Tag Archives: msa

A New Era in MSP Compliance

Medicare Secondary Payer (MSP) compliance is changing. The rapid evolution of technologies is making it possible to automate portions of the process that were previously beyond reach, empowering claims professionals and those responsible for the creation of Medicare Set-Asides (MSAs), conditional payment resolution and Section 111 reporting with new tools that increase their efficiency and vastly improve accuracy.

The stakes are higher, as well. We have seen a marked shift in policy in recent years, as the Centers for Medicare and Medicaid Services (CMS) has increased its focus on cost recovery. This has manifested itself most noticeably in the form of new MSP compliance policies and increased enforcement measures. Starting Jan. 1, responsible reporting entities (RREs) could face penalties of up to $1,000 per claim, per day, for failure to properly comply with Section 111 reporting requirements.

In addition, CMS has increased coordination between Section 111 reporting and cost-recovery programs, which will permit greater scrutiny and empower the agency to implement these increased enforcement measures. Conditional payment debt recovery measures can now be categorized as aggressive, with swift referral of unresolved debt to the U.S. Department of Treasury.

At the same time that MSP compliance is growing more stringent, though, insurers are benefiting from improvements in technology that are driving costs down, increasing accuracy and accelerating the reporting process through automation. Old-school methods are losing viability, especially in light of technology innovations that have arrived on the scene in recent years.

MSP Compliance the Old-School Way

To better understand how technology is changing the game, let’s look at how things have been done in the past. Traditional MSP vendors have been tasked with examining a patient’s medical records to identify the types and effectiveness of medical treatment rendered, recommending physicians for future care, scrutinizing Medicare coverage determinations, reviewing claim payment histories, consulting workers’ compensation fee schedules and researching Redbook average wholesale price (AWP) pharmacy costs, all in the name of MSA preparation. The tedious, painstaking and manual effort involved in creating an MSA involves the use of highly trained and specialized medical and, oftentimes, legal personnel.

All of the efforts of your MSP compliance vendor don’t merely drive up the vendor’s cost; it can drive internal costs higher, as well. CMS Workers’ Compensation Review Center (WCRC) policies require a 24-month lookback at active treatment records relative to a single date or multiple dates of loss, so claims adjusters or their support staff must typically pull a select subset of patient and payment records to fulfill the current MSP compliance requirements. The amount of documentation to be retrieved by the client and reviewed by the MSP compliance vendor can be voluminous in many cases, driving costs up even further.

Many MSP compliance vendors still rely on insurers to manually supply other important information, as well, including demographic data, the First Report of Injury form, covered and denied body parts, a pharmacy benefit management summary (PBM), pertinent legal documentation and more, depending on case specifics. Some of that information may require authorization to speak with a third-party vendor, which can complicate matters even further. All of this takes time, which in turn drives costs.

See also: MSP Compliance Is Out of Control

There is a time delay associated with this manual methodology, as well. In most cases, reports can be produced in a matter of a week to 10 days, but in some cases they may require several weeks, depending on their complexity, the volume of documentation involved and the capacity of the vendor. If the MSA is needed in a hurry, most MSP compliance vendors will impose an additional charge to expedite the process. Those rush fees can add up quickly, even doubling the total cost of producing a single report.

Given the sheer volume of information that might need to be reviewed to create an MSA, it’s no surprise that errors occur. Strong quality assurance (QA) programs ensure the accuracy of the reports before delivery to the client, but, again, QA efforts, although necessary, can increase costs and delay report delivery times.

AI Is Changing the Game for MSP Compliance

One of the key challenges associated with medical claims, generally speaking, is the abundance of unstructured and semi-structured data that might be involved. This is precisely why MSP compliance has been such a high-skill, labor-intensive process. But today, artificial intelligence and machine learning (AI/ML) have advanced to the point at which they can accurately ingest the kind of information that previously required extensive human involvement.

