Attention Structured Settlement Brokers:

The attached Memo from the Centers for Medicare & Medicaid Services was recently released and addresses 6 topics regarding Medicare Set-Asides. 5 of the 6 topics just reaffirm or clarify existing policies, however item #4 answers a very important question concerning an inflation adjustment for MSA's. Item # 5 reaffirmed that MSA's can be established with Structured Settlements.

Q1. Reaffirmed that MSA's must be based on WC fee schedule (if the state has such a schedule) or full actual charges. Thus, in California, the WC fee schedule must be the basis for the MSA proposal

Q2. Clarified an exception to allowing the applicant to Self-administer their MSA. If the applicant was assigned a representative payee for Social Security purposes or is otherwise deemed incompetent by a court, then the applicant may not Self-administer their MSA.

Q3. Reaffirmed that Medicare can't accept the set-aside monies directly up front. These funds must be set up in a Medicare Set-Aside arrangement and paid out as needed.

Q4. Formalizes a change in position regarding Inflation adjustment. The new position is that the MSA arrangement does not need to be indexed for inflation and may not be discounted to present-day value. The MSA's completed by First Health Priority Services have been sent up and approved by CMS without an inflation factor. By not including an inflation factor we have been able to keep the amount of the MSA's lower than those MSA vendors that were including an inflation factor.

Q5. Reaffirmed that MSA's can be set up with Structured Settlements. It identified what goes into the seed money.

Q6. Reaffirmed that a MSA is not appropriate if future medical expenses are being left open.

Gregg Chapman
General Counsel/Client Liaison
First Health Priority Services, Inc.
A Division of First Health Group Corp.
21210 Victory Blvd. 12th Floor
Woodland Hills, CA 91367
Office: (888) 987-2667 Cell: (818) 825-7887
Fax: (888) 685-9375
greggchapman@firsthealthps.com