There are many Injured Workers who are on Medicare or are considered as Medicare-Eligible.  Many of these Injured Workers wish to settle their workers’ compensation cases via a “Compromise and Release” settlement.   This type of a settlement is generally considered as a “buy out” of the claims and as a “buy out” of the Injured Workers entitlement to “lifetime medical” care paid for by the workers’ compensation insurance. In these circumstances, Medicare’s interests need to be addressed when there is a settlement. Medicare Set-Asides is the means upon which the interests of Medicare are considered.

This article is a Part II, of a prior article on Medicare Set-Asides.   This article discusses the “nuts and bolts” that are to be contained within the MSA.  To achieve this goal, Life Care Plans, Future Medical Care Plans, Prescriptions Drugs, and Life Expectancy will be discussed.  If you are interested in the Part I of the article, click here.

What is a “Life Care Plan” for MSA Purposes?

“A “Life Care Plan” is a dynamic document based on published standards of practice, comprehensive assessment, data analysis, and research that provides an organized concise plan for current and future needs with associated costs for individuals who have experienced catastrophic injury or have chronic health needs. A life care plan is appropriate when the claimant’s injury or disease is extensive and serious, e.g., paraplegia, quadriplegia, brain damage. Although submission of a life care plan is optional, you are required to include drug and dosage lists. Include all pricing charts, cost projections, pricing information, and explanatory narratives and analyses.” [emphasis added]  Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

Note: Irrespective of the Medicare Issue, the parties in catastrophic injury or chronic health need case may utilize Life Care Plans to assist in resolving cases.   They are not exclusive to the development of a MSA.

What Types of Reporting is included in a “Life Care Plan”?

“When the parties to a WC settlement present CMS with “life care plans” or similar evaluations prepared by non-treating physicians to support and justify their proposed WCMSAs,

Medicare will consider accepting such evaluations if the physician does all of the following:  Examines the claimant; Reviews the claimant’s medical records; Contacts any of the claimant’s treating physicians (if applicable); Is available to answer CMS’ questions; Prepares a report that summarizes the above; and Offers a written medical opinion as to all of the reasonably anticipated future medical needs of the claimant related to the claimant’s work injury or illness/disease.   Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1 [emphasis added]

Note: Non-physicians frequently draw up “Life Care Plans.”

What is a “Future Medical Care” Plan?

In cases where there is not a catastrophic injury or one with chronic health needs, there is still the need to provide a Future Medical Care Plain.

“A Future Treatment Summary lists all expected care by type, level, frequency, cost per event, and total for all expected future medical and pharmacy care. A Future Treatment Plan is required in the absence of a Life-Care Plan. Future Treatment Summaries do not require the same stringent evaluation as a Life Care Plan; however, they delineate the treatment care pricing expectations by the submitter for the purpose of WCMSA calculation. The Future Treatment Summary gives the WCRC some insight into the pricing methods used by the submitter, and should not be construed to carry the same weight as treatment records or Life Care Plans.” Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1 [emphasis added]

Note: These Plans address “expected” care.   This may not be a realistic picture of the individual.  For example, no one would expect a post-surgical infection and need for hospitalization.   This can be a large cost but would not be considered as expected.   Also, someone with comorbidities, i.e. diabetes, which may complicate treatment.  This may not be considered within this framework as expected as well. In sum, the MSA may not be an “accurate” assessment of one’s care cost.   Rather, it is merely an “expected” assessment.

Does CMS Accept MSA Plans on Face Value?

No. CMS will not necessarily accept a plan based upon the fact that it was prepared and is in the correct format

“Please note that such a life care plan or evaluation is not automatically conclusive. The CMS may not credit the report if there is information that calls the evaluation or plan into question for some reason, such as contrary evidence, internal conflicts, or if the plan is not credible on its face.Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1 [emphasis added]

Note:  Either by mistake or intentionally, there may be some intent to skew a MSA to lower the amount.  These attempts may be flagged by CMS and there may be a need to increase the MSA amount.   To be fair, there have been times where carriers have provided for treatment monies beyond which may have been required. This is done where they have provided for treatment which was not necessarily to be considered as “expected.”

Should MSAs also Address Applicant’s “Current Treatment” for Their Industrial Injury?

Yes. Current treatment information needs to be provided within a MSA.

“Current Treatment Provide the treatment/services that the claimant regularly receives. The current treatment should give an indication that the work-related condition is stable (or at least is not getting worse).” .Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

The summary of current treatment should be supported by a minimum of two years of medical documentation and a comprehensive payment history from the WC Carrier (including indemnity payments). See Section 10.7 for details on medical records submission. If the work-related injury occurred less than two years from the date of the WCMSA submission, supporting medical documentation should date back to the date of the work-related injury. Also note any relevant past treatment, such as surgery, that the claimant may have undergone.” .Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1 [emphasis added]

Note: The “two years” part of this statement is important.   In order to complete and get an MSA approved, the gathering of an Injured Workers treatment and pharmacy records from all providers, industrial and non-industrial, is important to get a MSA completed and approved.

