Two changes have occurred regarding MSAs for non-group health plans, including general liability, auto no-fault and worker’s compensation. These changes act in tandem and call into question the ability of a claimant to self-administer his or her MSA. From the beginning, the Achilles heel of the MSA program has been the inability of the Centers for Medicare and Medicaid Services (CMS) to monitor post settlement spending from the MSA accounts. Initially, the annual attestation statements were sent to Regional Offices (RO), staffed by CMS employees. However, the RO’s had no mechanism to properly review these statements to determine if the funds were spent appropriately or if they were filed at all. On March 21, 2014, CMS published its first Self Administration Toolkit for Workers Compensation Medicare Set Aside Arrangements (WCMSA), version 1.1.
The first change occurred on July 10, 2017 when CMS updated its Workers Compensation Medicare Set Aside (WCMSA) Reference Guide. Originally, CMS took a neutral position regarding administration of the accounts, allowing the parties to determine if the claimant would self- administer the funds or use a professional administrator. The updated Reference Guide now states, “it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”
The obvious reason for the change is the inability of virtually all claimants to correctly pay according to proper fee schedule rates, file the attestation statements and submit a 1099 showing interest paid on the account. Additionally, and probably without intent, CMS may have created a cause of action against settling parties if a professional administrator is not used and treatment or pharmacy charges are denied for misappropriation of funds. The WCMSA Reference Guide was updated March 19, 2018 following the installation of the new WCMSA review contractor, Capitol Bridge, LLC.
On April 2, 2018 CMS released an updated Self Administration Tool-Kit for WCMSAs v. 1.2. The second change mirrors the first one. CMS, an agency under the Department of Health and Human Services is tasked with managing the entire Medicare system. CMS relies on contractors for the entire MSA process, including conditional payments and approval of MSAs. CMS finally realized that the RO’s could not adequately review the attestation statements and recently shifted this responsibility to the Benefits Coordination and Recovery Center (BCRC), a Medicare recovery contractor.
The BCRC has access to all data involving individuals having a claim in the Medicare system. Fidelity Fiduciary Company, a post settlement professional administration provider, has now started receiving phone calls and letters from the BCRC advising that claimants have died, Social Security numbers do not match, the person is no longer a Medicare beneficiary, etc. The BCRC desk clerks have instant access to this information and are now monitoring the attestation statements. If any money is misspent or spent inappropriately, their duty is to notify CMS so that Medicare benefits will be denied to that claimant.
Caution is urged when settling claims that require a MSA since the funding, by lump sum or annuity, is for the future life expectancy of the claimant. The average life span of a worker’s compensation claim is about four years but the MSA funds may last for 20-30 years. That is quite a long time for problems to occur if the claimant is allowed to self-administer the account with the temptation of spending the funds irresponsibly on items which are not related to the injury claim.
Despite the practice of submitting MSAs to CMS for review and approval, if the funds set aside to protect Medicare’s future interests are not spent properly on Medicare-covered, injury related care, the Medicare benefits are at risk and responsible parties to the settlement may be at risk for private cause of action for failure to protect Medicare up to the total settlement amount. As more payers move to voluntary non-submission of MSAs, the need to protect post settlement MSA funds and Medicare beneficiary benefit denials, post settlement account administration and support is the only recognized means of risk protection.
Bennett L. Pugh, JD
Chief Executive Officer
Fidelity Fiduciary Company, LLC
P.O. Box 43613
Birmingham, AL 35243-0613
Chief Executive Officer
Care Bridge International, Inc.
MSP Compliance Bridge, LLC
9040 Town Center Parkway
Lakewood Ranch, FL 34202
As this article goes to publication, we have been advised that CMS will soon publish Liability MSA (LMSA) criteria. This is a first in the industry and would create a new method of considering and protecting Medicare’s interests in General Liability and no-fault claims. Once issued, we will provide updates.
Bennett L. Pugh is a member of the Alabama State Bar and the Alabama Association for Justice. He is a 1985 graduate of Cumberland Law School and is currently the CEO of Fidelity Fiduciary Company, LLC, a professional administrator since 2001.
Deborah Watkins is a seasoned insurance claims professional and a thought leader in the Medicare Secondary Payer industry with an Executive Master’s in Healthcare Leadership from Brown University. She is the Founder and CEO of Care Bridge International, a late stage InsureTech offering the first and only digital solution for forecasting medical treatment and costs at an individual claims level for MSAs and medical reserves.