Today, we can read various types of documents and can use AI and machine learning to derive meaning from them. Natural language processing (NLP) can discern the subtle, but extraordinarily important, differences between phrases such as “patient reports no back pain” and “pt rpts no prior hx of back pain.” While claims and MSP compliance professionals still have an important role to play, AI gives them a distinct head start in the process, first by filtering out the right information, then by ingesting it, making sense of it and highlighting key attributes of the cases that require attention.

When claims adjusters are relieved of the problem of preparing information for an MSP compliance vendor, they can instead focus on their core responsibilities. AI can ingest everything, automatically filtering out what it needs for a particular report. AI now automates tasks that were once thought to fall outside the realm of automation.

This level of automation also makes it possible to easily develop multiple versions of an MSA report quickly, enabling adjusters and managers to assess the risk levels associated with various claims’ scenarios and potential outcomes. This, in turn, gives insurers greater control over claim decisions while helping them to remain fully compliant with CMS policies and regulations.

For MSP compliance, in particular, AI applications can improve the process even further by incorporating CMS feedback into decision-making algorithms. In other words, AI/ML can learn which elements of a report rendered development requests and counter-higher approvals from Medicare’s WCRC, and AI/ML can incorporate feedback and tailor future reports to more closely conform to CMS expectations.

Lower Costs, Increased Accuracy and Efficiency

AI technology is no longer just a visionary idea; AI has arrived, and it’s transforming the way insurers do business. Innovative insurance companies are already reaping the benefits of this technology. Tom Veale, president of TRISTAR Risk Management, reports that his company has saved over 33% on compliance costs after adopting a purpose-built AI approach designed to handle MSP reporting, risk analysis and compliance.

AI and machine learning will continue to gain momentum. In the short term, that will provide competitive advantage to early adopters (as is already happening at TRISTAR and other organizations). As adoption increases, the old ways of managing MSP compliance will be rendered increasingly obsolete. CMS policies and enforcement measures will only serve to accelerate that trend.

Medicare Set Asides: You Are Overpaying

Medicare Set Asides (MSAs) have become a standard feature in settling workers’ compensation claims over the past 15 years. This year, MSA proposals for 26,000 workers’ compensation claims might be submitted to the federal government. We present new evidence that strongly suggests that this voluntary process of submission predictably and excessively inflates the cost of claims. For claims payers who are concerned about the burdens of set asides, this problem and its solution are top news.

Workers’ compensation claims payers far over-spend on Medicare set-asides (MSAs), paying as much as double what they need to. The conventional practice of submitting a MSA report to CMS for review and approval, which is entirely voluntary, predictably inflates costs and overburdens claims payers. Claims payers simply need to
change their gameplan.

This year alone, for some 26,000 claims and at an average of about $93,000, claims payers will set aside funds to reimburse Medicare for any medical care Medicare delivers to injured workers to treat their work injuries.

I became involved in this massive, cumbersome process of financial resolution in 2000. I participated and watched as most claims payers selected to follow a certain game plan. They’ve stuck to it.

In a nutshell, here is what happens, at an annual outlay of more than $2 billion. At the time of a claims settlement, claims payers want to cap their future financial exposure to Medicare. They know that if they submit to Medicare a report for funding (“set aside”) a fixed, irrevocable amount of money for treatment under Medicare, and Medicare approves the report, they can wash their hands of the
claim.

This method of resolution spawned a small industry of firms that help claims payers prepare these reports and negotiate an amount.

Problem solved – but at a very high cost.

First, the process is extremely convoluted and time-consuming. Our company’s survey of three dozen claims payers, which we undertook in 2016, revealed a very low level of trust in the process. Due to the involvement of Medicare, it is inherently bureaucratic.

Second, these irrevocable set-aside plans (“MSA reports”) tend to be extremely costly. They greatly inflate the projected treatment costs over actual treatment costs.

See also: 8 Questions on Medicare Set Aside  

Our company recently analyzed several hundred approved reports. We compared the forecasted spending on medical care (surgeries , medication, etc.) with actual spending on behalf of the injured worker for the first five years post approval of the MSA report. We found that in the fifth year, the pace of medication spending was 64% of the forecast and for all other medical care 55%.

