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

Click here for a downloadable copy of this blog

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.

What You Should Know About Post Settlement MSA Funds
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What You Should Know About Post Settlement MSA Funds

Are you self-administering your Medicare Set-Aside (MSA) funds or do you have a client doing so? If so, you are not alone. According to the National Council on Compensation Insurance, Inc. (NCCI) recently published a research brief updating its 2014 study on Workers’ Compensation MSAs (WCMSAs) and WCMSA reviews and reported that, between 2010 and 2015, approximately ninety-eight percent (98%) of the Workers’ Compensation cases included in the over 10,000 case sample, settled with the injured worker choosing to self-administer their MSA funds. Due to the large percentage of injured workers opting to self-administer, the Centers for Medicare & Medicaid Services (CMS) published a free downloadable, 31-page “Self-Administration Toolkit”, now in Version 1.3 which was updated on October 10, 2019.

If you’re a Claimant/Applicant/Petitioner’s attorney settling a WC case and your client is considering self-administration, below are a couple of blogs you may consider reading before deciding if self-administration is the best option.

CMS simply states that a competent administrator must be chosen to administer the MSA funds. The key word is competent, and it is the responsibility of the settling parties to deem whether the injured person is sufficiently competent to self-administer an MSA account. Below are a couple of scenarios regarding options for administration of MSA funds.

  • Injured Person Self-Administers his/her MSA Funds – The injured person handles his/her own MSA funds and assumes responsibility for handling the MSA funds per CMS’ guidelines for Medicare Secondary Payer (MSP) compliance.
  • Engage a Professional Administrator – Engage a third-party professional administration company to administer the MSA funds, coordinate all aspects of billing, complete annual reporting to Medicare as needed, maintain accounting records, etc. The Administrator assumes responsibility for handling the funds per CMS’s guidelines for compliance. Per CMS’s guidelines, fees for professional administration cannot be deducted out of the corpus of the MSA funds.
  • Engage A Trustee – Engage a person or professional entity (like a bank or trust company) who manages property or assets that have been placed in a Trust (i.e. a Special Needs Trust (SNT)). Per CMS’s guidelines, fees for a trustee cannot be deducted out of the corpus of the MSA funds.
  • Appointed Guardian or Conservator – An individual that has been determined to be mentally or physically incapacitated by a court of law, or when a minor is in need of an adult to manage his/her property, a guardian or conservator may be appointed.

Post Settlement Tips for Self-Administration

  • Per CMS’ guidelines, do not co-mingle MSA funds with personal funds. Place the MSA funds into a separate, interest bearing, FDIC insured account.
  • Keep pertinent documents regarding the settlement in a safe place. You may need to refer to these documents for paying claims, if applicable. Examples include:

           o Executed Settlement
           o Power of Attorney
           o Conservator or Guardianship appointment
           o Trust documents
           o MSA Allocation Report / Life Care Plan / Medical Cost Projection Report
              or a report that was prepared and used in the settlement to determine
              and allocate the total future Medicare Set-Aside (MSA) funds.
           o CMS Approval Letter, applicable if the MSA was submitted to CMS for review
           o Accurate annual accounting, post settlement
           o Keep track of all post settlement expenses, receipts paid and copies of bills
           o Annual attestation letters, post settlement (these can now be submitted electronically)
           o Any correspondence from CMS, post settlement

