Worker’s Comp Payers May Be Required to Report Medicare Set-Asides to CMS

Medicare Secondary Payer Act enforcement efforts are ramping up

December 20, 2023 Photo

Last year in October, the Centers for Medicare & Medicaid Services (CMS) announced that it would be hosting a webinar on Nov. 13, 2023, regarding the expansion of Section 111 Non-Group Health Plan (NGHP—workers’ compensation, general liability, and no-fault insurance payers/plans) Total Payment Obligation to Claimant (TPOC) reporting to include Workers’ Compensation Medicare Set-Aside (WCMSA) information.

This was a shocking announcement that CMS intends to require the reporting of MSAs, as CMS has never required the reporting of MSAs previously. Further, MSAs are a wholly voluntary mechanism in protecting Medicare’s future interest where a workers’ compensation payer seeks to close future medicals in a settlement with a Medicare beneficiary; thus, to require the reporting of MSAs seems to not jive with the voluntary nature of MSAs.

During the webinar, CMS noted that they did not have firm plans to require the reporting of WCMSAs but that it was their intent to potentially require this in the future. The upcoming potential requirement to report WCMSA information for workers’ compensation Medicare beneficiary settlements appears to have been prompted by coordination of benefit issues. CMS representatives commented on the webinar that CMS is not always provided with WCMSA information/finalized settlement documents post-settlement even when a WCMSA is approved by CMS.

As such, the potential WCMSA reporting requirement will provide CMS with another source to reference basic WCMSA information and coordinate benefits/pay secondary where an MSA is available to pay. Of note, CMS has not determined whether retroactive reporting of WCMSA information (e.g., reporting WCMSA information for closed files/older settlements) will be required.

Essentially, CMS made clear that they are looking for reported WCMSA information reporting on all workers’ compensation settlements involving Medicare beneficiaries, regardless of whether the Medicare Set-Aside was voluntarily submitted and reviewed by CMS or was a non-submit/evidence-based Medicare Set-Aside. Further, CMS noted during the webinar that submission of WCMSAs to CMS remains voluntary, and the upcoming WCMSA reporting requirement does not represent a policy shift with respect to the validity of non-submit / evidence-based Medicare Set-Asides. CMS referenced the WCMSA submission process as voluntary several times throughout the webinar.

However, it is unclear how this potential upcoming WCMSA reporting will interact with civil money penalties (CMPs) for Responsible Reporting Entities (RREs) that fail to timely report TPOC and Ongoing Responsibility for Medicals (ORM).

Certainly, that CMS may require workers’ compensation payers to report Medicare Set-Aside (MSA) information is a harbinger of greater enforcement of the Medicare Secondary Payer (MSP) Act, specifically regarding protecting Medicare’s future interests by way of an MSA. Clearly, CMS is seeking transparency or some auditing mechanism to monitor when MSAs are being established as part of a workers’ compensation settlement.

By way of background, The CMS review process for Workers’ Compensation Medicare Set-Asides (WCMSAs) has officially been in place for over 20 years now, with the process first being introduced by CMS in 2001. A WCMSA is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. Medicare’s guidance dictates that the WCMSA funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease.

The primary intent behind a WCMSA is to protect Medicare’s future interest. It further aims to prevent shifting the burden of future injury-related medical care onto the Medicare Trust Fund. Over the years, CMS has refined its processes and procedures regarding its criteria for review. It is critically important to understand these processes before submitting a proposed WCMSA to CMS.

While there are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process. A CMS-approved WCMSA secures a set dollar amount for future medical exposure with Medicare. When the WCMSA fund is appropriately spent, Medicare will again assume primary payment responsibility. If parties choose to submit a WCMSA for review, then CMS requires that submitters comply with its established policies and procedures.

Non-Submit MSAs have grown in popularity over time, and it is likely that CMS will want these Non-Submit MSAs reported to CMS as well via Section 111 Reporting. CMS acknowledges Non-Submitted MSAs would be appropriate in certain scenarios where the settlement would not meet CMS’ review thresholds. The WCMSA Reference Guide provides an example involving a claimant who would be reasonably expected to be Medicare-eligible within 30 months of the settlement, but where the settlement was $225,000. CMS notes that such a settlement would be “…ineligible for review under the non-CMS-beneficiary standard requiring a case-total settlement to be greater than $250,000 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the [workers’ comp] injury up to the full value of the settlement.”

The statement in the Reference Guide that encourages “some plan for future care” clearly describes a non-submitted future medical allocation, in which the parties protect Medicare’s interest via a future medical allocation without CMS approval.

A Non-Submitted, or Evidence-Based, MSA (EBMSA) would involve an MSA, prepared and set aside by the claimant, based upon the medical records, medical and clinical principles, and adherence to state workers’ compensation laws and statutes. Arguably, such an MSA would be defendable, and preserves the claimant’s and insurer’s rights to administrative appeal should Medicare ever question the MSA amount.

In fact, according to 42 CFR 411.46(d)(2), if a specific amount of the settlement is designated for future medical services, CMS will only require that amount to be exhausted before providing coverage. In other words, CMS submission is not required, but designating a specific amount for future medical, which is reasonable and based upon the medical records, is. Undergoing the preparation and incorporation of a defensible, evidence-based allocation into a settlement aims to protect all parties and comply with the applicable federal MSP regulations.

With the progression of CMS’ establishment of guidelines as well as enforcing penalties, over the past two decades the workers' comp community has continued to update its procedures and strategies to ensure compliance. While the Nov. 13 webinar did not clarify all the changes that are still to come, those changes will surely impact the workers' comp community’s internally established procedures and will include additional data points to report which could impact systems and staffing. 

About The Authors
Multiple Contributors
Heather Sanderson

Heather Sanderson, Esq., is chief executive officer of Sanderson Firm PLLC.

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