Self Administration Toolkit for WCMSAs

On April 11, 2014 the Centers for Medicare and Medicaid Services added a Self Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements to its website. It can be viewed here.

The resource is designed to aid workers’ compensation claimants in the self administration of their MSA accounts with the proper establishment of, and expenditures from, their WCMSA account. It describes self administration guidelines and procedures including the need to establish an interest bearing account for the funds and explains the payment of medical bills using MSA funds to reimburse providers and annual accounting requirements. It includes form letters to be provided to medical providers and sample transition records for MSA expenditures. Additionally, it explains circumstances where an MSA is temporarily and/or permanently depleted based on lump sum or annuity funding.

The Toolkit is the first comprehensive outline of the compliance obligations that are incumbent upon workers’ compensation claimants after settlement. This guidance suggests that CMS recognizes the failure of most claimants in the proper management of their MSA to ultimately protect their Medicare benefits and those of the Medicare Trust Fund. The guidance advises injured parties regarding the use of Workers’ Compensation state Fee Schedules in reimbursing providers and in properly advising Medicare as to the use of the MSA account. CMS advises that the Toolkit can help in the management of the account and “satisfy Medicare’s interests related to future medical care.” Additionally, it cautions that prior to treatment for a workers’ compensation injury a claimant “must” advise a healthcare provider of the existence of a WCMSA. CMS further suggests that bank statements and tax records should be kept as the documentation may be requested by CMS as proof that the account is administered “correctly”.

The complicated rules and extensive knowledge required to adequately identify the medical bills which are applicable to the Medicare Set Aside account preclude successful management of these funds by most Medicare beneficiaries.  When paired with CMS’ explicit and implicit warnings regarding its future interests and the potential denial of Medicare benefits based upon inaccurate or incomplete evidence of proper exhaustion, the Toolkit may cause alarm for claimants.   CMS further advises that a Medicare beneficiary seek the advice of a professional for assistance with the proper use of the MSA funds when confidence is lacking.

To simplify these requirements and ensure proper exhaustion of the WCMSA, Gould and Lamb Trust Company offers the following services:

Post Settlement Account Administration

High-touch trust and account management.

The Gould & Lamb Trust Company ensures compliance and no loss of benefits through professional administrative services for Medicare Set-Aside, Medical Custodial Accounts, and Special Needs Trust accounts. This service provides dedicated assistance, choices in management of settlement funds, and 24/7 access to account information via a secure web-based portal.

MSA Self-Administration Support Service

  • Low cost alternative to professional administration
  • Offers ongoing access to a dedicated representative offering guidance to properly disburse Medicare Set Aside funds
  • Access to discount prescription drugs, durable medical equipment (DME), outpatient services and case management
  • Assistance with CMS Annual Accounting
  • Resolution of temporary and permanent exhaustion

Professional Medicare Set-Aside (MSA) Administration

  • Preparation of professional administration agreement
  • Establishment of the MSA interest-bearing account
  • Access to discount prescription drugs, durable medical equipment (DME) outpatient services and case management
  • CMS Annual Accounting
  • Resolution of temporary and permanent exhaustion

Medical Custodial Account (MCA)

  • Preparation of professional administration agreement
  • Establishment of the medical account offering discount prescription drugs, durable medical equipment (DME), outpatient services and case management
  • Medical Account Coordination with a Medicare Set Aside account

Special Needs Trusts (SNTs)

  • Trust document preparation and professional trustee services
  • Coordination of asset management
  • Trust administration, including annual accounting to Social Security, Medicaid, the Courts and IRS, as required
  • Access to discount prescription drugs, durable medical equipment (DME), outpatient services and case management

The Global Leader in Compliance

To receive a quote for assistance with Self Administration or Professional Administration of a WCMSA or to learn more about our MSP compliance services, call 1-866-MSA-File and ask to speak with Bobbie Chasco at extension 1022.

11th Circuit Appellate Court Rules Government’s Lawsuit Untimely

Recently, the United States Court of Appeals for the Eleventh Circuit rendered its decision on United States v. Stricker et al., finding that under the applicable statutory provisions and federal regulations, the government’s action under the MSP Act accrued on October 29, 2003, when $275 million was transferred by the defendants to the plaintiffs’ lawyers. Since the government filed its lawsuit on December 1, 2009, even if the longer six-year limitations period applied, the government’s action was untimely.

For decades, from its chemical plant in Anniston, Alabama, the Monsanto Company and its predecessors—including Pharmacia Corporation and Solutia, Incorporated—allegedly produced polychlorinated biphenyls (“PCBs”), which are toxic pollutants linked to cancer and birth defects. In 1996, thousands of individuals sued Monsanto, Pharmacia, and Solutia (collectively “the PCB producers”) in state and federal courts in Alabama for injuries caused by PCBs.