In other words, close to half of the funds locked up in the MSA reports were not being used!

Another study confirms how medical spending declines for many claimants over time. We analyzed a huge database of eight million non-settled workers’ compensation claims, noting medical spending for as much as 11 years after injury. We focused on opioid treatment patterns, as opioids are both expensive and create patient safety risks. The data showed a rapid early decline, as we expected. But it strikingly showed that the decline in use never ceased. For instance, for every 100 claimants who were actively using opioids in the fourth year post injury, only 50% were using opioids in the seventh year and 25% were using opioids in the tenth year.

Why don’t MSA reports anticipate that medical spending will go down? The reason is due to mandatory rules that Medicare imposes. If you elect voluntarily to submit an MSA report, you must follow these rules, three of which are worth noting:

First, Medicare requires that medications (which compose about half of all set-aside budgets combined) be priced unrealistically high, at Redbook “average wholesale price,” or AWP. I cannot imagine a claims payer paying for drugs at that price. Pharmacy benefit managers arrange for prices that are as much as 30% lower.

Second, Medicare unrealistically requires that all medications be budgeted unaltered for the projected life of the injured worker. The average life expectancy for an MSA is 24 years.

There is no scientific assurance whatsoever that opioids are effective in providing long-term relief from pain, much less being safe to use for 24 years.

Third, Medicare requires that any treatment the worker is receiving or has planned at the time of settlement will continue. In reality, treatment evolves as patients adapt.

Rather than submit an MSA report, which locks the claims payer in to an inflated and unalterable fixed amount, the claims payer can prepare a MSA plan for the large majority of claims using realistic forecasts, fund it and enjoy a cap on its financial liability without submitting a report. CMS has always recognized a non-submitted, funded plan as sufficient to satisfy its secondary payer rights so long as certain compliance steps are taken, and in fact states that the submission process is a voluntary one.

See also: Medicare Set Asides: 10 Mistakes to Avoid  

There is a way to realistically predict the medical spending: refer to a huge database of actual spending. Care Bridge’s analytic-powered MSA generates a Medicare Set Aside plan in minutes, based on machine learning algorithms of more than a billion medical claim transactions. It forecasts future medical care and costs at a zip code level. The variables of a claim can be matched against a large data set of similar claims to forecast care, which offers a more objective and accurate projection compared with current methods. Our clients are able to fund Medicare protection at the most probable cost, rather than an inflated cost, and settle claims  six to eight months faster. This  offers  a defensible way to protect Medicare and manage risk at a more realistic cost.

An authoritative white paper, “Medicare Set-Asides: What Is the True Cost of Future Medical Care?” is available here.

Big Misunderstanding on MSAs

With the federal government’s announcement that it is considering expanding its MSA review process to include up to 51,000 MSAs for liability insurance and no-fault settlements, the liability MSA issue should be front and center for all parties resolving liability insurance claims. Non-compliance in this area has been rampant over the years, and changing your habits now is critical to ensuring a closed file remains closed from the federal government’s perspective.

Addressing MSA issues in liability claims: What are you waiting for?

In 1980, Congress enacted the Medicare Secondary Payer (MSP) Act. 42 U.S.C. § 1395y(b)(2). From this law (and following administrative policy statements from the federal government), parties resolving workers’ compensation (WC) claims became concerned about the application of Medicare Set-Aside Arrangements (MSAs). Today, we see the MSA issue often grinding a WC settlement to a halt for a variety of reasons. Strangely, the same broad level of concern has never really existed for those resolving auto, liability or no-fault claims.

This article explores why, historically, these MSA issues have only resonated in the WC community. By comparing the issue in the WC context versus the liability context, you will see that parties resolving liability claims without addressing the MSA issue (more accurately stated as the future medical issue) expose themselves needlessly to the federal government asserting recovery for future medical expenses it paid mistakenly on behalf of its beneficiary. This exposure could lead to the federal government pursuing recovery of double (or, perhaps, treble damages. Recently, the federal government announced it is considering expanding its MSA review process to include liability and no-fault cases. No one wants to be the ones the federal government targets for non-compliance. Perhaps the Chinese philosopher Sun Tzu said it best in “The Art of War”: “The greatest victory is that which requires no battle.” At this point, if you are not yet addressing liability MSA issues as standard operating procedure on every single case, what are you waiting for?