  • Document Retention – How long should you keep settlement documents, CMS letters, etc? These documents you may want to keep for the life of your account. How long should you keep payments of medical bills, annual accounting, and yearly attestations? State laws generally govern how long medical records are to be retained. However, the Health Insurance Portability and Accountability Act of 1996’s (HIPAA) administrative simplification rules require a covered entity, such as a physician billing Medicare, to retain required documentation for six years from the date of its creation or the date when it last was in effect, whichever is later. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE1022.pdf
  • What type of MSA funding arrangement was decided at the time of settlement? There are two types of MSA funding arrangements.
    1.    Lump Sum Funding – After settlement, a check for a one-time payment representing all future medical expenses that are injury related and Medicare allowable is issued.
    2.    Structured Annuity Funding – A combination of a check for the initial deposit or seed money used to fund the MSA. The amount of the seed deposit typically includes the first surgical procedure or replacement and the equivalent of two years of annual funds along with the yearly annuity payment beginning on the 1-year anniversary of settlement. Note: Medicare recognizes a structured settlement annuity as a viable method of funding MSAs. Medicare will become the primary payer of injury-related medical expenses, once documentation is provided showing the MSA funds were spent appropriately and there is no other available primary coverage to pay for injury-related Medicare covered medical expenses – until the next upcoming annuity payment has been deposited into the MSA account. For topics unique to Structured WCMSA Accounts, please refer to this link.
  • Before the injured person’s case settles, the WC claims adjuster typically will have paid for medical treatments and prescription medication that were related to the injury. After settlement occurs, the MSA funds should be used to pay injury-related and Medicare allowable expenses from the settlement date forward until exhausted.
  • If you are a Medicare beneficiary, you will need to continue to pay Medicare premiums, co-payments, and deductible amounts. Medicare updates its plans, premium costs, and coverage on a yearly basis. Each year, Medicare publishes a free downloadable handbook called “Medicare and You”.
  • If the injured person is Medicare eligible, he/she can add coverage to or change his/her plan during Medicare’s Open Enrollment period. The Open Enrollment period would not have an impact on their MSA Funds that they are currently self-administering. Every year, Medicare’s Open Enrollment period begins October 15th and ends December 7th for most Medicare plans. For Medicare Advantage plans, open enrollment runs from January 1st through February 14th. Medicare has designed a Medicare Plan Finder which it describes as a convenient way to compare coverage options, shop for plans, and feel confident about the coverage choices Medicare enrollees make. It also lets Medicare beneficiaries build and track their drug list to determine the best Part D (prescription drug) plan that meets their medical needs, including the display of lower-cost generic alternatives. Some details regarding Medicare Advantage Plans can be reviewed by clicking this link so you can compare covered benefits.
  • Medicare-Certified Providers – When choosing providers to receive care, consideration should be given whether the providers will be able to bill Medicare in the event MSA funds have either temporarily or permanently exhausted (depleted), or in the event a Medicare beneficiary may need Medicare covered treatment that is not injury related. If a provider cannot file claims to Medicare, the Medicare beneficiary may be billed for services in select circumstances. To locate providers that are Medicare-certified, please click here.
  • Reimbursement of Medicare Conditional Payments before and after settlement. If Medicare pays for care related to your injury, it may be doing so on the condition that Medicare will later be reimbursed for such payments. More information about Medicare’s right to recovery may be found here.
  • At the end of each year, interest earned on MSA funds will need to be identified as interest income generated from the MSA account for the prior tax year. Under CMS’ guidelines, the interest earned is to be deposited and remain in the MSA account to pay only for Medicare allowable expenses related to the injury, or used for other allowable purposes, such as to cover banking fees related to the account, mailing/postage fees related to the account, miscellaneous related document copying charges, and income tax on interest income from the MSA account.

Mismanaged MSA Funds

  • During the pre-settlement phase, the pricing of medical items and services for most MSA allocation reports are prepared using Workers’ Compensation state fee schedules for the state where the injury occurs. For liability cases, those medical items and services are priced at the Usual and Customary rate for the geographic region. For both WC and liability cases, prescription drug expenses are typically priced at Average Wholesale Pricing (AWP). Injured parties might not subscribe to or otherwise access the AWP pricing rates or state fee schedule rates and could end up paying for medical treatment or prescriptions drugs at amounts higher than they should.
  • When the injured person mistakenly pays for a non-Medicare allowable expense out of the MSA account, Medicare reserves the right to deny all injury-related Medicare covered claims until the MSA funds have been replenished or the injured worker can demonstrate appropriate usage equal to the full amount of the MSA.
  • If a provider mistakenly sends the bill to Medicare when it should have been paid out of a MSA account, the claim may be denied by Medicare and this could lead to CMS initiating an audit of the MSA funds.
  • Medicare may accidentally pay for an injury-related claim when it should have been paid out of the MSA account. The injured person may end up being billed or charged for the Medicare copay, coinsurance, or deductible amount, and later, still have to reimburse Medicare from the MSA funds.

When considering all the factors described above, doesn’t it make sense to strongly consider the use of a professional administrator? Also, The Centers for Medicare & Medicaid Services (CMS) published in the WCMSA Reference Guide, that professional administration is highly recommended.

Simply put, Professional Administration makes sense. If you are an attorney or an injured person who has questions regarding switching from self-administration to professional administration, Medivest is here to answer any questions you may have.

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