Summary of April 2024 CMS Q&A session on new process for Section 111 reporting

By Mark Popolizio, J.D., Jeremy Farquhar

April 26, 2024 / 14 min read

On April 25, 2024, the Centers for Medicare and Medicaid Services (CMS) held a “Question and Answer” session to further discuss its plans to require Section 111 Responsible Reporting Entities (RREs) to report various workers’ compensation Medicare set-aside (WCMSA) data points as part of its TPOC reporting trigger.^[1] CMS held this special Q&A session in follow-up to its April 16^th webinar as technical difficulties precluded the agency from taking questions during the webinar.^[2]

CMS’s TPOC/WCMSA reporting process

By way of brief background, under CMS’s forthcoming TPOC/WCMSA reporting process, RREs will be required to report certain WCMSA data points for all TPOCs (settlements) involving Medicare beneficiaries which include a WCMSA. Reporting of the WCMSA data will be required whether or not the WCMSA is submitted to CMS for review/approval and will be required for WCMSAs included as part of a settlement that does not meet CMS’s voluntary WCMSA review thresholds (“non-threshold” WCMSAs). Voluntary testing starts October 7, 2024, with the new reporting requirements starting on April 4, 2025.^[3] This new process is prospective in nature meaning that the reportable WCMSA data points will only be required for coverage reports with TPOC dates April 4, 2025, or later.^[4]

In terms of released resources, CMS held its first webinar in November 2023. CMS then issued an Alert dated February 23, 2024 [see our article here] providing additional information, including the data fields to be reported and new Section 111 error codes. CMS then incorporated much of the information discussed in its first webinar and alert as part of its recently released Section 111 NGHP User Guide (Version 7.5). The reportable WCMSA data fields, as outlined in User Guide (Version 7.5), can be viewed here. On April 16^th, CMS held its second webinar during which, as noted above, the agency was unable to take questions due to technical difficulties. Against this backdrop, CMS scheduled this special “Question & Answer” session held on April 25^th.

Summary of CMS’s Q/A Session

Overall, CMS addressed several questions on a range of different topics related to its new process during this hour long session. For the most part, much of the information discussed was previously outlined by CMS in the agency’s resources as referenced above, although CMS did provide additional information on some other points raised by the participants which it had not previously addressed.

The authors provide the below outline of selected points discussed by CMS as part of this session as follows:^[5]

Application - CMS reiterated that its new TPOC/WCMSA reporting process only relates to workers’ compensation claims.

Field 37 (MSA Amount) - CMS addressed a question received through its Section 111 WCMSA mailbox concerning whether the MSA Amount field should only include the WCMSA payout value, or if non-allocated funds should also be included within the reported MSA Amount. In response, CMS clarified that the MSA Amount should only be the funds that have been set aside for payment of future medicals that would otherwise be covered under Medicare. CMS noted that funds allocated for non-medical related expenses should not be included within the submitted MSA Amount as these expenses are not the type of items included as part of a WCMSA.

Further, a participant asked CMS if the TPOC amount and MSA Amount would/should be the same in a situation where a TPOC only settled medicals. In response, CMS indicated that this would not necessarily be the case. CMS explained that the WCMSA amount is only one component of a TPOC, and that a TPOC could also include funding and items in addition to a WCMSA, such as resolving past debts, payment of a prior conditional payment to CMS, or potentially other items unrelated to a WCMSA. On this point, CMS noted that the MSA Amount would not include these types of items and is limited to funds to cover a claimant’s future medical care that would otherwise be covered by Medicare.

Field 39 (Lump Sum or Structured/Annuity Payout Indicator) and Field 40 (Initial Deposit Amount) – Regarding these fields, a participant asked what CMS means when referencing the “combination” of a lump sum and an initial deposit amount. In response, CMS stated that this refers specifically to scenarios in which the WCMSA funds are distributed partially via lump sum payment, and partially through a subsequent structured settlement/annuity. In this instance, CMS indicated that the RRE should report the Lump Sum or Structured/Annuity Payout Indicator (Field 39) as Structured/Annuity (a value of S would represent Structured/Annuity) and the Initial Deposit Amount (Field 40) should represent a combined value of the lump sum and the value of the initial deposit for the structured settlement/annuity.

RRE submissions of workers’ compensation TPOCs with $0 MSA Amounts - A participant asked CMS to confirm that Medicare would not apply a WCMSA (“W”) record to CMS’s Common Working File (CWF) database and would assume primary payer status (“no questions asked”) in a situation where an RRE submits a workers’ compensation TPOC with a reported MSA Amount of $0. In response, CMS confirmed that no WCMSA (“W”) record would be applied to CWF in this scenario and, therefore, a Medicare Administrative Contractor (MAC) would not deny primary payment in connection to a WCMSA. However, and importantly, CMS rejected the questioner’s reference to “no questions asked.” In this regard, CMS stated, as it previously indicated during its April 16, 2024 webinar, that it reserves the right to review/audit these types of submissions and suggested that it might identify scenarios where it feels there is an inappropriate lack of consideration/funding for future medicals as part of a WCMSA.