Background

In 1980, Congress enacted the MSP Act. With the goal of extending the life of the Medicare Trust Funds, the MSP Act provides that the federal government should not pay for a beneficiary’s medical expenses when payment has been made under a workers’ compensation policy or plan, an automobile policy or plan, a liability insurance policy or plan (including self-insurance) or a no-fault plan. When the federal government’s right of recovery under the MSP Act is triggered, the parties involved in the claim have the responsibility to make sure Medicare does not pay a bill prematurely that had been paid previously as part of the settlement, judgment or award.

See also: Medical Liability Insurance (Video)  

In 2001, the federal government — through what is now known as the Centers for Medicare and Medicaid Services (CMS) — first verbalized its statutory interpretation of the MSP Act as applying not only to past medical expenses but also to future medical expenses. In what became known as the “Patel Memo,” CMS described situations in WC claims where parties should consider funding an MSA to ensure that Medicare is not asked to pay a medical bill prematurely on behalf of one of its beneficiaries. Since 2001, CMS has provided ample guidance in the form of additional policy memoranda and a reference guide that incorporates that policy memoranda for those who wish to ask CMS to review and approve an MSA as part of resolving a WC claim. Today, MSA concerns are commonplace in the WC community but not in the liability insurance community. Why is that?

Statutory and Regulatory Language

As a launching point, it’s important to understand the MSA statutory and regulatory landscape. In short, there is none. That’s right — neither the MSP Act itself nor the regulations enacted by CMS to provide its official interpretation of the MSP Act discuss or even mention the terms “Medicare Set-Aside” or “MSA.” Further, the Medicare Act provides that “The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this subchapter. In situations where regulations are not enacted, the Medicare Act provides that “No rule, requirement or other statement of policy … that establishes or changes a substantive legal standard … shall take effect unless it is promulgated by the Secretary by regulation under paragraph (1).” 42 U.S.C. § 1395hh(a)(2). As the MSP Act is a subpart of the Medicare Act, this applies to the MSP Act as well. Plainly put, because no regulation exists about MSAs today, there is no substantive legal standard parties must meet with respect to MSAs themselves.

However, parties focusing on the so-called “MSA requirement” have missed the forest for the trees. An MSA is one possible tool to comply with the obligation to make sure Medicare does not pay a medical bill that is someone else’s responsibility. That same broad prohibition has existed under the MSP Act since Dec. 5, 1980. Medicare will not pay for a beneficiary’s medical expenses where payment has been made under a workers’ compensation plan, an automobile plan, a liability insurance plan (including self-insurance) or a no fault plan.” 42 U.S.C. § 1395y(b)(2)(A)(ii). The same statute addresses future medical expenses that Medicare could potentially be asked to make post-settlement for liability insurance just as it does for WC. According to the law, Medicare is barred by statute (but for the conditional payment exception) to make that payment where payment has already been made for those same items, services and expenses. Presumably, that payment would have already been made by the liability insurance carrier or self-insured to the claimant as part of the settlement.

While the statute does not address MSAs, it does address future medicals. The fact that parties resolving liability insurance claims miss this is troubling. What’s more troubling (for some) is that the statute has addressed future medicals in liability cases for 36 years. Future medicals in liability cases under the law is not a new development. Despite the clear statutory text of the MSP Act, parties resolving WC claims worry about MSA issues, while parties resolving liability insurance claims generally do not. Why is that?

