Medicare Secondary Payer Compliance in a Trump/DOGE Administration Era; Why Indemnified MSAs are Still a Great & Viable Option

Written by: Heather Sanderson

In November 2024, I authored an article titled, “How a Trump Presidency Could Reshape Medicare Secondary Payer Enforcement.” Now that the new administration has been in place for nearly three (3) months, a follow-up on this topic felt timely, particularly as Sanderson Firm has recently received many questions related to the new DOGE agency and what impacts, if any, the wave of federal layoffs might have on Medicare Secondary Payer (MSP) and the Centers for Medicare & Medicaid Services (CMS) initiatives.

As of the writing of this article, it is likely too early to tell, but we can “read the tea leaves” a bit. Many are aware that on January 21, 2025, the Department of Health & Human Services (HHS) issued a communications freeze, meaning that sub-agencies of HHS, such as CMS, cannot issue public documentation or communications “on — among other things — regulations, guidance, announcements, press releases, social media posts and website posts until such communications [are] approved by a political appointee.”

While the freeze was initially designated to last through February 1, 2025, based on recent inquiries to relevant agency staff, CMS is still subject to the freeze and cannot issue any formal communications, whether written or verbal, around MSP initiatives. It is unknown when the freeze will lift. At Sanderson Firm, we have experienced that CMS/MSP policy employees are still readily available for questions on files as needed and have been responsive to any case-specific inquiries. However, the MSP industry should not expect any CMS webinars/town halls discussing or outlining new or changed policies for the workers’ compensation/general liability/no-fault insurance payer industry or updated Reference/User Guides on MSP for the foreseeable future.

While the MSP division was largely unscathed following DOGE’s initial reduction in force for federal probationary workers about a month ago, it is unknown whether a newly planned and announced reduction in force by RFK, Jr. at HHS will impact the MSP division at CMS. As of March 27, 2025, HHS issued a fact sheet indicating a federal layoff of 10,000 HHS employees; more specifically, 300 of those layoffs are planned within CMS. It remains to be seen if those layoffs will impact the MSP division staffers.

Despite the turbulence in these federal changes, one thing that we know for certain is that mandatory Workers’ Compensation Medicare Set-Aside (WCMSA) reporting is still going into effect on Friday, April 4, 2025.

As of April 4, 2025, workers’ compensation payers of Medicare beneficiary settlements over $750.00 must report WCMSA information through Medicare Section 111 Total Payment Obligation to Claimant (TPOC) reporting. Failure to populate several of the new data fields related to WCMSA information can result in a “hard error” from CMS, meaning that CMS will reject the file record, and if not corrected timely, the workers’ compensation payer/insurer could face potential civil money penalties of up to $1,000 per day/per claim, adjusted for inflation.

Post 4/4/2025, all MSA types that reasonably recognize Medicare’s interest, submitted or not, are still viable options for workers’ compensation payers and nothing has changed in that regard. CMS was abundantly clear when they hosted a webinar last year on MSA reporting that their sole purpose in seeking MSA data was to close the gap on settlements occurring with Medicare beneficiaries, which included an MSA as part of the settlement, so that they can properly coordinate Medicare benefits post settlement as needed. CMS recognized non-submit MSAs as well as submitted MSAs as part of their discussion; there was no differentiation.

Despite insinuations made elsewhere in the MSP industry, the fraud, waste, and abuse target initiatives by DOGE/HHS seek to root out actual fraud (e.g., “phantom billing” Medicare for services or supplies that were never provided, “up-code billing” by billing Medicare for more expensive services than the services actually performed, etc.). Evidence-based non-submit MSAs are certainly not fraudulent on their face given CMS’ policy guidance confirming that it references evidence-based guidelines as a resource in determining the appropriate future medical care for an injured individual.

Some within the industry have mischaracterized the Indemnified MSA as a “dangerous deal”, citing the 4/4/2025 WCMSA reporting requirement and other government initiatives as evidence that CMS will more closely scrutinize and/or reject a non-submit evidence-based MSA (e.g., an iMSA). The reality is that these mischaracterizations are often only made by MSP vendors for the express purpose of inciting fear within the industry and to instead encourage the use of their products. It is also often borne out of the vendor’s inability, or plain sterility, to even offer a competitive indemnified MSA product.

Sanderson Firm has only seen an increase in demand for our Indemnified MSAs across well-respected and knowledgeable workers’ compensation primary payers, and the Indemnified MSA will continue to be a reasonable alternative to “traditional” submitted MSAs. The new MSA reporting requirement has not changed the landscape. CMS will be looking to ensure you have protected their interest with an MSA. CMS’ voluntary review process for MSAs is an option, certainly, and non-submit evidence-based MSAs are acceptable and allowable under the law pursuant to 42 CFR 411.46(d)(2), which allows parties to carve out a portion of the settlement for future medical, protecting the rest of the settlement dollars from Medicare’s recovery. Further, if CMS were to ever challenge a non-submit MSA, due process to demonstrate that the MSA was properly calculated must be provided by CMS. An Indemnified MSA provider, such as Sanderson Firm, stands behind its MSA fully and will walk through that appeals process and pay for relevant costs should that ever happen.

In summary, there will be more to come on the status of the new administration/DOGE on MSP and we will provide updates as they arise. For now, workers’ compensation payers should continue on with their MSA preferences as they have before and comply with the 4/4/2025 requirements. Should you have any questions, please contact me.

Stay tuned for Part 2 of our blog series, "Why a Diligent MSP Services Partner is Essential in the Ever-Changing Medicare Secondary Payer Landscape", coming next week! In this segment, we dive deeper into the crucial role of an experienced MSP partner in navigating complex compliance challenges and staying ahead of ever-changing regulations. Don’t miss out on valuable insights that can help your organization thrive in this dynamic environment!