Amidst the NPRM chatter on Medicare Set Asides (MSA), with an October action date in the horizon, this is an opportune moment to calmly deliberate on key indicators.
There are two kinds of MSA funding structures: lump sum or structure. Generally, MSAs that are lump sums are easier to monitor than structure arrangement because Medicare will not make any payments for related conditions until all funds including earned interest have been completely exhausted. In a structure arrangement, where the agreed-on funds are paid from an initial deposit and subsequent deposits in regular installments over a given period of time, if the fund is exhausted appropriately in a given annual period, then Medicare will pay primary for further related conditions during that period. See CMS’ WCMSA Reference Guide, Version 2.9, Ch. 5.0: Sections 5.1 – 5.2; and Ch. 19.0: Section 19.3.2. (January 4, 2019, COBR-Q1-2019-v.2.9). Commentators note that CMS demonstrates “outright dislike” over structured MSAs due to the administrative burden of possibly extending coverage during a period of temporary exhaustion between installments outweighing the possibility of securing funding from misappropriation or unrelated expenses. See Jordan, The Complete Guide to Medicare Secondary Compliance, Ch. 4, §4.04 (Matthew Bender).
Regardless of the vehicle, CMS “highly recommends” that the MSA funds be professionally administered. Moreover, CMS states claimants may self-administer their own MSA, if State law allows. CMS WCMSA Ref. Guide, V. 2.9, Ch. 17.0: Section 17.1. Professionally administered MSAs could be held in trust and subject to a written agreement between the claimant and administrator which sets forth in great detail the material terms and conditions needed for creating and controlling the use of MSA funds over the claimant’s lifetime. For example, the contractual provisions governing relations between claimant and administrator would include obligating the transfer of funds, cooperating with medical claims and accounting submissions, paying claims and satisfying reimbursements, allocating discretion among principle and income, reporting and recordkeeping to CMS, compensating the administrator, terminating the MSA, and other matters relating to the contract. Though CMS’ reasons are not plainly apparent, its endorsement clearly suggests that MSA self-administration by the most competent claimant or beneficiary is not advised or suitable even under ordinary circumstances and, perhaps, self-administration is better proscribed unless the right is explicitly permitted by State legislation.
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