Major CMS changes impact Workers' Compensation Medicare Set-Aside

On January 17, 2025, the Centers for Medicare & Medicaid Services (CMS) issued an updated Workers' Compensation Medicare Set-Aside (WCMSA) Reference Guide (v4.2). While there were several changes, the one that will most impact WCMSA practices related to zero-dollar submissions.

Zero-dollar submissions

Starting July 17, 2025, CMS will no longer review $0 WCMSA submissions as part of its WCMSA review/approval process. The intent of an MSA is to ensure there's not a post-settlement cost-shift to the Medicare program. Zero-dollar submissions were utilized when workers' compensation claims did not implicate the need for future medical treatment. If the CMS approved the submission, it acknowledged its interests were protected. Without the approval, Medicare could pursue recovery of related medical claims.

According to the new guide, "Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation. Entities should consider the [below stated conditions] in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation." Therefore, employers are responsible for determining and documenting whether the claims meet the conditions specified in the guide. These include:

• The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished before the settlement)
• There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare's detriment

In addition to eliminating the review of $0 WCMSA submissions, the guide provides much- needed clarity on the conditions that may demonstrate Medicare's interests have been protected:

• The injured workers' treating physician documents in medical records that "to a reasonable degree of medical certainty" the injured worker no longer requires treatment or medications related to the condition(s) of the workers compensation settlement; or
• The workers' compensation primary payer has denied benefits under state workers' compensation law and has made no payments, medical or indemnity, except for investigatory purposes, before any settlement, medical/indemnity benefits are not being actively paid, and the settlement agreement doesn't allocate any amounts for future or past medical or pharmacy services as a condition of the settlement; or
• An applicable judicial body of competent jurisdiction determined by a "ruling on the merits" that the workers' compensation payer isn't responsible for any medical and indemnity benefits, such benefits are not presently being paid, and the underlying agreement does not attribute certain amounts to future medicals; or
• The workers' compensation claim was denied by the payer within the applicable statutory period permitted to "pay without prejudice," no benefits are actively being paid, and the settlement agreement doesn't allocate amounts to future medical services.

Going forward, documenting $0 WCMSAs remains important. Under CMS's new TPOC/WCMSA reporting requirements certain WCMSA data points must be reported to CMS, as part of the Section 111 reporting process, regarding all workers' compensation settlements involving a Medicare beneficiary that meet the current Section 111 TPOC reporting thresholds starting April 4, 2025. This reporting applies even when no WCMSA will be included as part of the settlement. In this latter instance, a $0 WCMSA value must be reported. CMS also reserves the right to audit $0 value, if it suspects cost shifting to Medicare.

Amended review process modified

Shortly after the release of the revised reference guide, CMS released an e-mail notice reiterating the policy change for zero-dollar MSAs and noting the following modification related to the Amended Review Process:

"Currently, amended review requests cannot be submitted until 1 year after a WCMSA case has been approved. Effective April 7, 2025, amended review requests will be allowed at any time after a WCMSA case is approved."

CMS implemented its Amended Review process in 2017, which allows parties a one-time request to submit new medical documentation to adjust a prior WCMSA approval for cases meeting the Amended Review process. This is good news as it should reduce delays and costs when there is new evidence a submission determination should be revised. The Amended Review criteria remain unchanged in Section 16.3 of the WCMSA Reference Guide.