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.

In-House and Outside Defense Counsel’s Need for MSP Education

According to the latest Social Security Old Age, Survivors, Disability Insurance and Medicare and Medicaid Trustees Report, despite the most recent legislative reforms, Medicare is still in both short term and long term financial distress. As a result, the Centers for Medicare and Medicaid Services (CMS), the federal agency which oversees the day-to-day administration of the Medicare system, has stepped up its enforcement of the Medicare Secondary Payer (MSP) Act. Resulting from amendments to the Act in 2003 and 2007, parties settling no-fault, workers’ compensation and liability cases must consider Medicare’s interests. Consequently, in-house corporate counsel and outside defense counsel have had to learn MSP basics.

MSP Education is Essential

However, in order to appropriately represent the insured and insurer’s interests, it is no longer sufficient just to know the basics of the MSP Act. It is time that all in-house corporate and outside defense counsel become significantly aware of mandatory insurer reporting requirements, the conditional payment reimbursement process, and learn how to determine whether a Medicare Set-Aside is appropriate. In order to assist with this endeavor, Gould & Lamb, the country’s premiere and most trusted corporate MSP compliance partner, has put together a 2-day comprehensive program focusing on mandatory insurer reporting, resolution of conditional payments, and Medicare Set-Aside allocations, approval, and administration.

2-Day MSP Conference

The program will:

Introduce those in attendance to the purpose of the mandatory insurer reporting process and will also discuss in great detail Responsible Reporting Entities (RRE) requirements when submitting information on a quarterly basis to CMS. Gould & Lamb experts will share their knowledge and experience in assisting RREs to submit information electronically on liability insurance (including self-insurance), no-fault insurance, and workers’ compensation claims where the injured party is a Medicare beneficiary.

Offer in-depth analysis of Medicare conditional payments, payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Because primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, Gould & Lamb experts will share their years of expertise in dealing with Medicare’s direct right of action against all primary payers responsible for making such payments, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.

Explore the intricate details of Medicare Set Asides (MSA). From situations where claimant is a current Medicare beneficiary at   the time of settlement, to instances where the claimant is not yet a Medicare beneficiary, but can reasonably be expected to become Medicare-eligible within 30 months of the settlement, Gould & Lamb experts will discuss when and how Medicare expects its interests will be taken into account. The program will include specific presentations on how to arrive at a reasonable allowance for the future projected costs, and what may happen if such an allowance is not made in the form of an allocation or set-aside arrangement for future medicals.

Provide great insight on MSA administration and Special Needs Trusts (SNT) administration. Gould & Lamb experts will share their years of experience administering MSA accounts, making sure such funds are in fact only used to pay for claim related medical care, that Medicare would otherwise approve or cover, at the correct fee schedule. The program will also offer valuable information when dealing with Medicaid recipients, and the necessity for establishing and administering a SNT to protect claimant’s future Medicaid eligibility and thereby reduce insured and insurer’s potential liability exposure.

For more information on the Medicare Secondary Payer Educational Conference hosted by Gould & Lamb , visit the Event Homepage.

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About the Author: Rafael Gonzalez is Director of Medicare Compliance & Post-Settlement Administration. He brings over 20 years of experience in the Workers’ Compensation and Liability insurance industries with a specific focus on Medicare Compliance. Rafael has been responsible for all areas of Medicare Set Aside Allocations (MSAs) including the preparation of MSAs and their approval by the Center for Medicare & Medicaid Services.  At Gould & Lamb, Rafael’s duties include assisting clients with Medicare Compliance issues, specifically on Post-Settlement Administration and client education.

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.