How Is Future Treatment Determined?

Future Treatment is determined as follows:  “[d]etermine the cost of future medical expenses and prescription drugs that are directly related to the injury or illness suffered by the worker. This amount can be determined by reviewing medical records and past medical and prescription expenditures. The WCMSA must show the amount of money that should be invested to provide for the yearly expenses for the worker’s life expectancy.” Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

Is “Life Expectancy” an Issue with MSAs? Why is “Life Expectancy” Important?

 “Life Expectancy” is a term frequently used by individuals in the “actuarial” community.  There are segments of the medical and business world that makes calculations as to when someone is expected to die.   This is then reduced to a number.   So, an a Female 65 years of age may have a 21.6 year life expectancy.   These numbers were taken from a Life Expectancy Table generated from statistics from the U.S. Government.   This calculation is based upon the general population.   Those in the medical and business worlds will do further analysis. They will look at whether the individual has morbidities such as diabetes, hypertension or kidney disease.   There are medical conditions that can impact one’s life expectancy.   In sum, “Life Expectancy” can have a base which is calculated on the general population.   It can then be lowered based upon the individual’s morbidities.   By shortening the “Life Expectancy,” the cost of the MSA can be reduced.  Therefore, insurance companies will want to get a lower life expectancy to save money.

Note: In order to protect Medicare’s interests, a Workers’ Compensation Medicare Set-Aside (WCMSA) should be funded based on the life expectancy of the claimant unless state law specifically limits the length of time that WC covers work-related conditions.

What is the Philosophy of the MSA Calculation and the Amount?

“The key is that both the principal amount that is to be set aside and the anticipated interest that it will earn must be sufficient to provide for the worker’s future medical treatment and administration fees for the worker’s lifetime.” .Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

What Should MSAs Document?

The MSA should “[i]dentify specific types of medical services or items, the frequency and duration of the medical services or items, and the projected costs of the medical services or items related to the work injury or disease that are expected in the future in light of the claimant’s condition; Include ICD-9 or ICD-10 diagnosis codes if available. Do not use ICD-9 codes for submissions with a DOI on or after 10/1/2015; do not mix ICD-9 and ICD-10 codes in one submission. (ICD-9 codes will continue to be allowed on submissions with a DOI of 9/30/2015 or earlier.) ; Appropriately identify the information by both Medicare-covered services and services not covered by Medicare. • Future treatment must be based on the evaluation and recommendation of a physician(s), e.g., the primary care physician, orthopedic surgeon, or other specialist (if applicable).  An independent medical examination (IME) may be sufficient under certain circumstances, e.g., claimant has not received treatment in several years, and there is no primary care physician.  The claimant’s condition and medical care required in the future must be documented in written evaluations, reports, and/or letters from a physician(s). Living arrangements that affect the medical benefits of the settlement should be noted, such as nursing homes or assisted living facilities.” Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

How Do MSAs Address Prescription Drugs?

Prescription drugs must be included even if the claimant is not yet a Medicare Part D beneficiary, if the current treatment records or future care plan support the use of drugs in treating the claimant’s WC injury.

What is an Example of a MSA Breakdown?

“ Example: The primary care physician states that during the claimant’s life expectancy of 30 years, it is estimated that he or she will need the following Medicare-covered services.

  1. A physician visit every 6 months with an estimated cost of $75 per visit.
  2. Physical therapy (PT) – 12 sessions per year for only the next 3 years with estimated cost of $50 per session
  3. An x-ray every 3 years with an estimated cost of $100 per x-ray (including interpretation)
  4. An MRI every 5 years with an estimated cost of $1,500 per MRI (including interpretation)
  5. Maintenance dose of prescription pain medication at $8 per month for 12 months per year
  6. Inpatient hospitalization every 10 years with an estimated cost $10,000 per hospitalization
  7. The projected total costs in this case are $49,180 as listed below; Physician visits @ $4,500 ($75 x 2 x 30) ; PT @ $1,800 ($50 x 12 x 3) ; X-rays @ $1,000 ($100 x 10); MRIs @ $9,000 ($1,500 x 6); Medication @ $2,880 ($8 x 12 x 30); Hospitalizations @ $30,000 ($10,000 x 3)” Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 3.1 May 11, 2020 COBR-Q2-2020-v3.1

What If I Need Legal Advice?

If you would like a free consultation concerning any workers’ compensation case, please contact the Law Offices of Edward J. Singer, a Professional Law Corporation. They have been helping people in Central and Southern California deal with their worker’s compensation cases for 28 years. Contact us today for more information.


9.3Edward Jay Singer
Edward Jay SingerReviewsout of 22 reviews