CMS’s comments on this point elicited multiple follow up questions regarding CMS’s potential approach or processes through which the agency may review $0 MSA submissions. One participant questioned CMS regarding whether the agency has any “process considerations” for review of these scenarios. Initially, CMS replied by simply indicating that it was not in a position to comment on this issue at present. However, in response to another participant who asked whether CMS would develop specific guidelines for review of these $0 MSA submission scenarios, CMS indicated, without elaboration, that it would develop a specific process for review and that this would likely be prompted by what it termed “a clear indication” that a lack of funding for future medicals appeared to be inappropriate. CMS also suggested that, in this situation, it could decide to pursue recovery and apply a WCMSA (“W”) record to CWF upon that further review.

WC/Liability settlement (MSA being funded by liability carrier) – A participant inquired as to the applicability of reporting under the TPOC/WCMSA process in a situation where a claimant is settling their workers’ compensation (WC) and related liability claim together in which the WC carrier waives its lien rights in exchanged for case closure, and the liability carrier takes responsibility for funding a MSA from the liability settlement proceeds. In this scenario, CMS indicated that it would still expect the MSA amount to be reported despite the fact that it is being paid out from, and funded by, the liability settlement. In this situation, CMS indicated that who and how the MSA is funded is immaterial for reporting purposes under its TPOC/WCMSA reporting requirements. However, from the authors’ perspective, the feedback CMS provided on this point could be viewed as somewhat contradictory to the agency’s longstanding published TPOC reporting guidelines. It will be interesting to see if CMS provides any additional clarification or guidance on this point moving forward.

Section 111 penalties - Regarding Section 111 penalties, a participant questioned how the receipt of “hard errors” vs “soft errors” may impact the potential assessment of CMPs. In response, CMS explained, as it had discussed on its recent webinar, that if a “hard error”^[6]is received, this would result in a rejection of the RREs submission and, if that rejection led to a delay in reporting of a year or more, the RRE could be subject to the assessment of a CMP based on that untimely report per CMS’s CMPs penalty provisions.^[7] Further CMS explained that a “soft error”^[8]would not result in the rejection of a coverage report which, in and by itself, would not lead to the assessment of a CMP. However, CMS was careful to indicate that, while a “soft error” would not have an impact in relation to CMPs, that an error of this nature could potentially have other negative downstream consequences and, hence, should be avoided if possible and appropriately addressed via a corrected update if received.

In terms of “when” CMS would look to impose a potential CMP in this regard, CMS reiterated that any untimely TPOC reports resulting from a rejection due to errors related to the reporting of required WCMSA data points would not result in the assessment of a CMP for two full reporting quarters subsequent to the April 4, 2025 effective date of the new requirements. On this point, CMS noted that this is in keeping with what is published in its CMPs final rule, which in pertinent part, states that CMS “will not assess any CMPs associated with a specific change for a minimum of 2 reporting periods following the implementation (effective date) of that policy or procedural change.”^[9] As part of this discussion, a participant further inquired about this two quarter (6 month) suspension of CMPs by asking if the suspension of CMPs would only apply to scenarios in which an untimely report was connected to a rejection related to a WCMSA related error as opposed to a suspension of all CMPs across the board. In response, CMS indicated that that this was correct. On this point, CMS indicated that only an untimely report found to be the result of a rejection specifically due to a WCMSA related error would be excluded from the assessment of a CMP during these two quarters (6 month) period.

CMS additional resources - CMS reminded the attendees that questions regarding this process can be submitted to CMS at S111WCMSA@cms.hhs.gov. In addition, CMS referenced its Section 111 NGHP User Guide as another resource and reminded the audience that they sign up for notifications using the e-mail updates box at the bottom of any CMS.gov page.

How Verisk Can Help

For our Section 111 customers, Verisk will be ready to test and properly report the new data elements. Our data specifications are being amended across all our platforms as we speak. We have started releasing these specifications and will continue to do so over the course of the next week. We will also be ready to assist our clients when CMS initiates testing in October. To further support our customers, alerts will be added to our platforms to remind customers of the obligation to collect required WCMSA data. As part of this, direct entry portal options will be available to supplement/ augment data collection as an interim or permanent option for clients unable to amend their system and/or data feed in time for the April 4, 2025 go-live date.

