The Current Status of Submitted v. Non-Submitted Medicare Set-Asides (MSAs)

Early on this year in January, there was quite the commotion in the workers’ compensation industry when the Centers for Medicare & Medicaid Services (CMS) released an updated to the WCMSA Reference Guide (Reference Guide) which included new information as it pertains to Workers’ Compensation Medicare Set-Asides (WCMSAs). Of significance was the inclusion of Section 4.3, which for the first time, addressed CMS’ position on Non-Submit/Evidence-Based Medicare Set-Asides. Before delving into the status of submitted v. non-submitted MSAs, let’s look at the events that occurred early on this year. First, let’s review the initial Reference Guide update on Non-Submit MSA’s.

·        January 13, 2022- Section 4.3 is added to the Reference Guide, addressing Non-Submit/EBMSAs. This update provided that unless the CMS program has reviewed an MSA, it cannot be certain that its interests have been protected. Thus, unless CMS approves a WCMSA, it will deny payment for medical services to the beneficiary up to the net settlement amount, less procurement expenses, before CMS will resume payment for the injury related medical expenses.

Word of this update traveled fast, and the workers’ compensation/Medicare Secondary Payer (MSP) industry had numerous questions/noteworthy concerns about the language chosen for inclusion in the updated Reference Guide section 4.3.

The following updates and clarifications were delivered over the next 90 days.

·        February 17, 2022: CMS hosts a WCMSA webinar. During the webinar, CMS acknowledges that in submitted MSAs, the Workers’ Compensation Review Contractor (WCRC) reviews proposed WCMSAs with a “worst case scenario” allocation philosophy. CMS additionally acknowledged that the CMS submission process is a wholly voluntary process. Additionally, regarding Non-Submitted/EBMSAs, CMS softened its stance on the webinar from its initial messaging in the January WCMSA Reference Guide to comment that Non-Submitted MSAs would not automatically be assumed as a burden shift to Medicare, and that nothing has changed from a legal, regulatory, or legislative standpoint with the Section 4.3 update. Thus, non-submit MSAs are still recognized, legitimate and not automatically deemed a burden shift so long as the beneficiary and his/her representatives can prove appropriate allocation and exhaustion of the Non-Submit MSA/EBMSA funds.

·        March 21, 2022: In this update to the Reference Guide, CMS revised Section 4.3 and softened the language. The following sentence is now also included in Section 4.3:

“As a matter of policy and practice, CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate.” (Emphasis added).

Note that CMS again uses soft and permissive language (“may”) here to describe its ability to deny payment. In the prior version of the Reference Guide, CMS used the phrase “will deny payment.” Thus, this language change clearly signaled that parties may prove that the Non-Submit MSA was appropriately allocated for and a protection of Medicare’s interests.

Commentary:

The million-dollar question that Sanderson Firm is asked quite often, is what is the status on Non-Submit/EBMSAs now, nearly 9 months since the initial inclusion of 4.3 in the Reference Guide, and 6 months since the clarification to 4.3 which occurred in March?

While there have been no known challenges/benefit denials in settlements with Non-Submit/EBMSAs to date, and no additional guidance updates on this matter since March, there have been some resulting changes/impact to settlements in which parties desire to incorporate a Non-Submit MSA into workers’ compensation settlements with Medicare beneficiaries in some jurisdictions.

Sanderson Firm has noticed a lack of awareness around the March 21, 2022, Reference Guide update/change to 4.3. Unfortunately, despite the update/clarification, some claimant attorneys and even Judges have unfortunately misinterpreted CMS’ WCMSA Reference Guide update from January to now mean that submission of MSAs to CMS is mandatory where review threshold is met. However, as mentioned above, the March update to the WCMSA Reference Guide makes clear that submission of MSAs to CMS remains a voluntary process, and that Non-Submit MSAs would not automatically be deemed a burden shift to Medicare. Parties may demonstrate to CMS that the Non-Submit/EBMSA allocation/exhaustion was appropriate. Further, on the February webinar, CMS made clear that nothing from a legal, regulatory, or legislative standpoint has changed with the Section 4.3 update.

As discussed in many of our prior blogs, Non-Submit MSAs are permissible pursuant to 42 CFR 411.46(d)(2), and so long as the MSA provider/vendor can appropriately stand behind the methodology of calculation of the Non-Submit/EBMSA, the MSA will be recognized, and the rest of the settlement dollars will be protected.

Thus, the industry is currently in a position today where Non-Submit/EBMSAs are still being utilized in many settlements for those that understand the legal backing of 42 CFR 411.46(d)(2) to Non-Submit MSAs and that CMS is no longer taking the position that a Non-Submit/EBMSA would be deemed automatically to be a burden shift to Medicare. Parties seeking to continue to utilize Non-Submit MSAs should take solace in knowing that a well-documented/allocated EBMSA will withstand any potential future CMS scrutiny, and all parties, including the beneficiary, will be protected. Only the Non-Submit MSA/EBMSA will need to be exhausted before Medicare resumes primary coverage and the rest of the settlement dollars will be protected from CMS recovery.

Interestingly, regarding submitted MSAs, Sanderson Firm and the industry are currently seeing a trend in which the WCRC is taking an increased amount of time in reviewing submitted MSAs. Turnaround times for MSA review at the WCRC are now currently averaging around 30-45 days, rather than the previous timeline of 14-20 days. Further, the industry is experiencing an uptick in development letters, which are documentation requests that must be fulfilled for the WCRC to review the proposed WCMSA.

Sanderson Firm will continue to monitor WCMSA/Non-Submit MSA trends and provide updates as they arise. Parties should determine their individual settlement goals and objectives when determining whether to submit an MSA to CMS or utilize a Non-Submit MSA.

Sanderson Firm provides both standard WCMSAs and CMS submission, as well as an Indemnified Non-Submit EBMSAs (iMSA). Contact me to learn more about these services or for any general MSA/MSP questions, at heather@sandersoncomp.com.