Medicare Set-Asides and CMS

The Centers for Medicare & Medicaid Services’ (CMS) review process for Workers’ Compensation Medicare Set-Asides (WCMSAs) has officially been in place for 20 years now, with the process first being introduced by CMS in 2001. A WCMSA is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. Medicare’s guidance dictates that the WCMSA funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease.

The primary intent behind a WCMSA is to protect Medicare’s future interest. It further aims to prevent shifting the burden of future injury-related medical care onto the Medicare Trust Fund. Over the years, CMS has refined its processes and procedures regarding its criteria for review. It is critically important to understand these processes before submitting a proposed WCMSA to CMS.

While there are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process. A CMS-approved WCMSA secures a set dollar amount for future medical exposure with Medicare. When the WCMSA fund is appropriately spent, Medicare will again assume primary payment responsibility. If parties choose to submit a WCMSA for review, then CMS requires that submitters comply with its established policies and procedures.

Review Thresholds

Should the workers’ compensation settlement meet CMS’ workload threshold for review, CMS will review a proposed WCMSA. The current thresholds for CMS to review a proposed WCMSA are:

•    The injured worker is a current Medicare beneficiary and the settlement value is $25,000 or greater.

•    The injured worker has a reasonable expectation of Medicare entitlement within 30 months of the settlement and the anticipated settlement value is $250,000 or greater. An injured worker would have reasonable expectation of Medicare entitlement if she would potentially be eligible within 30 months of the settlement for Medicare. Some examples of where this would occur would be if the injured worker has applied for Social Security Disability (SSD), or if the injured worker is 62.5 years of age or older. 

It is important to note that CMS’ threshold for review is not considered a bright-line rule/safe harbor as to when a WCMSA or protection of Medicare’s future interest might be required. To the extent a workers’ compensation payer enters a settlement that forecloses any future responsibility for medical treatment, then a WCMSA should be considered and incorporated into the settlement as a protection of Medicare’s future interest.

If the settlement does not meet CMS review threshold, then a non-submitted MSA should be considered dependent upon the specific facts of the settlement and the anticipated need for future medical care as it relates to the underlying injury or injuries. CMS, in fact, notes two specific examples within its WCMSA Reference Guide where the settlements did not meet CMS threshold for review, but that, if no future medical allocation/MSA were provided, the entire workers’ compensation settlement would be potentially subject to recovery by CMS from any party involved in the settlement. 

Re-Review and Amended Review

Should the WCMSA not be approved as proposed (CMS may issue a counter-high or a counter-low if its calculation of the appropriate WCMSA amount is greater than a 5% difference) and/or the parties disagree with CMS’ determination of the WCMSA amount, there are two review options: re-review and amended review.

For the standard re-review process, the parties must believe that there is a mathematical error or missing documentation during CMS’ review process. In other words, where the submitter disagrees with CMS’ decision because CMS’ determination contains obvious mathematical mistakes, or where the submitter has additional evidence not previously considered by CMS—which was dated prior to the submission date of the original proposal, and which would warrant a change in CMS’ determination—the parties may request a re-review by CMS.

In 2017, CMS introduced an amended review process that allows parties in certain unsettled cases to request approval of a lower MSA allocation based, in part, on new medical evidence or a change in the claimant’s treatment regimen occurring after the original MSA. To qualify for the amended review process, the CMS determination date must be at least one year prior, but no older than six years; and the projected care must have changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

While the re-review parameters can be somewhat limited, the amended review process could breathe new life into efforts to settle claims that did not settle following a CMS counter-higher approval. Identifying cases ripe for amended review could help close out some claims that parties were previously unable to settle due to the previously high CMS approval amount.

How to Avoid Common Submission Errors

The first key to a successful submission is documentation; the second is experience in understanding what CMS requires to review a WCMSA. CMS will issue a development request for additional information if the WCMSA is submitted without the required supporting documents. It is imperative that a WCMSA submission includes current medical records, a concise and thorough summary of the medical treatment, and rationale to support the WCMSA. 

CMS currently averages 12 days to return an approved MSA amount when the WCMSA is submitted that follows CMS’ guidelines. The WCMSA Reference Guide details the requirements necessary to successfully submit the WCMSA for approval. To avoid a missed WCMSA CMS approval opportunity, it is recommended that submitting parties secure the assistance of certified Medicare specialists experienced with this detailed process.

In summary, navigating the CMS review process involves experience, preparation, and an understanding of CMS’ guidelines and procedures. Further, as CMS does update its WCMSA Reference Guide on a regular basis, it is important to stay abreast of any changes to CMS’ policies and procedures. A successful settlement with CMS approval on a WCMSA is completely plausible where parties comply with CMS requirements and understand the processes and procedures.