CMS to Stop Reviewing $0 MSA Submissions: What This Means for Workers’ Compensation Settlements

January 2025

On January 17, 2025, Centers of Medicare & Medicaid Services ("CMS") released version 4.2 of the Workers’ Compensation Medicare Set-Aside Arrangement ("WCMSA") Reference Guide. In section 4.2, CMS announced that it would no longer review zero-dollar WCMSAs effective July 2025. Furthermore, in an email alert on January 21, 2025, CMS announced another change. Effective April 7, 2025, CMS will eliminate the one-year waiting period for WCMSA Amended Review requests. Instead, an Amended Review request can be submitted to CMS at any time after a WCMSA approval. The Amended Review criteria remain unchanged in Section 16.3 of the WCMSA Reference Guide in that CMS must have previously issued conditional approval or approval of the MSA, settlement has not yet occurred, and the projected care has changed by the greater of 10% or $10,000.00. This should allow cases where new evidence is available to avoid the one-year waiting period, reducing delays and associated costs.

CMS also released one of its biggest changes yet in this version of the Reference Guide: effective July 17, 2025, CMS will no longer review $0 WCMSA submissions. Up until now, in workers’ compensation cases involving Medicare beneficiaries, the parties could submit a $0 MSA to CMS for approval if the total settlement exceeded $25,000.00. This allowed the parties to obtain a sense of finality in knowing that if Medicare approved the $0 allocation, then the parties were safe and considered to have adequately protected Medicare’s future interests. Of course, if the parties chose not to submit a $0 MSA to CMS for approval, then it was a question of how much risk the parties were comfortable accepting. Medicare could refuse to pay for accident-related medical expenses up to the full settlement value if it later discovered the $0 MSA and decided it was not adequate. This risk still exists; however, as of July 17th, the parties will no longer have the option to obtain assurance from Medicare for their $0 MSA. New guidance by CMS attempts to replace this assurance as long as appropriate evidence is maintained in the file.

In addition to stating that it will no longer review $0 MSAs, CMS has provided guidance for when it will consider a $0 MSA to have adequately protected Medicare’s interests. Section 4.2, entitled “Indications That Medicare’s Interests Are Protected,” states that the following four situations will demonstrate that a $0 MSA will be supported by CMS (note these are not exclusive; but, meeting any one of these will ensure that Medicare will not question the $0 MSA):

• The individual's treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatments or medications related to the settling WC injury or illness; or
• The workers’ compensation insurer or self-insured employer denied responsibility for benefits under the state workers’ compensation law and the insurer or self-insured employer has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement; or
• A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the workers’ compensation insurer or self-insured employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services; or
• The workers’ compensation claim was denied by the insurer/self-insured employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.

Section 4.2 of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, version 4.2, January 17, 2025 (emphasis added).

Therefore, not only will CMS no longer review $0 MSAs, but the criteria for a $0 MSA has changed and it appears to have become more difficult to meet the requirements for a $0 MSA. For example, a note from the treating physician must contain the specific language under the first condition, and it must also be contained within the medical records; not a note on a separate letter. Previously, we regularly submitted a separate narrative from the treating physician that no further treatment was required for the work injury.

Furthermore, to meet condition two, if the carrier has denied responsibility from inception, and has not paid any benefits, if the carrier agrees to pay a specific disputed amount for provider bills or any specific amount for conditional payments in an effort to settle the case, the carrier would forfeit a potential $0 MSA. While it seems that this rule might put more money in the carrier’s pocket because the time, costs and efforts expended in submitting a $0 MSA are no longer required, it seems to make it more difficult for the parties to settle out both past and future medical expenses in many instances. Of course, interpretation of this section will be determined to some degree by the industry, which will take the industry time to absorb as these rules were recently issued. We will provide updates to guide you along the way as the industry digests this rule.

While Medicare will no longer review $0 MSAs starting July 17, 2025, it is very important to properly document your file in case Medicare should question the $0 MSA in the future. The Reference Guide states that in determining if a $0 MSA is appropriate, entities should maintain documentation to support the $0 allocation.

The guidance for $0 MSAs is effective immediately, even though Medicare will stop reviewing $0 MSA’s starting July 17, 2025. Furthermore, carriers will be required to report all MSAs for settlements involving Medicare beneficiaries starting April 4, 2025, as part of its Mandatory Section 111 Reporting requirements. Therefore, Rule 4.2 will collide with the carrier’s obligation to report $0 MSAs in short order, and Medicare will be able to see and scrutinize all $0 allocations involving Medicare beneficiaries, should it choose to do so.

Key Changes:

• CMS has eliminated the 1-year amended review period.
 
• CMS will no longer review $0 MSA proposals, and has provided guidance for when CMS will consider a $0 MSA to adequately protect Medicare's interests.

BCM Law, P.C. remains on stand-by to assist you in navigating these new rules and can help determine if a $0 MSA is appropriate in your case, or to assess your risk. We can also help you document your $0 MSA allocation to prepare for any future inquiry by CMS. Contact us at 312-425-3131 or submit THIS FORM.