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Helping Applicants Administer their
Medicare Set-Aside Accounts


By Steve Chapman and Gregg Chapman, Esq.

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Steve Chapman and Gregg Chapman, Esq. specialize in structured settlements of workers’ compensation cases. In this article they discuss self administration of MSAs.

For more information on structured settlements and the structure broker’s role, see:

 
 
This article is about Medicare Set-Aside (MSA) Self Administration Assistance Programs. These programs provide support services to help Applicants who choose to self-administer their workers’ compensation MSA accounts. They are provided by vendors who charge a fee based on how long the Applicant would like to use their services, typically, one, three or five years. While these programs have been around for a while, recent technological advancements and competitive pricing have made these a cost effective option for those administrators who could use some help in complying with the Centers for Medicare & Medicaid Services (CMS) requirements.
 
Self Administration Assistance Programs provide support services to Applicants who choose to self-administer their workers’ compensation MSA accounts.
It is important not to confuse these Self Administration Assistance Programs with vendors that provide Professional Administration of MSAs. CMS offers the Applicant the choice of administrating their own MSA account (unless they have been deemed incompetent or have been assigned a Representative Payee) or hiring a 3rd party to professionally administer the MSA. A professional administrator sets up a custodial account where the MSA funds are deposited. This administrator then has the responsibility to manage those funds according to CMS requirements. The cost for professional administration depends on the size of the MSA and can run up to $2,000 per year for the life of the applicant. It has been estimated that professional administration accounts for only about 5% of all MSAs.

 
CMS offers the Applicant the choice of administrating their own MSA account (unless they have been deemed incompetent or have been assigned a Representative Payee) or hiring a 3rd party to professionally administer the MSA.
 
Self Administration Assistance Programs were created to offer help to the other 95% who are managing their own MSA accounts. In order to determine if an Applicant might want this service, it is important to understand what CMS expects from an administrator. CMS requirements include:
  • MSA funds must be placed in an interest-bearing account, separate from your personal savings or checking account
  • MSA funds may only be used to pay for medical services and prescription drug expenses related to your work injury that would normally be paid by Medicare.
  • The administrator must keep accurate records of payments from the MSA account. These records may be requested by CMS as proof of appropriate payments.
  • Accounting for income tax on interest earned from the set-aside account as well as banking fees, postage and copying charges.
  • If payments from the MSA account are used to pay for services other than Medicare-allowable medical expenses related to medically necessary services and prescription drug expenses, Medicare will not pay injury related claims until these funds are restored to the MSA account and then properly exhausted
  • Annually, the administrator must sign and forward a copy of the attestation form, which states that all payments from the MSA account were made for Medicare-covered medical expenses and Medicare-covered prescription drug expenses related to the work-related injury, illness, or disease.
  • An annual accounting shall be submitted to the Medicare lead contractor each year.

Some of these requirements might initially seem overwhelming to certain applicants who are administrating their own MSA account. For example, if one has never balanced a checkbook, they might be worried about creating an annual accounting. Additionally, there are literally hundreds of services, items and drugs that Medicare does not pay for. As the Administrator, the applicant must know what is not covered by Medicare so that MSA funds are not used to purchase any of these. The Applicant must also be able to follow the California workers’ compensation fee schedule. Thus, an assistance program that can provide the answers and educate the Applicant on these issues might be the solution for certain self administrators.

 
95% of applicants manage their own MSA accounts.
There are a number of vendors that provide MSA Self Administration Assistance Programs. Most of the larger MSA companies offer this service as well as some of the vendors providing Professional Administration. Additionally, some vendors provide only this service. Not all of these programs offer the same services and they charge different rates. The typical fee is $700 for one year, $1800 for three years and $2500 for 5 years. The services that I think are most helpful to an administrator seeking assistance include:
  • Unlimited phone support. Nothing beats getting on the phone with an expert and getting the answer to your question immediately. “Can I pay for my hearing aid out of my MSA account?; My doctor charges more than CA WC fee schedule for an office visit, can I pay the entire amount from my MSA account?; My doctor wants me to have a surgery that is related to my injury, but it was not included in my MSA allocation, can I pay for it out of my MSA account?” These questions and hundreds more will regularly come up. Having access to an expert that will give an immediate answer makes administration much easier.
  • Customized webpage created by the vendor where the administrator can track everything related to their MSA account. This technological advance makes tracking expenses and accounting easy for the Applicant. The vendor also places the MSA and other settlement documents on the webpage for easy access.
  • Assistance with Medicare’s annual reporting requirements
  • Assistance in paying medical bills at proper fee schedule rates
  • Access to bill review services
  • Online access to pharmacy and medical equipment service programs linked to your MSA
  • CMS updates and alerts
  • Instructional guidance and links to state and Medicare fee schedules
  • Techniques for insuring the MSA only pays for proper treatment and at the appropriate rate
  • Tools for filing annual and final accounting reports and attestation forms for Medicare
 
Not all of these programs offer the same services and they charge different rates.
 
In conclusion, Self Administration Assistance Services were created to provide short term help to applicants that might not be able to manage their MSA accounts per the CMS guidelines on day one. These programs will show the applicant how to set up their MSA accounts, how to pay the provider the appropriate fee, how to properly account for the funds, how to complete the required paperwork and how to notify CMS when the MSA account is exhausted. Many applicants just use this service for one year and then have the tools and the confidence to administer their account on their own. Others might sign up for a three or five year program before they master their duties. While the CMS self administration requirements at first glance don’t seem too complicated, the difficulty in getting answers from CMS when questions do arise make this alternative source of assistance attractive.

 
These programs will show the applicant how to set up their MSA accounts, how to pay the provider the appropriate fee, how to properly account for the funds, how to complete the required paperwork and how to notify CMS when the MSA account is exhausted.
 
Steve Chapman has been a structured settlement specialist for more than 24 years. For the past 17 years, he has specialized in workers’ compensation structured settlements. He has appeared at every Appeals Board throughout California.

During the past 5 years, he has participated in settlements totaling over $1 billion. Mr. Chapman strives to remain current on all issues affecting the settlement of the case, including Medicare set-aside allocations, life care plans, medical cost trends, Long Term Disability, and Social Security issues.

To contact Steve Chapman:
Steven F. Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Cell: 310-480-5742
Email: SettleMan@aol.com
 
 
Gregg Chapman has been a member of the State Bar of California for twenty years. Over the last eight years, he has worked for two of the largest national MSA vendors in various positions including General Counsel, National Sales Manager and Director of MSA Education. He has provided hundreds of presentations on all topics regarding Medicare Set-Asides to the insurance industry and attorney associations across the country.

To contact Gregg Chapman:
Gregg Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Email: greggchap@aol.com