Eventually, the parties reached a settlement whereby the PCB producers paid $300 million to the plaintiffs in return for their release of liability. More than six years after the PCB producers transferred $275 million to the PCB plaintiffs’ lawyers pursuant to the settlement, but before that money was distributed to the PCB plaintiffs, the government filed suit under the MSPA against the PCB producers, the PCB plaintiffs’ lawyers, and the insurance companies which furnished liability insurance to the PCB producers, seeking to recoup Medicare payments that it had made on behalf of 907 PCB plaintiffs.

The Federal Claims Collection Act provides that when an action is “founded upon a contract,” the government must sue within six years of the accrual of the cause of action. 28 U.S.C. § 2415(a). For actions “founded upon a tort,” the government must file suit within three years of accrual. 28 U.S.C. § 2415(b). As a result, the defendants moved to dismiss the government’s MSPA complaint, arguing that because the underlying cause of action related to a toxic tort claim, the three-

year statute of limitations under § 2415(b) applied to bar the government’s action as untimely. The defendants alternatively argued that, even if the six-year statute of limitations under § 2415(a) applied based upon the contract between the plaintiffs and their attorneys, the government’s action was still barred because the complaint was filed more than six years after the cause of action accrued. The district court agreed with both arguments and granted the motions to dismiss.

The events contemplated by the settlement agreement were as follows:

  • August 20, 2003: The parties agreed to a settlement.
  • August 26, 2003: The PCB producers transferred $75 million to the interest-bearing account.
  • September 9, 2003: The parties signed a written settlement agreement.
  • September 10, 2003: The state court approved the settlement agreement.
  • September 17, 2003: The PCB producers wired the additional $200 million to the interest-bearing account.
  • October 28, 2003: The PCB lawyers certified that 75% of the adult PCB plaintiffs had signed releases.
  • October 29, 2003: The PCB producers paid $275 million to the PCB plaintiffs’ lawyers.
  • December 2, 2003: The PCB plaintiffs’ lawyers certified that 97% of the PCB plaintiffs had signed releases.

On December 1, 2009, the government filed the lawsuit seeking reimbursement of conditional payments it had made.

The had government six years “after the right of action accrues” to bring an action “founded upon any contract express or implied in law or fact.” See § 2415(a). It had three years after the action accrued to bring an action “founded upon a tort.” See § 2415(b). The court found that it need not decide whether the government’s attempt to recoup Medicare payments under the MSPA after a toxic-tort settlement constituted an action founded upon a contract or an action founded upon a tort. Assuming that § 2415(a)’s six-year limitations period applies, the government’s action under the MSPA against the PCB producers, their insurers, and the PCB plaintiffs’ lawyers accrued on October 29, 2003, when the PCB producers transferred the $275 million from an interest-bearing account to the PCB plaintiffs’ lawyers. Because the government filed this lawsuit on December 1, 2009—six years, one month, and two days from when its action accrued—its lawsuit was untimely.

Interestingly, the court briefly mentioned that the recently signed legislation, (although not applicable in this case), clarifies the uncertainty concerning statute of limitations issues for MSPA reimbursement claims. The Strengthening Medicare and Repaying Taxpayers Act establishes a three-year statute of limitations for Medicare to file suit for recovery under the MSPA. See Pub. L. No. 112-242, § 205(a) (2013).

The case seems to answer many questions about the viability of conditional payment recovery actions by the federal government under the Medicare Secondary Payer Act. Medicare’s arguments are typically centered on the very broad language of the Act which, when considered alone, carries no limitations period on actions to recover funds paid by Medicare on behalf of injured Medicare beneficiaries. However, when coupled with The Federal Claims Collection Act, a cogent argument can be raised that the power of the federal government is not without limitations. As the court noted, actions accruing after the passage of the S.M.A.R.T. Act are subject to a three year limitations period. However, for all actions that ripened before the enactment of S.M.A.R.T., the arguments made by the defendants in the Stricker case have now been given deference by the Eleventh Circuit.

MSAs for Liability Cases? – CMS Publishes Timeline for Rulemaking

The Centers for Medicare and Medicaid Services recently published RIN: 0938-AR43 in follow-up to its Advanced Notice of Proposed Rulemaking, originally released on June 15, 2012 (read here). The original ANPRM solicited public comment on a proposed rule regarding  standardized options that CMS was considering making available to beneficiaries and their representatives to clarify how beneficiaries could “meet their obligations to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers’ compensation when future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care.” The document provided seven options for satisfying Medicare’s interest when settling future medical benefits as a result of an injury or accident.

