The Impact of State Fee Schedules on Medicare Set-Asides

Written by: Kristina Bonanno, Esq. 

Medicare Set Asides (MSAs) are a standard mechanism to protect Medicare’s interest in workers’ compensation settlements involving Medicare beneficiaries as well as reasonably expected Medicare beneficiaries. The goal is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for claim-related conditions during the claimant’s life, and to set aside sufficient funds as part of the claim settlement to cover that cost.

The jurisdiction of the workers’ compensation claim dictates the pricing utilized when preparing the MSA. Most states have a workers’ compensation fee schedule that is appropriate to price the medical treatment allocated for in the MSA. There are some states; however, that do not have state workers’ compensation fee schedules to price an MSA. Indiana, Iowa, Missouri, New Hampshire, New Jersey, and Wisconsin do not have fee schedules. Full and actual charges, also known as Usual and Customary (U&C) pricing, are appropriate to be utilized to price medical treatment for MSAs in these jurisdictions.

For the remaining jurisdictions where a state fee schedule exists, parties should be aware of the impact that a fee schedule update could have on the value of the MSA. For example, the Florida legislature recently passed a bill that was signed into law by the governor increasing the workers’ compensation medical fee schedule effective January 1, 2025. The bill increases the maximum reimbursement allowance for medical services from 110 percent to 175 percent of the reimbursement amount allowed by Medicare, with surgical procedures increasing from 140 percent of the amount allowed by Medicare to 210 percent.

These increases will drastically impact MSA values once they take effect in 2025 and parties in any jurisdiction that are aware of pending fee schedule updates would be encouraged to re-evaluate claims for settlement. Further, workers’ compensation payers may wish to obtain an MSA and possible CMS approval before any fee schedule increases take effect as this fee schedule pricing adjustment could cause a drastic cost increase in the MSA.

The Centers for Medicare & Medicaid Services (CMS) Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide notes that CMS will apply the most current version of the state’s fee schedule and that if a state institutes or changes a fee schedule, CMS will apply the new fee schedule immediately upon learning of its official publication, for any cases still in process on that date. See CMS WCMSA Reference Guide Section 9.4.4, step 5.

Using the State of Florida increases noted above as an example, if an MSA was obtained and submitted and CMS completed its review in 2024 the current fee Florida fee schedule pricing would be applied to CMS’ determination. If a case was submitted after January 1, 2025, or had been submitted in 2024 but CMS did not complete their review and issue a determination until 2025, then the increased fee schedule pricing would be applied when the new Florida fee schedule becomes effective January 1, 2025.

If the parties desire CMS approval of an MSA it is worth noting that once CMS has approved an MSA that approval remains valid indefinitely unless additional review is requested so if an MSA was approved by CMS in 2024 but the case did not settle until a later date, the 2024 CMS approval would still be valid.

Most states update their fee schedules annually, although updates may be less frequent in some jurisdictions depending on their regulations. This is another reason we would recommend updating an MSA if a year or more has passed since the last MSA was completed and the claim has not yet settled to ensure that the MSA includes the most current treatment recommendations and pricing to give an accurate picture of what amount should be set aside for future medical care.  Sanderson Firm monitors fee schedule updates across the nation and maintains access to pricing databases that provide the most current fee schedule pricing.

If you have questions regarding the impact of state fee schedules on MSAs or if you would like to engage Sanderson Firm for our MSA services, please contact us.