Sarasota, FL (WorkersCompensation.com) – One effect of the pandemic has been an increased interest in closing workers’ compensation claims, by injured workers as well as payers. Experts say even more injured workers would likely settle their claims if they didn’t fear the Medicare Set-Aside (MSA) aspect.
MSAs are complex and confusing for industry stakeholders, let alone injured workers themselves. There are myriad nuances and compliance issues involved. “If these guidelines for the MSA are not followed properly, Medicare benefits could be jeopardized,” said Krista Johnson, senior director of Special Programs for Ametros, a professional administrator.
Understanding the intricacies and helping injured workers navigate the mystification of the dreaded MSA can lead to more settlements of long-term workers’ compensation claims.
What is an MSA and Who Needs One?
Congress enacted the Medicare Secondary Payer Act in 1981 to ensure Medicare was not paying for medical care that was rightfully the responsibility of another entity.
“On July 23, 2001, the Centers for Medicare and Medicaid Services (which oversees Medicare) issued a directive memo, called the Patel Memo, indicating that Medicare’s interest MUST be taken into consideration for Workers’ Compensation cases,” Johnson explained. “This is true for current Medicare beneficiaries, as well as those with a reasonable expectation of becoming a Medicare beneficiary.”
“Reasonable expectation” means the injured worker will become a Medicare beneficiary within 30 months of the settlement date.
MSAs were created to help those affected adhere to the Patel directive. They are special funds created to pay for the medical needs of a specific injury/illness. While there is no legal requirement to have an MSA, experts say they are a useful tool to ensure injured workers have the money to cover their medical expenses while still protecting Medicare’s interests.
Setting Up the MSA
The MSA outlines and calculates the future Medicare-covered medical needs for an injured person over their remaining lifetime. It is comprehensive, in that it should include all treatments and services related to the specific injury. “Maybe [the person] needs a wheelchair,” Johnson said. “All will be listed out in the report.”
The MSA funds must be deposited in an interest-bearing account and cannot be comingled with any other monies. Any other money resulting from the settlement must be kept separate from the MSA.
Healthcare providers – including pharmacies – should then be notified of the MSA, for appropriate billing. “It’s very important they are billing the correct party,” Johnson pointed out.
Treatment that is funded through the MSA should be for the specific occupational injury only, and covered by Medicare. It’s also important that providers use accurate coding for the injury-related expenses.
The medical expenses should be paid according to state-specific workers’ compensation fee schedules or ‘usual and customary’ rates to ensure providers do not overcharge. “Providers typically over-bill and the claimant is unaware of the right fee schedule rates,” Johnson said. “So it’s important to do your research and know that before you pay a bill.”
CMS provides a variety of resources to assist people setting up and administering their MSAs. For example, it notes that interest income generated from the MSA will be shown on IRS form 1099-INT.
“You must pay tax on interest income,” according to the Self-administration Tool Kit for WCMSAs. “You must document the amount of tax owed on the interest income from your WCMSA account. You may pay only the tax amount due on your WCMSA account with WCMSA funds. WCMSA funds themselves are not considered taxable income, but the interest they earn is taxable income.”
Once medical bills are received, the recipient should pay the provider out of the MSA. However, there are instances when the MSA does not have enough money to pay the provider. In such cases, the injured worker must send an attestation to CMS notifying the agency of the exhaustion of funds.
It is important to keep complete records for the annual attestation reporting – or the exhaustion of funds, whichever comes first. Each year, the recipient must submit the annual attestation report. This is an annual accounting of the workers’ compensation MSA and includes such things as
- Dates of service
- Names of medical providers – including pharmacy
- Amount charged
- Related ICD 9/10 codes
It must also note if there has been a temporary depletion of MSA funds.
To ensure medical expenses are covered, recipients must coordinate their Medicare benefits along with their MSA. The attestation submissions should be submitted within 30 days of the settlement date each year.
In the annual attestation, recipients are notifying CMS of what services fall under Medicare parts A or B. It also separates out the costs of prescriptions. If MSA funds exhaust, the injured worker must be enrolled in Medicare Part D to cover prescriptions.
“By signing this form you are acknowledging that you are taking Medicare’s interests into consideration, and that if you falsify the document that Medicare has the right to deny coverage for injury-related treatment up to the full amount of your settlement,” Johnson explained. “Also, there it is notifying you that CMS has the right to audit your annual attestation at any time, and it is recommended that you keep these records for a period of 7 years for each attestation; so organization of all of your supporting documentation will be key in a CMS audit.”