In the intricate landscape of workers' compensation and liability settlements, Medicare Set-Asides (MSAs) play a pivotal role in safeguarding Medicare's future interests. MSAs allocate a portion of settlement funds to cover anticipated medical expenses related to the injury that would otherwise be paid by Medicare.
A promising and increasingly recognized approach to addressing these challenges lies in the integration of Evidence-Based Medicine (EBM) into the MSA process. By relying on scientifically validated treatment protocols, EBM ensures that injured workers receive appropriate, effective, and medically necessary care. Simultaneously, the use of EBM often results in more reasonable MSA allocations for payers while protecting Medicare's interests, whether the MSA is submitted to the Centers for Medicare & Medicaid Servies (CMS) or not.
Understanding EBM
EBM is the conscientious, explicit, and judicious use of the current best evidence in making decisions about the care of individual patients. It integrates clinical expertise with the best available external clinical evidence from systematic research. Rather than relying solely on anecdotal experience, outdated practices, or speculative future treatments, EBM emphasizes scientifically validated medical interventions that have been proven effective through rigorous clinical trials, meta-analyses, and peer-reviewed studies.
In the context of workers' compensation and MSAs, EBM serves as a standardized foundation for determining what constitutes reasonable and necessary medical care for the injured worker's compensable condition.
The Role of MSAs in Workers' Compensation
An MSA is a financial arrangement in which a portion of a workers' compensation or liability settlement is earmarked to pay for future medical expenses that are related to the compensable injury and would otherwise be covered by Medicare. By establishing MSAs, parties to a settlement ensure compliance with the Medicare Secondary Payer (MSP) Act, which prohibits Medicare from paying for injury-related medical expenses when another entity—such as a workers' compensation insurer—is primarily responsible.
CMS reviews submitted MSAs when workload review thresholds are met. Although this this process is voluntary, failure to properly account for Medicare's interests can lead to repercussions, including Medicare’s refusal to pay for injury-related treatment after settlement.
MSAs strike a delicate balance: they must allocate sufficient funds to cover reasonably anticipated medical expenses while avoiding inflated or speculative projections that burden employers, insurers, and other payers with excessive costs.
Incorporating EBM into the MSA development process produces clear, measurable benefits. First, it improves medical outcomes for injured workers. The primary goal of any post-settlement medical arrangement is to ensure that the injured worker has access to appropriate medical care to maintain their health and to manage their condition. EBM promotes treatment protocols that have been rigorously evaluated and shown to improve patient outcomes.
Further, a common concern among workers' compensation payers is the unpredictability and potential inflation of MSA projections. When projections are based on unchallenged physician recommendations that include outdated, excessive, or experimental treatments, the resulting MSAs may be disproportionately large and financially burdensome.
EBM provides a defensible framework for challenging or clarifying questionable treatment recommendations. By applying peer-reviewed guidelines, such as those from the Official Disability Guidelines (ODG) or American College of Occupational and Environmental Medicine (ACOEM), MSA allocators can justify the exclusion of unnecessary or non-evidence-based treatments from the allocation, such as when CMS allocates opioid medications at the same dosage over an individual’s life expectancy, which is not realistic. Further, some medications are not safe or recommended for older individuals. Thus, by using EBM, MSAs are both medically appropriate and financially reasonable, reducing settlement costs without compromising care.
Lastly, EBM enhances the integrity of the MSA process by ensuring that only treatments likely to be covered by Medicare, based on current medical standards, are included. CMS evaluates MSAs to ensure that Medicare will not become the primary payer for future medical expenses that should have been covered by settlement funds. EBM in MSAs prevents MSAs being prepared with a “worst case scenario” mindset. An MSA grounded in EBM aligns with CMS expectations by avoiding the inclusion of speculative, unproven, or non-Medicare-covered treatments. This meticulous adherence to current medical evidence and coverage guidelines strengthens compliance with the MSP Act and minimizes the risk of future disputes with Medicare.
Submission v. Non-Submission of an MSA to CMS
Workers' compensation payers have the option to submit or not submit an MSA to CMS for review and approval. While CMS has established a voluntary submission process for MSAs, there is no legal requirement mandating submission in every case.
Many payers choose to submit when the case meets CMS's workload review thresholds—typically when the claimant is a Medicare beneficiary or has a reasonable expectation of becoming one within 30 months, and the settlement exceeds $25,000 or $250,000, respectively.
However, some payers choose a non-submit MSA, particularly when they believe the allocation complies with MSP requirements but prefer to avoid the delays, increased costs, or the uncertainty sometimes associated with the CMS review process.
A properly prepared non-submit MSA still protects Medicare's interests when developed using sound methodology, such as EBM, adherence to Medicare coverage guidelines, and thorough documentation of the allocation process. Non-submitted MSAs, when defensible and based on current medical standards, can ensure that the settlement adequately accounts for future injury-related medical expenses that would otherwise be covered by Medicare.
This approach maintains MSP compliance by demonstrating that the payer took reasonable steps to protect Medicare, even without formal CMS approval. Ultimately, whether submitting to CMS or utilizing a non-submit approach, the critical factor is ensuring the MSA reflects medically necessary, appropriately allocated funds in alignment with both statutory obligations and best practices.
The application of EBM to MSAs represents a critical advancement in achieving the intertwined goals of injured worker care, fiscal responsibility, and Medicare protection.
Injured workers benefit from improved medical outcomes grounded in scientifically validated treatment protocols. Workers' compensation payers experience more predictable, reasonable settlement costs. And perhaps most importantly, Medicare's interests are fully safeguarded, maintaining compliance with the MSP Act and ensuring that the federal healthcare system is not inappropriately burdened, whether the MSA was submitted to CMS or not.
As stakeholders continue to navigate the complexities of MSAs, the adoption of EBM offers a practical, effective, and ethically sound pathway to optimize outcomes for all parties involved.