A Medicare Set-Aside (MSA) is a financial agreement that reserves a portion of a workers’ compensation settlement to cover future treatment and prescription costs of an injury, illness, or disease. MSAs were designed to protect Medicare from paying for post-settlement treatment related to the underlying injury for which the employer/workers’ compensation carrier would remain liable for if the claim was not settled. Utilized when an injured worker is or will soon be a Medicare beneficiary, MSAs project future injury-related medical costs over the person’s life expectancy.
In January 2022, there was quite the commotion in the workers’ compensation industry when the Centers for Medicare & Medicaid Services (CMS) released an update to the WCMSA Reference Guide (Reference Guide) that included new information as it pertains to Workers’ Compensation Medicare Set-Asides (WCMSAs). Of significance was the inclusion of Section 4.3, which, for the first time, addressed CMS’ position on non-submit/Evidence-Based Medicare Set-Asides (EBMSAs).
The initial Reference Guide update on non-submit MSAs occurred on Jan. 13, 2021, wherein Section 4.3 was added to address non-submit/EBMSAs. This update provided that unless the CMS program has reviewed the MSA, it cannot be certain that its interests have been protected. Word of this update traveled fast, and the workers’ compensation/Medicare Secondary Payer (MSP) industry had numerous questions and noteworthy concerns about the language chosen for inclusion in the updated Reference Guide Section 4.3. It almost appeared as if CMS was trying to mandate the submission of MSAs to CMS, which is currently a voluntary process/procedure.
Subsequently, about a month later, CMS hosted a WCMSA webinar. During the webinar, CMS acknowledged that in submitted MSAs, the Workers’ Compensation Review Contractor (WCRC) reviews proposed WCMSAs with a “worst case scenario” allocation philosophy. Additionally, CMS acknowledged that the CMS submission process is a wholly voluntary process. Additionally, regarding non-submitted/EBMSAs, CMS softened its stance on the webinar from its initial messaging in the January Reference Guide to comment that non-submitted MSAs would not automatically be assumed a burden shift to Medicare, and that nothing had changed from a legal, regulatory, or legislative standpoint with the Section 4.3 update. Thus, non-submit MSAs are still recognized, legitimate, and not automatically deemed a burden shift so long as the beneficiary and his/her representatives can prove appropriate allocation and exhaustion of the non-submit MSA/EBMSA funds.
Next, in March 2022, CMS issued a revised Section 4.3 for the Reference Guide and softened the language. CMS now utilized permissive language (“may deny” rather than “will deny”) to describe its ability to deny payment. Thus, this language change clearly signaled that parties may prove that the non-submit MSA was appropriately allocated for and a protection of Medicare’s interests.
A year later, there have been no known challenges or benefit denials in settlements with non-submit MSAs to date, and no additional guidance updates on this matter since March 2022. There have been some resulting changes and impacts to settlements in which parties desire to incorporate a non-submit MSA into workers’ compensation settlements with Medicare beneficiaries in some jurisdictions. Non-submit MSAs are permissible pursuant to 42 CFR 411.46(d)(2), and so long as the MSA provider/vendor can appropriately stand behind the methodology of calculation of the non-submit/EBMSA, the MSA will be recognized and the rest of the settlement dollars will be protected.
The authors agree that across third-party administrators (TPAs), insurance carriers, and self-insured entities, there are various perceived theories on whether MSAs should be submitted or not to CMS, and each settlement is unique. Further, workers’ compensation payers continue to see the evolution of what may be included in MSAs change from one day to the next.
Some examples of this would be the increase in mental health treatment, which is now more broadly covered by Medicare. It is not uncommon for workers’ compensation claims to also include future medical care for psychiatric treatment (i.e., anxiety, depression, PTSD, etc.). Additionally, ketamine infusions for chronic pain are now being included in MSAs. However, just a few years ago these infusions were not included in MSAs and have increased the cost of them where this treatment is warranted as ketamine infusion may cost $500 to $2,000 per infusion depending on ketamine dose, duration of infusion, and location. For now, Medicare still does not cover ketamine for mental health treatment.
Ultimately, the choice between submitting or not submitting an MSA to CMS has become and should remain the settling parties’ ultimate choice, especially keeping in mind the value of the settlement and the complexity of the claim.