A significant development in Medicare Secondary Payer (MSP) compliance and Medicare Set-Asides (MSAs) in workers’ compensation claims has arrived in 2025. The Centers for Medicare & Medicaid Services (CMS) announced in late 2023 and confirmed in early 2024 that Section 111 reporting would now be expanded to include required Workers’ Compensation Medicare Set-Aside (WCMSA) information, when available. The new reporting requirement took effect on April 4, 2025.
CMS has reiterated its preference that WCMSA information be reported on all workers’ compensation settlements involving Medicare beneficiaries, regardless of whether the MSA was voluntarily submitted and reviewed by CMS or was a nonsubmit/evidence-based MSA. Further, it should be noted that submission of WCMSAs to CMS remains a voluntary process, and the upcoming WCMSA reporting requirement does not represent a policy shift with respect to the validity of non-submit/evidencebased MSAs.
Given that MSAs have been a best practice for workers’ compensation settlements since 2001, and the Section 111 reporting law was passed in 2007 (implemented in 2010), it was certainly a surprise, 15 years later, to be merging these two requirements and to mandate the Section 111 reporting of voluntary WCMSAs.
At the time it was announced, many workers’ compensation industry stakeholders questioned why CMS suddenly wished to require the reporting of voluntary MSA information for all workers’ compensation claims. During a November 2023 webinar on the topic, CMS representatives commented that they are not always provided with finalized settlement documents post-settlement confirming WCMSA information even when the WCMSA is approved by CMS.
CMS’ intent for expanding reporting is to ensure that all reported WCMSA information is as accurate as possible for coordination of benefit purposes. As such, the WCMSA reporting requirement will provide CMS with another source to reference basic WCMSA information for the coordination of their status as a secondary payer where an MSA was established in resolution of the workers’ compensation claim. CMS made no indication that this upcoming requirement is in response to the use of non-submit, evidenced-based MSAs or that such MSAs are not allowed.
CMS has stated that the information submitted through Section 111 filings will be posted to the Common Working File (CWF) as a WCMSA record aimed at preventing payment of medical services related to injuries described by the diagnosis codes reported. CMS anticipates sending notification of the reported WCMSA information to the Medicare beneficiary indicating the process for appropriate attestation and exhaustion. CMS currently does this for WCMSAs that go through the voluntary submission process when they are provided with final settlement documents, however, beneficiaries may be surprised by such correspondence, triggering questions to primary payers and claims adjusters regarding the reported data.
The seven new data fields to be reported are outlined in the Section 111 NGHP User Guide version 7.5, Appendix A (https://www.cms.gov/files/ document/mmsea-111-april-1-2024- nghp-user-guide-version-75-chapter-vappendices.pdf). The new fields require the reporting of the voluntary MSA amount, the method of payout (Lump Sum vs. Annuity), and the amount of time the MSA is anticipated to cover. If a Zero Dollar Medicare Set-Aside is used during settlement, it is to be reported by leaving the lump sum or annuity payout structure (field 39) blank. Additional fields include the tax ID for professional administrators and the Case Control Number CMS assigns to an MSA, where available.
When reporting WCMSA information in the total payment obligation to claimant (TPOC), entering an incorrect value for certain fields (e.g., MSA Amount, MSA Period, Lump Sum vs. Annuity Indicator, Annuity Anniversary Deposit Date, and Case Control Number) will result in a hard error causing CMS to reject the record. In the event such an error occurs and the NGHP RRE fails to timely correct through re-report of the TPOC record, the NGHP RRE may be exposed to civil money penalties due to late reporting.
Additional errors pertaining to the new WCMSA information submitted may be returned as new soft or hard edits on the Section 111 NGHP Claim Response File according to current processing standards. CMS noted that although the WCMSA reporting implementation date is currently April 4, 2025, CMS will not assess any Civil Money Penalties (CMPs) associated with improper WCMSA reporting for two reporting periods (or six months) after the April 4, 2025, implementation date. This suspension period derives from the Final Rule’s temporary deferment of CMPs where Responsible Reporting Entities (RREs) are required to make changes to their systems to prepare data for Section 111 Medicare reporting purposes.
Given Section 111 reporting only applies to current Medicare beneficiaries, the reporting of WCMSA information will not apply to settlements with injured workers who meet “reasonable expectation” status as defined under CMS’ WCMSA Reference Guide. Additionally, there are no changes to reporting of settlements for no-fault and liability settlements through TPOC reporting.
With the expansion of Section 111 reporting to include settlements involving WCMSA, it is more important than ever for insurers and beneficiaries to have a clear understanding of WCMSA requirements along with the potential ramifications if future medical funds are prematurely depleted.Entering into the settlement agreement with a full understanding of the terms of the set aside can mitigate future interruption of benefits for the injured party and lay the foundation for a defense against attempts from Medicare for future collection. Given that WCMSAs have been utilized since 2001, if Medicare’s interest is considered a factor when settling losses, the new reporting requirements should not lead to process changes other than the new data reporting. Furthermore, if Section 111 reporting is timely, the WCMSA reporting will be timely. Insurers and beneficiaries should be aware that Section 111 reporting of WCMSA data will not alter the terms or amount of a WCMSA, these remain driven by the set aside agreement.
In closing, the best method of safely navigating the ever-changing landscape of WCMSAs is to understand the updated requirements to Section 111 reporting, focus on protecting Medicare’s interest, and leverage tools such as professional administration to mitigate premature exhaustion of MSA funds allocated for medical treatment.