Zero Medicare Set-Aside (MSA) Allocations: Clearing the Confusion and Strategies for WC Payers
How does one successfully settle a workers’ compensation claim with a Medicare beneficiary utilizing a zero Workers’ Compensation Medicare Set-Aside (WCMSA or MSA) allocation, particularly in scenarios where parties desire to submit the zero MSA to the Centers for Medicare & Medicaid Services (CMS) for review and approval? This question has come up quite frequently over the years.
The lack of clarity amongst workers’ compensation payers and settling parties seeking to settle with a zero allocation is not unwarranted, as there can be a great deal to unpack in strategy for obtaining a successful zero MSA approval from CMS. First, there are two (2) distinct reasons why parties may believe that a zero MSA is warranted in settlement of the workers’ compensation claim: 1) The WC claim is denied/controverted; or 2) The injured worker has completed treatment for his/her workers’ compensation injury.
To obtain approval, submitters of zero MSA allocations must comply with CMS’ requirements, which varies depending on whether it is a denied claim or claim with completed treatment. Further potentially compounding the conundrum of zero MSA allocations is that while CMS does review zero allocations, parties may find CMS’ requirements for approval of a zero allocation to be strict. Thus, at times CMS approval of a zero-allocation may either be a long-shot or completely unobtainable if the parties are unable to meet CMS’ requirements.
It is of course always important to note that CMS review of an MSA is recommended, but not required. CMS’ WCMSA Reference Guide notes: There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.”
For example, in a denied claim, payment of medical treatment or a settlement payment can obliterate parties’ ability to obtain an approved zero allocation. CMS may issue a counter high MSA amount, treating the claim as fully accepted. Or, if in a treatment completed situation, if parties are unable to obtain the treating physicians’ opinion as to the completed nature of treatment for the WC injury, CMS will also likely not approve the zero allocation.
For those WC payers that have a comfort/risk-tolerance level with non-submission, alternative methods will be provided herein. For now, let us dive into what’s involved for submission of zero MSA allocations to CMS:
Denied/Controverted Case
No medical expenses or indemnity benefits should be paid prior to the settlement unless the employer/carrier was required to pay by state law during an investigation period. In that case, the employer/carrier should provide a copy of the state law to CMS when submitting the MSA for approval. Generally, having made no payments to the claimant at the time of the submission of the MSA to CMS will provide submitters the best odds of obtaining approval of the zero allocation.
Any court orders or any other documentation which supports the denial of the case should be provided to CMS. Note that a court order where a judge simply approves the parties' stipulation to no liability is not persuasive with CMS. CMS takes the position that it will only accept a court order from a Judge which has rendered a decision after a hearing on the merits of the case. Further, if Medicare determines that a settlement has not considered Medicare’s interests, even in denied claims, it reserves the right to refuse to pay for services related to the WC injury until such expenses have exhausted the entire dollar amount of the entire WC settlement (see Section 4.1.4 of the WCMSA Reference Guide).
No Future Medical Care Needed
Section 4.2 of the WCMSA Reference Guide states that the following criteria need to be met for CMS to approve a zero allocation in this situation:
a) The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);
b) There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare's detriment; and
c) The individual's treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury.
Arguably, the most important prong here is the treating physician’s statement. CMS provides deference to the treating physician's opinion. An IME/QME opinion alone may not be sufficient or CMS to approve a zero allocation if the only medical report stating that no future treatment is required comes from someone other than the treating physician. Although it may not always be practical or easy to get a treating physician to provide this opinion, due to the deference that CMS provides to treating physicians, it may be well worth the effort to obtain it.
Conclusion and Alternative Strategies
Obtaining CMS approval on zero MSAs is not always possible. Because CMS submission of an MSA is optional (even where CMS workload thresholds are met), alternative options/settlement strategies for parties that believe that a zero allocation is appropriate but might not meet CMS’ requirements for approval should be discussed with a Medicare Secondary Payer (MSP) legal expert. Contact us to learn more.