According to the Federal Register, 107 comments were received. Considering the importance and far-reaching ramifications of a potential rule to codify and require the parties to consider Medicare in all insurance cases, the number of comments was startlingly low. In fact, the lack of CMS activity with regard to the rule making may signal that the issue was not pressing enough for immediate action. In fact, no response to the comments were addressed or made by CMS until the publication of the RIN. In several public appearances since June of last year, CMS officials refused to discuss the issue, advising that they were “under rulemaking.” While their position is technically incorrect as the rule was simply a proposed notice, CMS nonetheless gave many the impression that activity around the issue was not a priority.

With the release of the RIN, CMS seems to signal that they are prepared to publish a Notice of Proposed Rulemaking which would include liability insurance cases. The deadline for action, however, is listed as “9/00/2013.” Accordingly, we may be able to expect something substantive in the very near future. Presumably, CMS has digested the comments provided by those that bothered to respond. By and large, those comments either questioned the statutory authority of CMS to implement such a rule, or lamented the broken, sometimes incomprehensible workers’ compensation MSA review and approval process.

While the RIN suggests a timeline for action by CMS, it must be remembered that the suggested timeline will not be enforced by any entity other than CMS itself or the Department of Health and Human Services. Considering the slow response that CMS and HHS have exhibited in formulating and releasing Congressionally-mandated regulations to implement the newly enacted Strengthening Medicare and Repaying Taxpayers (SMART) Act, it would not be unusual to see the September deadline come and go without a proposed rule.

Certainly, CMS action on these issues and implementation of a rule requiring injured plaintiffs/claimants to formally consider Medicare’s future interests in any injury or accident case, could fundamentally alter the way claims will be evaluated, litigated and resolved particularly with respect to liability insurance claims. Gould & Lamb will continue to monitor the situation and will provide updates or comment as the situation is further defined. If you would like to discuss these issues, contact your G&L representative or call our corporate office and an executive team member will be glad to assist you.

Dangers of Pooled Medicare Set Aside (MSA) Post-Settlement Administration Funds

Post Settlement Administration of MSA

Christie Luke Vice President OperationsA MSA, created as part of the claims settlement, is designed to “reasonably consider Medicare’s future interest” as a Medicare Secondary Payer to workers’ compensation (WC) insurance (or other insurance) regarding a claimant’s post settlement injury-related medical expenses.  This is only part of ensuring a claimant’s Medicare benefits are protected.

The MSA industry has continued to expand, and the education of all involved has included the MSA creation and submission as well as the funding and administration of the funds.   Post settlement administration of MSA allocations is a very intricate part of the entire process and requires adherence to the Center for Medicare and Medicaid Services’ (CMS) rules and regulations, state and federal tax laws, and trust and fiduciary laws.

Pooling Assets Strategy

One strategy used by some throughout the industry is the ‘pooling of assets’ of various MSA accounts.  The sub-accounts are pooled into one account managed by professional money managers allowing for a higher rate of return than would be possible if funds were invested separately.  Overall, it appears to be a great scenario.  It is a benefit from an investment perspective and provides cost savings on the account management side.  This strategy has been used by banks and regulated trust companies for years.   In essence they are creating a “common trust fund”, which again, allows for more profitable investments with less risk.  And, unless the MSA Administrator is a bank, they are placing an enormous amount of risk upon themselves as well as the MSA accounts they manage.


There is another side to Special Needs Trusts involving means-tested public benefits, where income related benefits, SSI/Medicaid, may be involved.  These individuals are entitled to Medicare Part A and/or Part B and are eligible for some form of Medicaid benefits.  They have a limited income and if eligible, may receive assistance with their out-of-pocket medical expenses from their state Medicaid program.  For those who are eligible for full Medicaid coverage, the Medicaid program supplements their Medicare coverage by providing services that are available under their states Medicaid program. Services that are covered by both will be paid first by Medicare and the difference by Medicaid.  Therefore, in order for beneficiaries with “dual eligibility” to maintain their SSI/Medicaid benefits the MSA must be set up appropriately.

Pooling assets for purposes of investment or operational cost savings seems like an alluring option.   However, there are dangers of administrating MSA accounts in this fashion by non-banking professionals. Non-banking professionals are exposed to financial loss and claimants are exposed to potential loss of their Medicare benefits.

About the Author: Christie Britt, nee Luke, is the Vice President of Operations overseeing the extensive operations of Gould & Lamb.   She has vast knowledge of Medicare Set Asides and Post-Settlement Administration from an insurance claims perspective. Christie is MSCC certified and has her Green Belt Certification in Six Sigma.  She is also a member of the National Association of Medicare Set Aside Professionals (NAMSAP) and the Workers’ Compensation Claims Professionals (WCCP).

Gould & Lamb is a global leader of MSA/MSP Compliance Services in the country, serving domestic and international insurance companies, third-party administrators and self-insured entities.

Zero Allocation in CMS Submissions

When Is a Medicare Set Aside Required?

