CMS Publishes Self Administration Toolkit for WC Medicare Set Asides

Insurance LawOn March 21, 2014, CMS published its first Self Administration Toolkit for Workers Compensation Medicare Set Aside Arrangements (WCMSA). CMS had previously provided significant leadership on WCMSA administration matters through the several Policy Memos and Reference Guide it had published over the preceding 14 years. However, this was their first attempt at focusing on self administered WCMSAs, providing suggested or recommended letters and forms to be used throughout the process.

On January 5, 2015, CMS published a new, amended version 1.1 of the Self Administration Toolkit for WCMSAs. The Toolkit is broken down into 14 sections: Introduction, Setting Up the WCMSA Bank Account, How Your MSA is Funded, Using the Account, What to Tell Your Health care Providers, reviewing and Paying Your Bills, Keeping Records, Annual Attestation, Reporting Changes, Inheritance, Where to Get Help, Letters and examples, and Glossary.

Section 1, Introduction, makes it clear that a Medicare beneficiary may self administer his or her WCMSA. If so, the Toolkit will help him or her manage the account appropriately, satisfy Medicare’s interests related to future medical care, and assure Medicare will pay for future costs when the WCMSA is exhausted or depleted.

Section 2, Setting Up the WCMSA Bank Account, indicates that the beneficiary must deposit the WCMSA money in its own account, separate from any other accounts he or she may have. The account must be an interest bearing account, insured by the Federal Deposit Insurance Corporation (FDIC).

Section 3, How Your WCMSA is Funded, provides that the WCMSA may be funded either lump sum or structured. If structured, the first check should cover the first 2 years of treatment. All monies, whether paid lump sum or structured, should be deposited into the WCMSA account.

Section 4, Using the Account, outlines what medical and prescription expenses can be paid out of the WCMSA account. As has been communicated by CMS previously, WCMSA account funds can only be used to pay for medical treatment and prescription drugs related to the WC injury that are Medicare covered.

A beneficiary may also use the WCMSA account to pay for cost of copying documents, mailing fees and postage, any banking fees related to the account, and income tax on interest income from the account.

A beneficiary may not use the WCMSA account to pay for fees for trustees, custodians, or other professionals hired to administer the account, expenses for administration of the WCMSA, attorney costs for establishing the WCMSA, and Medicare co-payments and deductibles.

Section 5, What to Tell Your Health Care Providers, advises the beneficiary to notify his or her health care providers about the WCMSA so that such providers bill the beneficiary directly, and the beneficiary is then able to pay such bills out of the WCMSA account.

Health care providers may bill for medical care at full actual charges, or work comp fee schedule, depending on how the WCMSA was set up. Prescription medications should be billed based on Red Book Average Wholesale Price.

If a health care provider bills Medicare for work related treatment, the health care provider is responsible for refunding any payments received from Medicare for bills related to the treatment of the work comp injury. Such bills may then be paid to the health care provider from the WCMSA account.

Section 6, Reviewing and Paying Your Bills, reminds beneficiaries that they should review health care provider bills to make sure they are billing only for those items and services related to the WC injury and covered by Medicare.

Section 7, Keeping Records, makes it clear that the beneficiary needs to keep clear and accurate records of everything done with the WCMSA account, as these records will be used to determine if account funds were spent properly.

It is recommended that the beneficiary keep track of transaction date, check number, health care provider name, date of service, description of service, amount paid, deposit amount, and account balance.

Although beneficiaries should keep itemized receipts or proof of each payment, bank statements, and tax records, he or she will not submit these annually unless Medicare request such proof.

Section 8, Annual Attestation, requires the Medicare beneficiary to send an attestation every year, no later than 30 days after the anniversary date of the WC settlement, to Medicare Benefits Coordination & Recovery Center (BCRC) stating that the WCMSA funds were used appropriately.