MSA Jurisprudence

Maybe the distinction lies with the body of case law that has developed around the MSA issue in the liability insurance context. Specifically, at least two federal courts have concluded that liability MSAs are not “required,” while none (to the author’s knowledge) have concluded that liability MSAs are “required.” (See Sipler v. Trans Am Trucking Inc., 881 F. Supp. 2d 635 (2012) and Aranki v. Burwell, No. 2:15-cv-00668 (D. Ariz. Oct. 15, 2015).) This is not a surprising conclusion from the judiciary given the fact that neither the law nor the regulations interpreting the law “require” liability MSAs. Still, that same law does not differentiate between WC claims and liability insurance claims. In both, Medicare’s right to not pay certain future medical expenses ripens when payment has been made by a primary plan or payer to a claimant for those same expenses. The law itself provides no distinction. Without a distinction, one might think that concern for MSA issues would be the same in the liability insurance context as they are in the WC context. But, historically, they have not been. Why is that?

Federal Administrative Guidance

If it’s not the statute itself or the regulations enacted to interpret the statute or the case law rendered when parties have taken the MSA issue in front of the judiciary, perhaps it is administrative guidance in the form of policy memoranda that stoke the heightened concern in the WC community as compared to the liability insurance settlement community. While not active in drafting regulations about MSAs, CMS has been active in providing policy memoranda and other informal writings about MSAs in WC. Starting with the Patel Memo of 2001, CMS drafted approximately 16 policy memoranda about WCMSAs. Then, in 2013, CMS combined those policy memoranda into one comprehensive WCMSA Reference Guide. As of April 4, 2016, CMS issued Version 2.5 of its WCMSA Reference Guide, and it has become CMS’ one source of the truth when it comes to WCMSAs. By comparison, CMS has issued scarce guidance about liability MSAs. One can look to one policy memo in 2011, an Advanced Notice of Proposed Rulemaking (ANPRM) in 2012, and a Notice of Proposed Rulemaking (NPRM) in 2013. By the way, CMS voluntarily withdrew the NPRM in October 2014.

So, perhaps the distinction lies in the existence of the policy memoranda and the WCMSA Reference Guide. And that might make sense but for one thing: Policy memoranda and reference guides issued by the federal government alone are not afforded Chevron deference. For the non-lawyers out there reading this, Chevron deference is an administrative law principle whereby courts will defer to a federal administrative agency (like CMS) and its statutory interpretation of a law unless such interpretations are unreasonable. According to the United States Supreme Court, “Interpretations such as those in opinions letters — like interpretations contained in policy statements, agency manuals and enforcement guidelines — all of which lack the force of law — do not warrant Chevron-style deference.” Christensen v. Harris County, 529 U.S. 576 (2000). Thus, the mere fact that CMS has issued policy memoranda and reference guides about MSAs in WC situations does not mean those statements have the force of law behind them. Despite this, WCMSAs remain an issue of high concern, while LMSA issues remain largely ignored. Why is that?

CMS and its Current MSA Review Process

Well, the only other possibility for the disparate treatment of the MSA issue in WC as compared to liability insurance is the existence of a formal review process for WCMSAs. CMS is willing, under certain circumstances, to review a WCMSA when the parties voluntarily submit that WCMSA to CMS for review. However, since it cannot review every single WCMSA because of resource constraints, CMS has established workload review thresholds to help manage its caseload. This workload review threshold is not a safe harbor, and CMS clearly states this in its WCMSA Reference Guide. This means cases that do not meet the threshold are not provided safe passage from CMS on the issue. Future medicals should still be considered in a WC settlement that does not meet the CMS review threshold. That goes for WCMSAs in cases where the threshold is not met — as well as liability cases for which CMS does not yet offer a formal review process. The mere lack of a formal review process does not mean Medicare relinquishes its right to not pay certain future medical expenses under the law. Nor does it mean that Medicare surrenders its right to pursue parties who have failed to address the future medical issue compliantly under the MSP Act. The MSP Act grants Medicare the right to recover up to double damages plus interest for any conditional payments it is not reimbursed. 42 U.S.C. § 1395y(b)(3)<<— ??

See also: Data Breaches: Who Has Legal Liability?  

