Mandatory MSA Reporting Begins Next Month: What is the Impact at the Claims Level, and Do We Now Need “Under Threshold” MSAs?

By Annie M. Davidson, Esq., CMSP, MSCC, MSPA

You may have heard that starting April 4, 2025, Medicare will require reporting of Medicare Set-Aside (MSA) amounts on all workers’ compensation (WC) settlements over $750 with claimant-beneficiaries. What does this actually mean at the desk level for adjusters and attorneys handling these claims?

Quick Level Set

It is true that starting on April 4, 2025, carriers and self-insured employers will now need to report to Medicare via Section 111 Reporting what portion of the total settlement amount is set-aside for future medical care when they settle a WC claim with a claimant-beneficiary for more than $750.

Desk Level Day-to-Day Claims Handling Impact

Investigation

In terms of day-to-day handling of claims by adjusters, all claims will still need to be vetted (at the onset of the claim and throughout the claim) to determine if the claimant is a Medicare beneficiary. It does not matter that the claimant was not a Medicare beneficiary at the time of the injury. It matters whether they are a beneficiary (or will become one) during the pendency of the claim / by the time of settlement.

Leveraging already available tools is the best way to determine if the claimant is on Medicare:

1.      Check their date of birth upon notice of the claim. Are they 65+ years old? If so, there’s a good chance they are on Medicare.

2.      Ask the claimant. When you take the recorded statement or otherwise interact with the claimant initially upon notice of the claim, ask them if they are on Medicare or plan to get on Medicare soon.

3.      Check your PAID Act data. Once you have the claimant’s full name, date of birth, and Social Security Number populated in the claim system, it should feed through the monthly query process for Section 111 Reporting. About 10 days after the query file is transmitted to Medicare, the carrier / self-insured / relevant vendor will receive a query response file back from Medicare. Once the claimant-beneficiary is confirmed, then it is important to take certain steps to ensure additional required data flows to Medicare as necessary via quarterly reporting.

Settlement Preparation Impact

As the claim progresses and the parties prepare for settlement, it is imperative to understand if the claimant-beneficiary will require future care for the claimed WC injury. And even if they do not require future care, it is important to find a way to document that appropriately. For cases that exceed Medicare’s workload review thresholds, we recommend parties follow documented protocols outlined by the carrier / self-insured or the third-party administrator (TPA), etc. To the extent the carrier / self-insured (or their TPA) do not wish to follow the same protocol for “under threshold” cases or wish to develop a new protocol, consider what follows.

What is an “Under Threshold” Case?

Since CMS established its voluntary workload review thresholds for review/approval of MSAs in 2001, CMS has maintained its position that their review thresholds are not a “safe harbor” from needing an MSA.

For WC claims involving Medicare beneficiaries, the applicable workload review threshold is $25,000. That means parties must settle for more than $25,000 in order for Medicare to review and approve an MSA amount via its voluntary process. Despite Medicare’s caution, many entities and stakeholders in the industry long chose to forgo MSAs in these “under threshold” cases, essentially treating the threshold exactly as a “safe harbor.”

Medicare is aware of the practice, and with this new reporting requirement is clearly trying to curtail the practice. If the claimant-beneficiary’s WC claim will settle for more than $750, the parties need to make preparations for an allocation of some sort.

Abbreviated MSAs (aMSAs) and Zero Dollar Indemnified MSAs (Zero iMSAs)

Sanderson Firm offers a couple of cost-effective and cost-saving solutions for these “under threshold” settlements that take into consideration the fact that a full-fledged MSA written to Medicare’s outdated standards (often resulting in unnecessary overfunding of future medicals) may not be the best fit when settling these relatively low dollar cases.

For admitted “under threshold” claims where the claimant-beneficiary requires some future care, our aMSA is a great option to explore. Our aMSA is prepared by in-house experts using streamlined medical, pharmaceutical, and other relevant claim records. It is written using evidence-based standards and provides a clinically defensible future allocation. Indemnification of the parties is available at no extra cost.

For admitted “under threshold” claims wherein the claimant-beneficiary requires no future care as indicated by their physician, our Zero iMSA provides a defensible zero-dollar allocation. Indemnification of the parties comes standard should Medicare attempt to challenge the allocation later.

Additionally, for denied “under threshold” claims where no or limited medical and indemnity payments have been made, our Zero iMSA is also a perfect solution to document the parties’ defensible position pursuant to the MSP statute. Of course, indemnification of the parties comes standard as well.

Reporting Settlements Using Sanderson Firm Products

Settlement of a claim with a Medicare beneficiary for more than $750 triggers quarterly mandatory reporting requirements, including the total settlement value, which Medicare refers to as “Total Payment Obligation to the Claimant” (TPOC). TPOC expands as of April 4, 2025 to include specific information about what portion of the settlement funds is set-aside for future Medicare-covered medical treatment. With April 4, 2025 fast approaching, please know our allocations are delivered with an accompanying chart that clearly outlines relevant required information to report in order to aid adjuster and attorney clients in understanding what information must feed over to Medicare following settlement.

Partnering with Sanderson Firm

We are a law firm offering nationwide Medicare Secondary Payer compliance services. We stay at the forefront of MSP compliance and are clear innovators in the industry with our cutting-edge competitive offerings. Please reach out if you have any questions or wish to make a referral for an aMSA or Zero iMSA today!

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