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.