The Sky is Not Falling - Understanding the WCMSA Review Process
NOVEMBER 28, 2023
The Centers for Medicare and Medicaid Services (CMS) has been working overtime to ensure as many Medicare Set-asides (MSA) as possible are submitted through the voluntary Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) process.
Their latest townhall meeting outlines why interested stakeholders must partner with an experienced Medicare Secondary Payer (MSP) compliance partner. Is the sky falling? No! Remain calm and take reasonable steps to ensure compliance with the Medicare Secondary Payer (MSP) Act.
Understand Required vs. Recommended
A significant source of concern for interested stakeholders lies in the failure to differentiate between “required” and “recommended.”
Required: All parties to a workers’ compensation case[1] are required to consider Medicare’s interest.
Required: Attorneys are required under the Rules of Professional Conduct to protect their clients. One cannot simultaneously protect one’s client and Medicare.
Recommended: An MSA is the recommended tool to consider Medicare’s interests.
Recommended: An MSA is recommended in settlements that close out future medicals, and the employee is either a Medicare beneficiary or there is a “reasonable expectation”[2] of Medicare enrollment.
The term “Medicare Set-aside” is not codified in statute or regulation. Now is the time to understand what is required and recommended. There is a significant difference.
What Did CMS Say at the Townhall
In late 2007, the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) created reporting requirements on all workers’ compensation settlements.[3] Notwithstanding quick compliance by the insurance industry, CMS has been slow to enforce civil monetary penalties. CMS has been collecting information on open claims involving Medicare beneficiaries[4] and settlements.[5]
Based on its authority under these reporting requirements, CMS will require workers’ compensation insurance carriers[6]to report additional settlement information at some point in 2025. This additional information will include:
The total MSA amount;
MSA coverage period (if the MSA is greater than $0);
MSA funding mechanism – annuity or lump sum; and
The initial seed amount if the MSA is funded via an annuity.
CMS noted any claim with a reported MSA will include a “W” flag to prevent payment of medical services related to injuries described in the reported diagnostic codes. The bottom line is CMS will now have a process to track cases that did not undergo WCMSA review and approval.
The Sky is Not Falling!
The last two years have been filled with signs of trouble from CMS and how it views the WCMSA process. This started in January 2022, with the release of version 3.5 of the WCMSA Reference Guide and the inclusion of Section 4.3 – The Use of Non-CMS-Approved Products to Address Future Medical Care. While CMS backtracked two months later with clarification in version 3.6, many stakeholders believe the sky is falling.
For some, the November 13, 2023, CMS Townhall related to Section 111 Reporting confirmed the soothsayer’s prophecy. The reality is predictions of an impending apocalypse are greatly exaggerated. Relax, the sky is not falling!
Nothing has changed in terms of the MSP Act. While parties to a workers’ compensation case are required to consider Medicare’s interest, inclusion of an MSA is still only recommended in commutated settlements;
Nothing has changed in terms of the WCMSA review and approval process – it is still 100% voluntary; and
Nothing has changed regarding CMS’s right to determine that the burden has been shifted onto Medicare. This remains a function of the courts, and Medicare’s right of recovery does not ripen until it makes a “primary payment.”[7]
CMS was given the road map to recovery with Section 111 Reporting. They are taking further steps toward consistently enforcing the MSP Act. The added function to “flag” cases will enhance their ability to audit settlements and ensure Medicare remains the secondary payer post-settlement. Notwithstanding this added functionality, the bottom line is never to have the irrational fear of being reasonable in your settlements.
Conclusions
Relax. The sky is not falling! The moral of the story is to have courage and remain strong.
MSA Source uses an evidenced-based approach when preparing all MSAs. Our team is available to provide information on the WCMSA review and approval process. Contact us today to schedule a complimentary in-person or online training session for your team to provide you with all the information you need.
Those who take reasonable steps to ensure Medicare remains the secondary payer post-settlement have nothing to fear. Only those who have avoided the consideration of Medicare’s interests in their workers’ compensation settlements will have a pause when settling their next case. Now is the time to review your settlement processes and ensure they comply with the MSP Act.
[1] The Medicare Secondary Payer Act applies to all personal injury cases. The focus of this article is workers’ compensation cases.
[2] This term is not defined in statute or regulation. The WCMSA Reference Guide defines this term in Section 8.1.
[3] The MMSEA created reporting requirements for all Non-Group Health Plans (NGHP) (no-fault, liability, and workers’ compensation insurance plans), and Group Health Plans (GHP).
[4] Ongoing Responsibility for Medicals (ORM), means the Required Reporting Entity’s (RRE) ongoing responsibility to pay for the injured party's/Medicare beneficiary's medicals associated with the claim.
[5] Total Payment Obligation to Claimant (TPOC) refer to the dollar amount of the total payment obligation to, or on behalf of, the injured party in connection with the settlement, judgment, award, or other payment in addition to/apart from ORM.
[6] The focus of this article is workers’ compensation cases. These same requirements will apply to all injury-related cases.
[7] Perry v. United Food and Commercial Workers District Union, 405, 64 F.3d 238, 243 (6th Cir. 1995).