CMS Plans to Capture WCMSA Data: What to Expect

By Jeremy Farquhar, Mark Popolizio, J.D.

December 7, 2023 / 11 min read

As reported in our recent article, the Centers for Medicare and Medicaid Services (CMS) recently held a webinar to discuss its plans to require Section 111 Responsible Reporting Entities (RREs) to report various data points related to workers’ compensation Medicare set-aside (WCMSA) arrangements as part of its total payment obligation to the claimant (TPOC) reporting trigger.^[1] As outlined by CMS thus far, the types of changes contemplated by the agency could have a significant impact on Section 111 reporting and WCMSA compliance, including the use of non-submit and Evidence based Medicare set-aside arrangements. Headed into the new year, we will need to closely monitor future CMS updates as this new process develops.

Two people working together at a desk using laptops, paper, and pencils.

In the interim, to help process the information known at this time, the authors have prepared the following “Question and Answer” resource from the information provided by CMS on its recent webinar, along with an ending segment on important “go forward consideration points” as follows:

Questions & Answers

1. In general, what are the changes CMS is planning?

As noted above, CMS has announced plans to require Section 111 RREs to report various data points related to WCMSA arrangements as part of its TPOC reporting trigger. Right now, CMS’s plans are at their beginning stages, with CMS estimating a January 2025 implementation date.

2. Will the planned changes only apply to workers’ compensation (WC) claims?

Yes. CMS has advised that its planned changes will only pertain to workers’ compensation cases and will not apply to no-fault or liability coverages.

3. To which WC cases will these upcoming changes apply?

CMS’s upcoming changes will apply to WC claims involving Medicare beneficiaries where TPOCs (settlements) include a WCMSA. Regarding non-Medicare beneficiaries, CMS explained on the webinar that while a WCMSA proposal can be submitted to the agency for review under its separate WCMSA review process in certain situations where the claimant is not a Medicare beneficiary but has a reasonable expectation of becoming Medicare eligible within the next 30 months, reporting of the required WCMSA data points under its upcoming changes will not be possible, or expected, until/unless the claimant is determined to be Medicare eligible.

4. Do the upcoming changes apply to both WCMSAs submitted to CMS for review and non-CMS approved MSAs or Evidence based MSAs?

Yes. As noted in Q/A #3, CMS has advised that its plans to expand TPOC reporting to capture WCMSA data will apply to WC settlements involving Medicare beneficiaries that include WCMSAs, and this requirement will apply regardless of whether the WCMSA is submitted to CMS for the agency’s review, or in relation to a non-approved MSA or evidence based MSA, or in situations where ongoing responsibility for medicals (ORM) continues for some injuries associated with the claim but not others. On this point, CMS noted that while its longstanding WCMSA submission process will remain optional, the reporting of the required WCMSA data points through Section 111 under its upcoming process will not be optional.

5. Will reporting of the WCMSA data points be required regardless of WCMSA amount?

Yes. As part of its upcoming process, CMS stated that RREs will need to report the required data points (see Q&A # 5 below) regarding WCMSAs regardless of the WCMSA value, even if the WCMSA amount is zero.^[2] Further, CMS explained that the required data points will need to be reported regardless of whether the settlement meets CMS’s current $25k WCMSA review threshold, which is a threshold CMS uses separately to evaluate whether it will review a WCMSA proposal. Thus, in other words, the current $25k WCMSA review threshold CMS uses for review purposes will not apply to the forthcoming Section 111 WCMSA reporting requirements. Rather, as CMS explained, under its upcoming process the WCMSA data points will need to be reported, regardless of whether CMS’s $25k WCMSA review threshold is met and whether a WCMSA is submitted to CMS for review. However, as clarified by CMS during the Questions and Answers segment of the webinar, changes related to the new Section 111 WCMSA reporting requirements will not negate the longstanding $750 workers’ compensation “low dollar” TPOC threshold for physical trauma-based claims and, as such, the new requirements will apply only to those claims required to be reported under CMS’s Section 111 TPOC reporting threshold guidelines.

6. What are the WCMSA data points RREs will need to report?

On the webinar, CMS stated that it plans to collect the following data elements via the Section 111 Claim Input File layout:

MSA Amount – This will be the total MSA amount and will be required when reporting a workers’ compensation TPOC where there has been an associated WCMSA established.
MSA Period – This will represent the period of coverage, in years, and will be required in any scenario where the MSA amount is greater than $0.
Lump/Annuity Indicator – This data element will indicate whether the settlement is being paid out via a lump sum or as a part of a structured annuity and will be required in any scenario where the MSA amount is greater than $0.
Initial Deposit Amount – This data element will only be required for those scenarios in which the settlement is being funded via a structured annuity.
Anniversary (Annual) Deposit Amount – This data element will be required only in scenarios involving a structured annuity. As part of the Q&A session, CMS indicated that in situations where there is a structured settlement/annuity, the Anniversary (Annual) Deposit Amount is expected to be submitted one time with the initial TPOC report and not on an annual basis.
Case Control Number – A Case Control number is created by CMS when they establish a WCMSA within their internal processes. If a WCMSA has been established via the voluntary process, prior to the Section 111 report having occurred, the RRE will have the ability to submit the associated Case Control Number via the Section 111 report. While this is an optional field, CMS encourages RREs to report it when it may be available as it would be helpful for them in making the connection to the pre-existing WCMSA.
Professional Administrator EIN – This would be the tax ID of the professional administrator in scenarios where a professional administrator is being utilized after the establishment of the WCMSA. This will also be an optional field, but CMS encourages submission of this information, if possible, when applicable.

Of note, while CMS will collect the above listed data points through the Claim Input File, CMS indicated that no changes are planned regarding the Claim Response File layout.

