Indemnified EBMSAs - Nearly 2 Years Post WCMSA Reference Guide Section 4.3: Clarifying the Confusion
By: Heather Schwartz Sanderson, Esq.
About one year ago, I authored a blog entitled “The Current Status of Submitted v. Non-Submitted Medicare Set-Asides (MSAs).” With the passage of nearly 2 years since CMS added Section 4.3 to the WCMSA Reference Guide in early January of 2022, which seemed to discredit Non-Submit Evidence-Based Medicare Set-Asides (EBMSAs), Sanderson Firm continues to reeducate and dispel misconceptions and misinformation around the legal validity and legitimacy of Non-Submit Evidence Based Medicare Set-Asides (EBMSAs).
At Sanderson Firm, we have always been and remain steadfastly confident in the following principles: 1) Non-Submit MSAs are legitimate and legally sound, as they are supported by the Code of Federal Regulations and the CMS review process is a wholly voluntary process; 2) Non-Submit MSAs which are prepared properly to protect Medicare beneficiaries and Medicare’s interests will not be successfully challenged; 3) Until the Centers for Medicare & Medicaid Services (CMS) amends the Code of Federal Regulations, as delegated by Congress, to not allow Non-Submit MSAs, Non-Submit MSAs are legally sound in protecting Medicare’s interest under the MSP Act and corresponding Federal Regulations, specifically pursuant to 42 CFR 411.46(d)(2). This regulation allows parties to carve out a portion of the settlement for future medical and protect the rest of the settlement dollars from Medicare’s recovery. Further, the WCMSA Reference Guide is administrative guidance issued by CMS and does not hold the weight of binding legal guidance.
Additionally, some blog articles circulated by MSA stakeholders and particularly MSA vendors (who no longer offer an indemnified EBMSA product) have been circulating misinformation that Non-Submit MSAs are too risky and that parties settling workers’ compensation claims with Medicare beneficiaries’ only option with MSAs is CMS submission. However, on the contrary, submission of an MSA to CMS is a wholly voluntary process and always has been since CMS established their review program of MSAs since 2001 and that has not changed. Even the WCMSA Reference Guide states, “There are no statutory or regulatory requirements that parties submit an MSA to CMS.” We’ll address the common misconceptions of Non-Submit MSAs piece by piece.
Misconception: If a Non-Submit/EBMSA is utilized, the full net settlement amount (not just the amount allocated as part of an EBMSA or non-submit MSA) must always be exhausted before CMS assumes responsibility for paying the claimant’s accident-related medical expenses post-settlement.
Truth: If CMS were to ever question a Non-Submit/EBMSA, parties would be afforded the opportunity to undergo the administrative appeals process, afforded to both Medicare beneficiaries as well as primary plans as provided under the SMART Act, to provide evidence that the EBMSA protected Medicare’s interests.
Both Medicare beneficiaries and primary plans have established appeal rights under the MSP Act. In essence, CMS cannot in its sole discretion deem a Non-Submit EBMSA to be a burden shift to Medicare without affording due process to the Medicare beneficiary and primary payer. Further, the Code of Federal Regulations, specifically 42 CFR 411.46(d)(2) supports Non-Submit MSAs and allows parties to carve out a portion of the settlement for future medical and protect the rest of the settlement dollars from Medicare’s recovery. Thus, the language in the WCMSA Reference Guide which states that “CMS may at its sole discretion deny payment for medical services” goes beyond the confines of established law. As the WCMSA Reference Guide is not law, the Code of Federal Regulations and MSP Act are controlling.
Misconception: More stakeholders have moved away from using indemnified EBMSAs and non-submit MSAs since the WCMSA Reference Guide’s Section 4.3 release.
Truth: MSA vendors who no longer offer an Indemnified MSA product of course will see the reduction of usage of EBMSAs/Non-Submits because they no longer offer this product to their customers. This misinformation is unfortunately being propelled by these MSA vendors who seek to misinform their clients on the legal ability for parties to use Non-Submit MSAs. It is curious also if this self-serving misinformation is for these MSA vendors to garner additional revenue on submissions of MSAs to CMS.