In addition, we will offer workflow automation options to facilitate WCMSA data collection, including a settlement document upload feature, that will allow data extraction of the required fields from settlement documents and auto entry into your Section 111 reporting data as either an enhancement to, or in lieu of, any amendment to your claim system or reporting specifications.

Also, in an exciting development, we will offer “automated MSA programs” to facilitate adherence to your internal referral protocols by leveraging data obtained through the Section 111 reporting process to trigger WCMSA report preparation when appropriate. This automation is designed to mitigate risk, save adjuster time, and drive a holistic compliance process to ensure readiness for the reporting change as CMS begins collecting WCMSA data for all Medicare beneficiaries settling workers’ compensation claims.

Questions?

Please contact the authors if you have any questions on the above or would like to discuss how Verisk can help you with your Section 111 reporting obligations.

[1] Very generally, the term TPOC as used by CMS stands for “total payment obligation to the claimant.” Very generally, a TPOC is one of CMS’s Section 111 “reporting triggers” and refers to the dollar amount of a settlement, judgment, award, or other payment, in addition to or apart from ORM. CMS’s Section 111 NGHP User Guide, Chapter III (Version 7.5, April 1, 2024), Chapter 6, section 6.4. In general, CMS describes TPOC as a “one-time” or “lump sum” payment intended to resolve or partially resolve a claim. Id. In general, a TPOC is the dollar amount paid to, or on behalf of, the claimant in relation to a settlement, judgment, award, or other payment. Id. TPOC reporting is applicable regardless of whether or not there is an admission or determination of liability. Id. CMS’s Section 111 NGHP User Guide, Chapter III (Version 7.5, April 1, 2025), Chapter 6, section 6.5.1. In addition, reporting under the TPOC trigger is applicable regardless of any allocation made by the parties or determination by the court. Id.

[2] On this point, CMS’s notice stated as follows: “Due to technical difficulties experienced at the previously held webinar, CMS will be hosting a Question-and- Answer session regarding the expansion of Section 111 Non-Group Health Plan (NGHP) Total Payment Obligation to Claimant (TPOC) reporting to include Workers’ Compensation Medicare Set-Aside (WCMSA) information. The intent of this session is to give RREs the opportunity to ask questions directly to CMS to ensure they are prepared for the change when it is implemented on April 4, 2025.” CMS’s notice, Change to Section 111 Workers’ Compensation Reporting Q&A Session – Mandatory Reporting for Liability Insurance (including Self-Insurance), No-Fault Insurance and Workers’ Compensation (notice date: April 19, 2024)

[3]CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSES) of 2007, Technical Change Alert: Change to Workers’ Compensation Reporting. See, CMS’s February 23, 2024 Alert.

[4] See, CMS’s Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter III, Section 6.5.1.1. As part of this section, CMS states, in pertinent part, “For workers’ compensation records submitted on a production file with a TPOC date on or after April 4, 2025, Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) must be reported.” Id. See also, CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSES) of 2007, Technical Change Alert: Change to Workers’ Compensation Reporting. See, CMS’s February 23, 2024 Alert.

[5] The above summary is based on the authors’ notes and understanding from CMS’s presentation. In this regard, if there is any conflict between the summary prepared and provided by the authors and CMS’s specific details, comments or their promulgated statements, the latter controls and take precedence.

[6] As part of CMS’s April 16 webinar, CMS noted that all WCMSA related error codes (CW01 – CW12), with the exception of error code CW09, are designated as “hard errors”. Of note, CMS’s new error codes are contained in the Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter V, Appendix G, pages G-65 through G-68. Click here to view the new Section 111 error codes.

[7] Very generally, under CMS’s final rule, CMS may impose a CMP for untimely TPOC and ORM reporting. Specifically, per 42 CFR § 402.1(22)(i), CMS may impose CMPs when the RRE “[f]ails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment, or the effective date where on-going payment responsibility for medical care has been assumed by the entity.” Id. For more information on CMS’s final rule, see the following resources: Fed. Reg. Vol. 88, No. 195, at 70363-70373 (October 11, 2023), CMS’s October 10, 2023 Alert, CMS’s FAQ resource, and CMS’s January 10, 2024 CMPs webinar.

[8] As part of CMS’s April 16 webinar, CMS noted that the only code considered a “soft error” is related to the Professional Administrator EIN field (Field 43 – Error Code CW09). Of note, CMS’s new error codes are contained in the Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter V, Appendix G, pages G-65 through G-68. Click here to view the new Section 111 error codes.

[9] Fed. Reg. Vol. 88, No. 195, at 70368 (October 11, 2023).

CMS holds a TPOC/WCMSA “Question & Answer” session to further discuss its new Section 111 reporting process

CMS’s TPOC/WCMSA reporting process

Summary of CMS’s Q/A Session

How Verisk Can Help

Questions?