The attestation must include the total spent for medical services, the total spent for prescription drugs, grand total of expenditures, total of interest income the account earned, and the balance of the WCMSA account at the end of the calendar year.

When the WCMSA account has no money left in it and there are no further deposits expected, the account is depleted or exhausted. Within 60 days of such depletion, the beneficiary must send the BCRC a final attestation letter indicating that the account has been completely exhausted. If Medicare is satisfied that the WCMSA funds have been spent appropriately, Medicare will pay for future treatment related to the work injury.

Section 9, Reporting Changes, reminds beneficiaries that if they move, he or she should send the new address to the bank that holds the WCMSA funds. If beneficiaries do not feel confident administering the WCMSA, they may seek advice from a lawyer or organization, or may appoint a representative to administer the account.

If for whatever reason Medicare entitlement is lost, the WCMSA funds may not be released, as such funds may be only be used to pay for future medical care related to the claim until exhausted.

Section 10, Inheritance, indicates that if death occurs before the WCMSA account is exhausted, the estate must pay for medical services provided before death so long as such expenditures are related to the work comp claim and are Medicare allowable. If there is money left after all bills are paid, the funds may be distributed according to the last will and testament, the settlement agreement, or state inheritance laws.

Section 11, Topics Unique to Structured WCMSA Accounts, provides that if there are structured funds left at the end of the year, such funds must remain in the account and carried forward to the following year, so that the beneficiary will then be able to use all funds to pay for medical care related to the WC claim.

If there is excess money any year thereafter, those funds must be carried forward too, on an ongoing basis, until all funds accumulated over the beneficiary’s life are appropriately used up, or inherited upon beneficiary’s death.

If however funds run out before the next structured payment or deposit is received, the beneficiary must send an attestation letter to the BCRC indicating that the account is temporarily depleted. The beneficiary should communicate this to his or her health care provider so they can then send the outstanding bills to Medicare until the next annual deposit to the WCMSA account is received.

If not yet a Medicare beneficiary, but have other insurance, the beneficiary should submit such bills to that insurance to pay for the WC injury until the WCMSA is funded again. If there is no other insurance, the beneficiary will have to pay out of pocket for such bills until the WCMSA is funded again.

Section 12, Where to Get Help, provides telephone numbers and web sites to assist beneficiaries with this process.

Section 13, Letters and Examples, offers sample documents and letters on all components of the WCMSA administration process, including letters for medical providers, pharmacy providers, lump sum annual attestation, exhausted lump sum account, structured annual attestation, temporary exhaustion structured attestation, permanent exhaustion structured attestation, and transaction record.

Section 14, Glossary, introduces terms and definitions commonly used or found throughout the WCMSA administration process.

The toolkit can be found at Accurate and proper administration of WCMSA funds is key to the success of the MSP program. It is clear, based on these latest attempts by CMS, that administration of WCMSAs is becoming a more significant component of the larger and always evolving and complex landscape of MSP compliance. As a result, adherence to these rules is highly encouraged.

29106aeRafael Gonzalez is Vice President of Strategic Solutions at HELIOS in Tampa, Fl. HELIOS is a national leader in MSP settlement solutions, including Mandatory Insurer Reporting, Conditional Payment Resolution, and Medicare Set Asides. HELIOS is the only national MSP compliance company providing pharmacy, medical providers, and durable medical equipment services as part of its MSA Professional Administration program services, thereby offering comprehensive, total-care solutions that mitigates risk and controls costs throughout the lifecycle of the claim. You may contact Rafael at, or at 813.612.5592.

1 thought on “CMS Publishes Self Administration Toolkit for WC Medicare Set Asides”

  1. I am not sure I understand how a beneficiary can assure that prescription providers are billing based on Red Book AWP (Section 5). A subscription to that product would be required.

    Also, in my read of Section 5 of the Self Administration Toolkit, I did not see any mention of Red Book. Are you relying on a different source for your insights?

    Thank you!

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