“Do Medicare Set-Aside Accounts (MSAs) have to be professionally managed” is a question I get with some regularity now that I work for a company in the business. I’ve tried to think of a clever way to answer the question with an affirmative response and have the answer be accurate. I’ve been at a loss to do that. So, the correct answer is, no, you do not need a professional manager. I then explain there are many things in life that are best left to a professional.
Over the years I have been asked if an individual should handle a legal matter on their own. My uniform answer has always been even in the simplest case there are risks, many not obvious, that are best managed by someone schooled in the law. Should an individual manage an IRS audit personally? I’ve always been told by accountant friends, it is possible, but ill-advised. An untrained individual might do or say something that triggers more serious audit inquiries than were originally anticipated. Should a homeowner with no training in electricity troubleshoot and attempt to fix a problem causing electrical outages in a private dwelling? This is not the law, or the tax code, it is however an area where a simple oversight could have major consequences leading to a personal injury or property damage. My point with these examples is that sometimes things appear to be much simpler at first blush than they ultimately turn out to be. I know personally, and we know as a company, that injured workers who settle their cases and elect to self-manage sometimes find themselves in trouble after settlement.
An obligation an MSA manager, professional or not, as an individual, is to pay for medical services consistent with an existing state fee schedule. This requires a level of knowledge beyond that possessed by the average medical consumer. Medical billing is a world unto itself. It requires a knowledge of things like Common Procedural Technology (CPT codes), or numbers assigned to every task and service that a medical practitioner provides to a patient including medical, surgical and diagnostic services, and knowledge of medical diagnosis.
It also requires a level of medical sophistication when dealing with billing staff that again is not possessed by the typical medical consumer. This was recently made clear to me in my own household. My wife underwent a surgical procedure requiring an overnight stay. The hospital and provider bills were sent to her and to our health insurance carrier. She is a careful consumer, so she reviewed the bills and found several obvious errors. She called the hospital and spoke with individuals in the billing department to correct the errors. She was singularly unsuccessful until she demonstrated she could speak the arcane language of a medical biller and told the person she was speaking with that she was a physician. It became clear to her that the bill was not going to be modified in any fashion unless a compelling argument could be made. She was equipped to make the argument. Could the typical injured worker make the compelling argument if there was a billing error which lead to higher costs? I suspect not.
CMS must be sensitized to the difficulty individuals have personally managing an MSA. In their Medicare Set-Aside Reference Guide they observe in section 17.1, “Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.” In the most recent Guide, one dated October 10, 2019, CMS added a stronger recommendation for claimants settling with an MSA who are prescribed certain medication. That Guide provides at section 17.1, “CMS highly recommends professional management administration where a claimant is taking controlled substances that CMS determines are ‘frequently abused drugs’ according to CMS’ Part D Drug Utilization Review (DRU) policy.” These CMS directives send a clear message on their thoughts on self vs. professional management.
“Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”
We have learned is some jurisdictions’ Administrative Law Judges are aware of the obligations post-settlement a claimant has to CMS if the settlement involves an MSA. Settlement terms are carefully scrutinized, questions are being asked about post settlement management of the MSA and in some instances, if professional management has not been arranged the settlements are not being approved. State Workers’ Compensation systems are charged with protecting the interests of parties to a claim. Professional management is seen as an extension of that obligation when a claim settles with an MSA.
So, can you settle a case involving an MSA without professional management? The answer is still yes, but, the better question is, is it a wise idea to do so? The answer to that question from a CMS and regulatory perspective, is that it is likely not a good idea.
Interested in learning how to determine the best approach to address MSAs with injured parties in the settlement process? Check out our blog, ‘8 Questions from Attorneys about Medicare Set Aside Administration.’