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.”