Sanderson Firm, without interruption, has continued to offer both Non-Submit MSA as well as submitted MSA solutions. Contrary to the MSA vendors who no longer offer an indemnified Non-Submit MSA product, we are experiencing a significant increase in usage of Non-Submit MSAs and even some stakeholders that have always traditionally submitted MSAs to CMS (even prior to Section 4.3) have moved toward utilizing our Non-Submit MSA products. In fact, based upon a study of recent referrals, we have experienced a 400% increase in interest in our iMSA (an indemnified, evidence-based, Non-Submit MSA) product alone. Our client base utilizing our iMSA products ranges from large and regional insurance companies, self-insured entities, as well as other workers’ compensation payers. Thus, it is not outside of the norm for workers’ compensation payers to be utilizing Non-Submit EBMSAs and the usage is growing, rather than shrinking.
Additionally, you don’t need to completely take the word from us. Recent submission statistics released by CMS clearly demonstrate that year over year, fewer MSAs are being submitted to CMS, even in 2022 after the release of Section 4.3.
Misconception: Since the publishing of Section 4.3 in the WCMSA Reference Guide, Non-Submit EBMSAs have been successfully challenged by CMS, and Medicare beneficiaries have lost Medicare benefits as a result.
Truth: Having worked with Non-Submit EBMSAs for nearly a decade, I have never had one of my Non-Submit EBMSAs questioned. That’s not to say CMS will never challenge any Non-Submit MSAs in the future; however, we stand ready should CMS ever challenge the validity of our Indemnified MSAs (iMSAs). Every iMSA at Sanderson Firm is reviewed by an experienced nurse and attorney before its completion, and nationally accepted evidence-based medicine principles are applied to the allocation. There is a defensible methodology as to how we allocate, and Medicare’s interests are fully protected. We fully stand ready should CMS ever challenge one of our iMSAs.
Misconception: Many claimant lawyers have reported that they will now only settle claims with a CMS approved WCMSA given the potential liability Section 4.3 poses for their clients. Many of these lawyers expressed concerns regarding indemnified EBMSAs in terms of coverage, enforceability, and other factors.
Truth: At Sanderson Firm, we have an over 80% success rate on our clients achieving settlement with our iMSAs. Many claimant attorneys simply need to be re-educated on the voluntary nature of CMS submission. Once the claimant attorney understands the voluntary nature of CMS submission and how the MSA is backed protecting all parties to the settlement, they typically agree to the arrangement.
Misconception: There are reports of some judges refusing to approve Medicare indemnification language as part of a workers’ compensation settlement, which has led to unexpected complications and uncertainties.
Truth: Through education, we have been able to make Judges understand the voluntary nature of CMS submission and to allow for the parties to agree on our iMSA. For example, we had a recent success on a workers’ compensation claim in California, wherein the Judge initially would not agree to our iMSA, but once our attorney participated in a pre-settlement hearing regarding the validity of the iMSA and Sanderson Firm’s robust indemnification program, the Judge approved the settlement with our iMSA.
Did you know? Sanderson Firm provides Indemnified MSAs (iMSAs), Evidence-Based Submitted MSAs (eMSAs) as well as traditional WCMSAs intended for CMS submission. We tailor our settlement solutions based upon clients’ expressed goals with settlements and risk tolerances. Our tantamount goal at Sanderson Firm is to truly be a partner for our clients and to achieve their ultimate settlement objectives.
Through our consultative approach, we are constantly seeking methods in which our clients can save unnecessary costs via evidence-based methodology. Lastly, with a standard WCMSA submitted to CMS, unfortunately, there is no room for tapering or weaning of drugs, and strict adherence to CMS guidelines is mandatory, often leading to inflated allocations. It's worth noting that CMS has acknowledged over-allocation concerns with this method and we believe that to be a strong influence in our clients seeking our iMSA product.
Contact us to learn more about our versatile MSA solutions.