Further, Medicare might be able to recover treble damages if it chooses to assert claims under the federal False Claims Act. It is the False Claims Act, in the author’s estimation, that parties should be concerned about most in this area — no matter whether you are a lawyer on either side of the “V,” a Fortune 500 company who self-insures liability claims or a liability insurance carrier. For a moment, think about the number of liability claims you have resolved over the past 10 years or so without addressing the MSA issue. Then, multiply that number by anywhere between $10,781.40 and $21,562.80 — and then triple that figure. That’s the future medical exposure facing parties not addressing the LMSA issue today. Claims brought by CMS under the False Claims Act represent the “nuclear” option, which would be the federal government’s most sensational way to enforce its rights in this area. But, as it currently stands, parties resolving liability insurance claims seem comfortable with this exposure, while the WC community is not. Why is that?

CMS Considering Expanding Formal Review to LMSAs

Given all that, perhaps you’re still comfortable with your LMSA exposure. You ignore the plain statutory text that places WC and liability insurance claims on level ground. You point to the lack of regulations directly on point. You cite the cases that state that LMSAs are not “required.” You cling to the fact that CMS withdrew the NPRM in 2014 and conclude that must mean that MSAs are a non-issue in liability insurance settlements. You’re the one who says that LMSAs will be an issue to be concerned about only when CMS provides an official review process. Well, get ready to be concerned because it appears that time is right in front of us.

On June 8, 2016, CMS announced that it is considering expanding its formal MSA review process to include liability and no-fault cases. CMS doubled down on that announcement in December 2016. As part of its RFP for WCMSA review contractor services, CMS asked bidders to provide information about its ability to review up to 51,000 LMSAs annually starting in 2018. That represents a 258% increase in MSAs reviewed as compared with current WCMSA reviewed. Bids are due to CMS by February 15, 2017 with an anticipated contract-award date of June 30, 2017.

If CMS is considering expanding the formal MSA review process, it must mean that CMS believes MSAs in those types of claims are a thing, right? Why else consider expanding its formal review process? If CMS believes liability MSAs are a thing, how long has it thought that, and how much work has been done internally to vet the LMSA issue and the parties resolving liability claims without addressing the issue? So many questions and so much exposure that could be remedied by one simple step. The greatest victory is that which requires no battle.

Conclusion

By this point, one certainly realizes the ostrich approach to the LMSA issue is ill-advised. The time is right to either 1) formalize your process for addressing the MSA issue on every one of your liability cases pre-settlement; or, 2) begin formulating your plan to defend yourself when CMS pursues you seeking double or treble damages for future medical payments it made for its beneficiary by mistake. As a lawyer, I prefer my clients choose the former, but I’m willing to be hired to help those who prefer the latter.

Your goal should be to minimize — or even extinguish — your future medical exposure related to this issue. You should get comfortable with the idea that Medicare’s right to future medicals is not limited to WC, and steps need to be taken to ensure your future medical exposure is minimal or even non-existent in the future.

If you’re interested in learning how you can devise internal protocols to address potential LMSA issues or you would like a legal opinion about an LMSA issue in a specific case, I’d be happy to speak with you. Call me at (704) 232-7297, email me at cattielawpllc@gmail.com, visit my website at www.cattielaw.com or tweet me @MSALawyer. Don’t wait until it’s too late and you can’t keep your file closed because the feds won’t let you.

Medicare Set Asides: 10 Mistakes to Avoid

Medicare Set Asides (MSAs) are a critical component of many settlements. After settlement, the injured party must spend, track and report the MSA carefully according to guidelines provided by the Centers for Medicare and Medicaid (CMS):

  1. Funds will be deposited in a separate interest-bearing account.
  2. All treatments and prescriptions need to be verified as being related to the injury and covered by Medicare.
  3. All expenses, treatments, dates of service and related ICD- 9/10 codes must be tracked annually; reporting must be sent to CMS.
  4. Bills must be paid according to the specific state workers’ compensation fee schedule or “usual and customary” pricing.

Reporting is complex, and, if the injured party fails to report properly, he runs the risk of having Medicare benefits denied. Additionally, paying retail rates for medical treatment can mean he is not abiding by the guidelines and will quickly run out of funds.