7. Will CMS introduce new “errors” as part of the Section 111 reporting process?

Yes. Per CMS, new errors (both hard and soft edits) will be introduced and returned in relation to issues identified with the newly added WCMSA fields. On the webinar, CMS suggested that further details regarding any newly introduced error codes would be relayed via future communications. Here, CMS made it a point to highlight again that all information being provided was part of an early announcement and, as such, not all technical details have been sorted out at this point and that further information would be communicated in the future.

8. Will voluntary testing be available?

Yes. While CMS has no plans for special or required testing, the agency noted that RREs interested in testing will be able to do so via the standard predefined Section 111 testing process and that RREs would be notified when testing becomes available (currently estimated for Fall 2024, though this is subject to change). On the webinar CMS encouraged RREs to coordinate any testing with their assigned BCRC EDI representative.

9. What are CMS’s projected timelines for these changes?

CMS has provided the following high-level estimates regarding its anticipated roll-out of the above changes:

Early 2024 - RREs will be provided with the updated file layout and newly introduced error codes
Fall 2024 - The ability to test the new changes will be made available
January 2025 - Final implementation of the new changes/requirements

Regarding the above, CMS was very careful to note that these dates are tentative and could change.

10. Has CMS indicated how it will use the information?

Yes. CMS on the webinar noted that a WCMSA record will be posted to the Common Working File (CWF) database which will prevent Medicare from making primary payments in relation to any ICD codes connected to the WCMSA. Also, CMS indicated that notification of the WCMSA would be sent to the beneficiary specifying the process for attestation and exhaustion. Further, CMS noted that once the new changes are implemented within the Section 111 reporting process, CMS will continue to facilitate the longstanding voluntary WCMSA process, as they have in the past, while the data collected via Section 111 will serve to supplement that existing process.

11. Has CMS made changes to existing Section 111 reporting requirements regarding the planned changes?

No. On the webinar, CMS stated that its upcoming changes do not alter standard pre-existing Section 111 reporting requirements, including the $750 TPOC reporting threshold (as defined by CMS). On this point, CMS was careful to note that its existing Section 111 reporting guidelines and reporting triggers remain the same, and that the upcoming changes do not negate or override current guidelines via which reportability is determined.

12. Has CMS established a process for questions and feedback?

Yes. CMS has established a new e-mail address, S111WCMSA@cms.hhs.gov, for questions and feedback regarding its planned upcoming changes.

Going forward – important consideration points

When the dust settles, CMS’s plans to capture WCMSA data points as part of TPOC reporting can be viewed as a significant expansion of its Section 111 reporting process. As CMS moves forward with further developing and, ultimately implementing it plans, there are certain key items to watch and important points for insurers to consider.

From a Section 111 reporting standpoint, the technical changes to the Section 111 process as outlined thus far by CMS are significant in nature, although they are relatively straight forward. On this point, as discussed above, CMS plans to expand the Claim Input File by adding seven fields to capture the WCMSA data points but does not plan any changes to the Claim Response File. In addition, CMS will be introducing new Section 111 reporting errors as part of its upcoming changes.

From a WCMSA perspective, an important point to consider is that CMS’s plans to capture WCMSA data points will apply to all WCMSAs – including non-approved MSAs and Evidence based MSAs. As such, CMS will now have better - and unprecedented - visibility into the use of WCMSA arrangements as part of WC settlements. Up until this point, CMS has lacked the ability to know about and track non-CMS approved MSAs or Evidence based MSAs. However, under CMS’s planned changes, the agency will now have, for the first time, greater knowledge about, and visibility into, the use of non-CMS approved WCMSA arrangements. Accordingly, going forward, it will be interesting to see how CMS, armed with this new WCMSA information, will use this data to scrutinize or question WCMSA arrangements established outside of its review process and, if this could raise potential issues for claimants (and potentially other parties) per Section 4.3 of CMS’s WCMSA Reference Guide.[3] While CMS did not specifically reference such plans as part of this webinar, this will certainly be one of the areas to watch as this new process unfolds and eventually gets implemented.

Questions?

Please feel free to contact the authors if you have any questions, or to learn how Verisk can help you with your Section 111 reporting obligations and how our several different WCMSA services can help you reduce costs and improve claims outcomes. In the interim, the Verisk policy team will monitor future developments and provide updates as warranted.

[1] Very generally, under CMS’s TPOC reporting trigger, reporting is required upon claim resolution (or partial resolution) through a settlement, judgment, award, or other payment for cases in which the claimant is/was a Medicare beneficiary as of the TPOC date and where medicals were claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals. Under CMS’s current thresholds, WC settlements greater than $750 are required to be reported under the Section 111 reporting process. See generally, CMS’s Section 111 NGHP User Guide (Version 7.3, August 7, 2023), Chapter III, Section 6.4. and CMS’s Section 111 NGHP User Guide (Version 7.3, August 7, 2023), Chapter III, Section 6.4.4.1.

[2] Id.

[3] As discussed in Verisk’s recent article, in general, CMS as part of Section 4.3 addressed the use of EBMSAs and Non-Submit MSAs. Specifically, CMS, while acknowledging its WCMSA review and approval process is voluntary, stated that it viewed “the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.” See, CMS’s WCMSA Reference Guide, Version 3.9 (May 15, 2023), Section 4.3. As such, CMS stated it “may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate.” Id. While CMS did clarify that it may consider and accept evidence that an EBMSA or a Non-Submit MSA funding was sufficient, it has not provided any metrics or guidance regarding how that is evaluated.

Breaking down CMS’s plans to capture WCMSA data

Questions & Answers

Going forward – important consideration points

Questions?