updates and new versions as we approach the implementation deadline. To view or download this guide, please click here.