For this reason and more, many rely on professional administration services, like Ametros’ CareGuard service, to help manage their medical bills and reporting. Additionally, these services help save the MSA money by securing discounted rates for medical treatments.

Let us describe some of the most common mistakes, so your injured party can make an informed decision about how to best manage settlement funds.

1. Overpaying

When an injured party handles MSA funds on her own, she pays retail prices on drugs, doctor visits, procedures and medical equipment. In most states, Medicare guidelines indicate that the injured person should pay the lower state fee schedule for treatments — even after settlement. However, doctors and providers do not know how to bill at the correct rates. If the injured party does not demand to be billed accurately, she will be overpaying!

We find that, on average, the fee schedule is 55% below what doctors actually bill. Why should someone pay $100 for a doctor visit instead of $45? A professional administrator ensures that the injured person pays the required price on the fee schedule — and, often times, even less.

2. Assuming that, when funds run out, Medicare or private insurance will automatically cover 100% of healthcare costs

The settlement process has many moving parts. Often, we find that injured parties are told that, when their MSA funds exhaust, Medicare or private insurance will kick in and pay for everything. This is a huge misunderstanding. The injured party is responsible for copays and deductibles after funds exhaust.

The injured party also needs to be enrolled in Medicare or private insurance and pay the premiums. If she is enrolled in a plan when funds run out, insurance/Medicare will begin picking up the bills, but she will still need to contribute copays, deductibles or coinsurance. Typically, she is expected to contribute around 20% of medical costs. It is important to have a professional administrator to ensure that an injured party does not overpay on medical expenses and never has to use personal funds once MSA funds are exhausted.

See also: How Medicare Can Heal Workers’ Comp  

3. Failure to enroll in Medicare or personal insurance altogether

Many injured individuals assume that having an MSA means they are on Medicare automatically. This is not the case. The injured individuals still need to enroll in Medicare or private insurance to have coverage if their funds run out. While Medicare Part A (emergency visits) does not require enrollment, parts B (regular doctor visits), C (private Medicare plans) and D (prescription drugs) all have monthly premiums. Medicare requires that they enroll in plans B, C or D. If they do not enroll in a plan, when their MSA funds exhaust, they will have to pay 100% of their healthcare costs.

At Ametros, we also offer extra insurance protection with Medicare supplement plans.

4. Believing that Medicare will play some part in managing the billing of the MSA

After settlement, Medicare will not receive the injured person’s bills and verify information. A professional administrator will do this, but, if the person is managing his funds on his own, it is his responsibility. Many injured individuals wrongly assume their medical bills will go directly to Medicare after settlement, and the MSA is used for copays or deductibles.

This is a dangerous misunderstanding, as Medicare will most likely reject paying for these treatments, and injured parties may be underestimating the true cost. As long as they have funds in their MSA, they are responsible for collecting bills and paying for them IN FULL. Medicare will rely on their annual reporting to see that they did the right thing. Only once their MSA is exhausted will Medicare contribute, and they will be responsible for just the copays.

5. Using MSA funds to pay for medical expenses that are unrelated to the injury or not covered by Medicare

Many view their MSA as a pool of funds they can use for their general medical care related to their injury. In reality, Medicare’s guidelines are very specific. Medicare requires they only use the funds to pay for the entire cost of medical treatments that are 1) related to the injury and 2) would be covered under Medicare. A professional administrator verifies that each medical expense is eligible and will go the extra mile with doctors to document that each treatment and prescription is related to the injury. Our team receives constant questions about whether medical treatments meet both requirements.

It is important that the injured party’s doctor verifies that medical treatments are causally related to their injury — for instance, a knee injury may trigger a hip problem that requires surgery. When the problem is related to the injury and Medicare would cover the treatment, it should be paid for with the MSA. It’s best to document this chain reaction so that, if Medicare has questions, the patient has all records on hand.

