On April 19, the Centers for Medicare and Medicaid Services (CMS) released an updated Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide, Version 3.3, which made a slight but notable addition to how the MSA seed amount is calculated.
Specifically, CMS now requires the MSA seed amount to include the cost of the first surgery/procedure for each body part. Previously, CMS accepted only one surgery in the seed even when there were additional surgeries for other body parts in the MSA allocation.
When settling parties choose to fund the MSA with an annuity, there is an initial deposit called the seed amount. The seed amount, under the prior rule, included the first two years of annual payments and, when applicable, the cost of the first surgery/procedure, the first replacement durable medical equipment if the cost exceeds $500, and sometimes injections.
For example, an overall Medicare set-aside of $100,000 might break down to a $25,000 seed amount (with one surgery), with the remaining $75,000 placed in an annuity.
Under the new rule, requiring the seed amount to include the first surgery for each body part does not change the overall MSA amount, but it puts more funds in the seed amount and less in the annuity. With the annuity less, the cost to the employer or carrier to fund the MSA will be more.
In other words, taking the above example, where previously the seed amount was $25,000 (to include one surgery), the seed may now be $45,000 (to include two surgeries) with the annuity only funding $55,000.
CMS also made some other minor changes in this updated guide:
Dan Anders is chief compliance officer at Tower MSA Partners LLC. This entry is republished with permission from the Tower MSP Compliance Blog.
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