For TPAs who offer or are considering MSA administration, here is an overview of Medicare Set Aside accounts.
Navigating the ins-and-outs of Medicare billing can present real challenges for healthcare TPAs – especially when it comes to Medicare Set Aside (MSA) regulations.
When a person eligible for Medicare receives a personal injury settlement, the Centers for Medicare and Medicaid Services (CMS) wants to make sure their dollars are protected when paying for medical expenses related to the injury. The CMS-recommended process for doing this is to establish a Medicare Set-Aside (MSA) account.
An MSA is a trust account designed to hold the portion of settlement proceeds that are allocated to pay for the claimant’s future medical expenses. The funds can only be used to pay for approved medical expenses related to the injury, and Medicare won’t begin paying for further treatment until those funds have been exhausted. This protects Medicare’s interests as a secondary payer, and helps ensure the settlement funds are used appropriately.
Who is Eligible for an MSA?
CMS does not require TPAs or individuals to establish an MSA after an injury settlement. However, CMS does require that everyone involved consider its interests at the time of settlement. Otherwise, CMS could take action against any party deemed to have acted against their interests.
A properly administered MSA is widely used as a method of considering Medicare’s interests. Although not mandated by CMS, an MSA provides an effective tool for protecting the interests of all involved.
CMS also has a preferred submission process for MSAs. Before the account is established, CMS will review the MSA and either agree or disagree with the set-aside amount. The submission process is voluntary, but also provides evidence of considering CMS’s interests in the settlement.
MSA Rules and Regulations
To ensure that the settlement money allocated to medical expenses is appropriately used, CMS requires detailed record keeping and reporting of the account. There are also restrictions how the money can be spent.
For example, MSA funds must be kept in a separate interest-bearing account. All funds, including interest, can only be used to pay for medical expenses covered by Medicare. The funds can only pay the Medicare-approved price for each expense, and all payments must be accurately reported.
Most important, all MSA funds must be fully spent before Medicare will begin paying for any eligible medical expenses related to the injury.
Workers’ Compensation Medicare Set-Aside Allocations (WCMSA)
In a WCMSA, CMS estimates all future medical expenses related to an on-the-job injury, and that amount goes into the MSA to pay for medical expenses normally covered by Medicare. CMS does not require the establishment of a WCMSA, but it strongly encourages them if:
- The claimant is eligible to receive Medicare and the workers’ comp settlement exceeds $25,000, or
- The settlement exceeds $250,000 and the claimant is likely to become eligible for Medicare in the future
CMS considers it likely that claimants will become eligible for Medicare if they are 62.5 or older when receiving the settlement, or if they have filed or plan to file for Social Security disability.
The Importance of Professional MSA Administration
Improper MSA administration, including paying for non-allowable expenses or paying more than the Medicare-approved price for a treatment, can blemish your reputation as a TPA and cause serious consequences for the claimant. These include:
- Mandatory repayment of funds used for unapproved expenses
- Denial of injury-related medical bills until all improperly spent funds have been repaid
- Putting the claimant’s future entitlement to injury-related Medicare benefits at risk
Enhancing MSA Usability
One way TPAs can help MSA claimants get more out of their settlement dollars is through a partnership with a platform provider/card processor and a pharmacy benefit manager (PBM).
An experienced administrative platform provider, who offers an account-linked debit card, can be very beneficial for claimants. Some providers have online tools (or repositories) that help with receipt keeping, which comes in handy during CMS reporting. In addition, many offer debit cards. For account holders, rather than filing claims for reimbursement, the debit card offers them instant access to their account funds. In addition, with inventory (IIAS) and merchant code (MCC) restrictions on the card, managing MSA dollars is easier and can help with compliance so as to not risk jeopardizing Medicare benefits.
TPAs should also consider forming a PBM partnership. PBMs offer discounts when account holders use a pharmacy within the PBM’s network. Prescriptions and other medical care related expenses are costly; this type of arrangement not only helps claimants get more for their money, but it also helps look out for the best interest of Medicare.
For TPAs who are considering offering MSA administration services, knowing CMS rules and regulations for compliance, record keeping, and reporting, is essential. It can also be very helpful to partner with an administrative platform provider to help your clients manage their funds and make it easy to access them.