Update to the Workers’ Compensation Medicare Set-Aside Reference Guide

February 2022

By: Carolyn P. Murray & Surbhi Saraswat Goyal

Key Takeaways:

1. The Centers for Medicare and Medicaid Services (CMS) has updated its Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide to directly address the insurance industry's frequent use of Evidence Based MSA and Non-Submit MSA.
2. There is an inherent contradiction in CMS maintaining that the MSA process is voluntary and yet strongly advocating for CMS approval of MSAs.
3. CMS’s implementation of this new change remains to be seen.

On January 10, 2022, CMS issued an updated WCMSA Reference Guide, Version 3.5. The updated WCMSA Reference Guide only included one change; however, it is causing a ripple throughout the Medicare industry.

Section 4.3: The Use of Non-CMS-Approved Products to Address Future Medical Care now states as follows:

“A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.” 42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the WCMSA Reference Guide use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement. As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount (emphasis added).”

At the same time, and somewhat contradictorily, CMS has not removed its long-standing language from the WCMSA Reference Guide that a MSA is never required to be submitted to CMS.

Section 1.0: About This Reference Guide still states:

“There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures (emphasis added).”

This leaves many in a conflicted position asking the question, when should we submit a MSA to CMS? At Brady, Connolly and Masuda, P.C. (BCM), our Medicare Compliance attorneys continue to review all issues of whether to submit an MSA on a case-by-case basis. We maintain that obtaining a formal MSA from CMS is the only way to confirm in writing that Medicare’s interests have been adequately considered. Therefore, without an MSA approval letter from CMS, there is nothing to guarantee that Medicare’s interests have been adequately considered.

How CMS will reconcile the contradiction in its reference guide of maintaining that MSA submission is voluntary and yet penalizing those who choose not to avail themselves to that voluntary process by submitting an MSA remains to be seen. We will continue to closely monitor CMS’ response in these situations. For the time being, our recommendation remains the same. The parties to a settlement may submit a MSA to CMS when thresholds are met (the claimant is a Medicare beneficiary and total settlement exceeds $25,000.00 or the claimant has a reasonable expectation of becoming a Medicare beneficiary and total settlement exceeds $250,000.00). As such, our clients still have the option to proceed with non-submitted MSAs with the knowledge that there is an additional risk in doing so and that CMS will view this as a shift of the financial burden to it. In those scenarios, as with each claim we handle, the BCM Medicare Compliance attorneys will ensure that there is adequate settlement contract language and supporting documentation to show good faith efforts that Medicare’s interests have been reasonably considered. However, this new regulation may weigh our analysis and recommendation in favor of submission when it is possible (i.e. the review thresholds are met).

We will continue to closely monitor the new CMS regulation, as well as CMS’ implementation of same. If you have any questions regarding the new WCMSA regulation, or whether or not to submit a MSA to CMS, please contact your Brady, Connolly & Masuda relationship attorney or one of the authors.