Breaking: CMS to Eliminate Review of Zero Dollar Medicare Set-Asides
Today, January 17, 2025, The Centers for Medicare & Medicaid Services (CMS) published a major update to the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide: effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero dollar ($0) allocation.
WCMSA Reference Guide Section 4.2 - Indications That Medicare’s Interests Are Protected
In addition to noting that CMS will no longer review zero-dollar MSAs beginning July 17, 2025, the updated WCMSA Reference Guide language further clarifies that CMS considers its interests protected where:
• The carrier/employer denied responsibility for benefits under the state workers’ compensation law and has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement
• A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the carrier/employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate an amount for future medicals
• The workers’ compensation claim was denied by the carrier/employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.
With these changes, CMS has finally formalized the items they have been requiring for approval of zero-dollar MSAs for years. While a CMS approval letter will no longer be available for zero dollar MSAs, these guidelines confirm what parties will need to have documented in order to support not funding an MSA and may allow quicker settlement of claims involving zero dollar MSAs since parties will no longer be subject to longer CMS review times, multiple developments requests, and possible counter higher risks of CMS submission on these claims.
In numerous instances, we have seen scenarios where CMS disagrees with a submitted zero MSA proposal (in instances where no payments have been made and the employer/carrier has denied responsibility under state law), leading to the unraveling of a well-intended settlement.
Therefore, this update of the WCRC no longer reviewing zero-dollar MSA allocations is a positive result for Medicare Secondary Payer stakeholders as it now allows injured employees, carriers, and employers to confidently settle their workers’ compensation claims with a zero-dollar MSA without the hassle of submitting the zero MSA proposal to CMS and “rolling the dice” on a CMS determination. Even though CMS’ elimination of zero MSA reviews will not occur until July 17, 2025, employers/carriers may now decline to submit zero MSAs to CMS for review assuming the criteria noted in the bullet points above apply.
Other Updates
CMS modified Section 9.4.3 (WCRC Review Considerations) to confirm that the recommendations of the treating physician will be given priority but that when determining what care will be included in CMS’s determination, CMS will also consider the claimant’s past use and future recommended treatment as supported by the medical records, evidence-based guidelines and current peer-reviewed medical literature.
This is not a significant change from previous WCMSA Reference Guide versions, but it does solidify that while multiple resources, including evidence based medical guidelines, are used by the WCRC in their review, reviewers will still defer to the treating physician recommendations.
There was also a correction to the example calculations for Intrathecal Pump, Spinal Cord Stimulator, and Peripheral Nerve stimulator replacements in Section 9.4.5 (Medical Review Guidelines).
If you have any questions about this WCMSA Reference Guide update or any other matters related to Medicare Secondary Payer (MSP) compliance, please contact us.