Russell S whittle, Esq VP MSP ComplianceRecently, Gould and Lamb has seen an increase in requests for submission to the Centers for Medicare/Medicaid Services CMS of “zero allocations.” Essentially, the parties to a workers’ compensation case that is either completely contested or where a portion of the claim is disputed believe that evidence or argument can be presented that will result in Medicare’s future interests being quantified as having no value. CMS acknowledges that there are, indeed, circumstances where Medicare’s interests are not at issue and, therefore, the parties are not required to establish a Medicare set-side arrangement.  CMS also recognizes, however, that there are many situations wherein the parties believe that a workers’ compensation zero allocation is warranted, but in fact it is not.

Two Types of Workers’ Compensation Claim Settlements

Medicare has identified two types of settlements in workers’ compensation cases.

One - No future medical care is anticipated based upon the compensable injuries or accident. The second is presented where only the past medical exposure or treatment is the subject of the settlement. Medicare recognizes the second scenario as a “compromise” case. As Medicare is not exposed for future medical care or services and because medical care remains “open” the establishment of an MSA is not necessary. In its policy Memorandum dated April 22, 2003, CMS advised that in true compromise cases, a Medicare Set Aside MSA is not necessary when all of the following factors were present:

  • The facts demonstrate that the injured individual is only being compensated for past medical expenses.
  • There is no evidence that the individual is attempting to maximize the other aspects of the settlement to Medicare’s detriment, and
  • The individual’s treating physicians conclude (in writing) that, to a reasonable degree of medical certainty, the individual will no longer require Medicare-covered treatment related to the workers’ compensation injury.

Clearly, even where medical benefits are not the subject of a claim settlement, the documentary evidence to be presented to Medicare can be extensive as all of the above elements must be satisfied.

Two - The future medical component of a case is resolved as a portion of the settlement fund but where there is evidence that Medicare’s interests are not at issue as no future medical care is reasonably anticipated. These “commutation cases” raise issues of fact and law that make the analysis by the submitter and the CMS reaction to that analysis, critical.

For commutation cases where evidence or legal arguments are utilized to demonstrate that Medicare’s interests are not at issue (and therefore that a CMS zero allocation is warranted) we normally see either an argument concerning the relatedness of treatment to the accident or a legal argument that questions the availability of medical benefits as a matter of law. Gould & Lamb has found that, in Medicare’s inquiry regarding the medical necessity of continued care is centered upon the reports and finding of the treating physician. The opinions of the treating provider will, in most instances, be considered persuasive to CMS. If the reports and physical findings show clearly that the condition or need for care is unrelated to the accident or its sequlae, a zero allocation may be approved. In contrast, if the opinions and findings to support the zero allocation are primarily based upon a records examination of an independent or court ordered evaluator, this evidence seems much less likely to provide the medical support needed for a zero finding by CMS.

Zero Allocation CMS SubmittalLegal arguments regarding the availability of treatment in a commutation case in order to support a workers’ compensation zero allocation, many times, include the running of the statute of limitations, that the individual was not within the course and scope of employment at the time of the injury and/ or myriad other defenses. Medicare has consistently advised that they will respect an evidentiary order as binding on these types of issues. The order must be truly evidentiary, however. Gould and Lamb has seen CMS disregard transcripts of a settlement hearing because no evidence was presented other than the testimony of the parties as to their desire to settle. Certainly, the CMS desire for evidentiary orders seems inconsistent with the overriding desire of the parties to settle case without resorting to the judicial process. Nonetheless, CMS guidance is clear that only hearings where evidence was presented, argument made and an order entered will be considered persuasive support for a zero allocation.

Commutation Cases Require Submitter to Present Both Legal and Medical Analysis

Because the majority of requests for zero allocations are commutation case where both legal and causation arguments are made, the submitter must present both legal and medical analysis if the zero allocation is to be accepted by CMS. CMS has routinely approved zero allocations in commutation cases where a cogent, well supported argument is made which recognizes and incorporates the evidence and positions of the parties with regard to the overall compensability and necessity of the need for care. In the absence of an evidentiary finding, a zero allocation must, in effect, be presented as to leave little doubt regarding the legal and medical underpinnings of the failure to allocate future care dollars. When properly presented, zero allocations should include relevant medical evidence as well as an analysis of the applicable state statutory requirements and the particular factual scenario presented in the case. When including other evidentiary factors including interrogatories, depositions and medical findings, a persuasive document can be created which can significantly increase the probability that a zero allocation will be accepted by CMS and that the parties can proceed with settlement with confidence. Gould and Lamb prepares each zero allocation utilizing our team of legal, medical and claims professionals to maximize the potential of CMS approval of what is, in essence, a legal/medical argument whose form and content are crucial to successful resolution of a disputed claim.