Zero Medicare Set-Aside (MSA) Allocations: Recent 2023 Updates and Recommendations on Fully Denied/Completed Treatment Workers’ Compensation Claims

By: Kristina Bonanno, Esq. and Brendon De Souza, Esq.

Our office previously published a blog article addressing the confusion workers’ compensation payers may face when considering a Medicare Set-Aside that does not allocate for any amount of Medicare-covered, claim-related medical expenses (Zero MSA). A link to that prior blog can be found here. Zero MSAs are common and appropriate on workers’ compensation claims in either of two scenarios: 1) The claim is fully denied, or 2) The claim was compensable, but the injured worker has completed all injury-related treatment. Typically, in the latter scenario, the treating physician will assert in writing that the injured worker will not require any future medical treatment as it relates to the workers’ compensation injury to further support the zero MSA.

Generally, achieving approval from the Centers for Medicare & Medicaid Services’ (CMS) on a submitted Zero MSA can be complicated as the Workers’ Compensation Review Contractor (WCRC) is quite stringent in approvals of zero MSAs. It is important to note that CMS submission of any MSA, even a Zero MSA, is never required because CMS review and approval remains a voluntary process. The 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.”

The industry has continued to experience the trend that a submitted Zero MSA will not be approved by the WCRC if the workers’ compensation employer/carrier has paid medical expenses or indemnity benefits under the claim. The only exceptions are if the treating physician provides written confirmation that no future medical treatment is necessary, medical and indemnity payments were made as required by state law during an investigation period, or a court order was issued (after a hearing on the merits) confirming that the employer/carrier is not responsible for medical treatment.

Some workers’ compensation payers may also find it difficult to provide CMS with the required medical records. CMS requires the last two years of treatment records be provided for review, regardless of who paid for treatment. In cases where claims have been denied and no payments have been made, some of our clients have struggled to provide two years of treatment records on their own and must rely on claimants and opposing counsel to assist with obtaining the needed medical records.

Additionally, if there has not been any treatment in the last 6 months prior to submission, CMS may require statements from the treating providers to determine 1) the last date of treatment, and 2) if there are any future treatment recommendations. Unfortunately, this further lengthens the CMS submission process and settlement can be delayed depending upon the responsiveness of the physician.

Another trend we have seen is an increase in CMS issuing development letters requesting draft or final settlement documents. If there are no settlement documents, CMS will require a detailed breakdown of the settlement amount. While CMS has a reasonable interest in ensuring no portion of the settlement is being allocated for future medical care, the detailed breakdown of the settlement may be difficult to assess in cases where settlement negotiations remain ongoing. It has been our experience that the higher the estimated settlement amount the more likely CMS will be to issue a development letter raising questions about the settlement or whether there have been any court orders issued in the case.

For Zero MSAs where treatment has concluded, historically, it was sufficient (in most cases) to provide CMS with a treating physician statement that no future treatment is required. CMS would typically issue an approval of the Zero MSA if such a statement was provided; however, recent case examples we have encountered have demonstrated that this type of physician statement may not be enough to ensure CMS approval of the Zero MSA.

Recent feedback we have received from CMS on zero allocations suggests that the only way to ensure CMS approval of a Zero MSA is by submitting a court order issued after a hearing on the merits of the case that states that the carrier is not responsible for future treatment of the work injury. Anything short of this runs the risk of a counter-higher determination as the underlying medical records may include issues of causation raised by treating physicians.

Understanding that court orders may not be able to be reasonably obtained in all cases, should workers’ compensation payers desire CMS approval of a Zero MSA, they should be vigilant in making sure no medical or indemnity payments are made on denied claims and that any payments that are made on the claim are appropriately categorized.

For claims where treatment has concluded, a physician statement should be obtained to certify that no future treatment is being recommended. If there were any questions surrounding causation, these should try to be resolved with the treating physician or court as soon as possible so that there is consistency in the records instead of questions. If the estimated settlement amount is significantly above the threshold for CMS submission, workers’ compensation payers should be prepared to provide a breakdown of the settlement amount to show CMS that no portion of the settlement is being allocated for future medical care and the parties are not attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment. 

Addressing these issues ahead of submitting to CMS will give workers’ compensation payers the best chance for CMS approval of a Zero MSA should CMS approval be desired by the settling parties. If the circumstances of the claim still leave areas of concern, non-submit reports and settlement addendums may be good alternative ways to address Medicare Secondary Payer issues for the claim.

If you have questions regarding Zero MSAs or if you would like to engage Sanderson Firm for our MSA services, please contact us.