It’s equally important to verify that Medicare would cover the expense. Oftentimes, injured individuals are caught off guard that expenses such as transportation and long-term care facilities are not covered by Medicare.

6. Using MSA funds to pay for copays, deductibles, premiums or administrative fees

Medicare guidelines state that MSA funds are not to be used for copays, deductibles, premiums or administrative fees. Some injured individuals purchase Medicare supplement plans for coverage gaps they may run into if their MSA funds exhaust. While this can be a good idea, Medicare does not allow the use of MSA funds to pay premiums for Medicare supplement plans — nor premiums for any other plan (including Medicare Part B, C or D).

Medicare also does not allow the use of MSA funds to pay investment advisers or other administrative services. At Ametros, our fee for professional administration always comes from funds that are separate from the MSA funds.

7. Failure to coordinate with providers and pharmacists on which items to bill to the MSA vs. Medicare or private insurance plan

Staff at most pharmacies and doctors offices have never heard of an MSA, so there is often confusion about billing. An individual managing her MSA is responsible for making sure each bill is paid properly with the MSA funds and for routing unrelated bills to Medicare or an insurance plan. It may sound simple, but often the injured person will visit the pharmacy to pick up medications that should be covered by the MSA, as well as medications that should go to the health insurance company or Medicare.

It’s important to be very specific with healthcare providers and staff to make sure they are separating bills. If the injured person is doing bill administration himself, tracking can be a huge hassle; it’s a challenge to request that the insurance plan reverse bills or try to secure a refund from doctors if bills are routed improperly.

See also: Top 10 Mistakes to Avoid as a New Risk Manager  

8. Mingling MSA funds with other accounts or investments

Medicare requires that funds be placed in a separate, interest-bearing bank account. Oftentimes, injured individuals skip this step. This may not seem like a big deal at first, but, as the account is used for other expenses, it can be a challenge to separate items and produce reporting for Medicare. In addition, depositing MSA funds into a personal checking account means the injured party may use the money incorrectly by accident.

Likewise, while Medicare has not given specific guidance on placing MSA funds into investment vehicles, industry experts agree that Medicare will not step in to cover any losses incurred from placing funds into the stock market.

9. Failing to notify Medicare properly when funds exhaust or replenish (if someone has an annuity)

Medicare must hear from the injured party every time her MSA funds run out and every time she receives another annuity check to replenish the account. If not, Medicare will not be prepared to cover healthcare if she has exhausted her funds and continues to be treated.

Medicare’s self-administration guide has a letter template for every time funds run out and another letter template for every time funds are replenished. Some injured individuals find themselves running out of MSA funds frequently. This means they need to send two letters a year to Medicare (not counting the annual reporting). Another frequent confusion of MSA holders who have annuities is whether they technically “exhausted” their funds because they spent more than their annuity check for that one year.

They only need to report exhaustion to Medicare when their aggregate account balance reaches zero. When their account is out of money entirely, they are required to notify CMS. A professional administrator verifies reporting for fund exhaustion and replenishment; this way, the hassle of keeping Medicare up-to-date is taken care of.

10. Failing to report MSA spending to Medicare annually

The annual attestation is the most basic requirement of the MSA: Medicare expects to hear from the injured party on the anniversary of the injury, every year for the rest of his life. The only exception is if he has notified Medicare that he has no funds remaining and no future annuity checks. As long as he has MSA funds or expected future annuity checks coming, Medicare will count on the report.

Annual reporting to Medicare is the fundamental requirement that MSA holders need to fulfill to ensure their Medicare benefits are protected. Unfortunately, many injured individuals forget the date of their settlement and file their reports late, and some do not file at all. When we take on administering MSAs where injured individuals did not complete their reporting, we usually have to make multiple phone calls, and, often, the injured individual is left waiting for approval for a medical treatment or prescription that Medicare needs to help cover.

At Ametros, we’re constantly encountering new issues with MSA accounts, and our team is always adapting to take the burden off the shoulders of the injured individual. After all, injured parties with MSAs have been through enough; they deserve help so they can settle well and remain on the path to better health.