The Centers for Medicare and Medicaid Services (CMS) has released an updated WCMSA Reference Guide (Version 4.2, January 17, 2025).
CMS’s noted updates include: (1) updated policy guidance regarding unfunded ($0) WCMSA requests with new guidelines added to Section 4.2; (2) language related to decision guidelines was updated (Section 9.4.3); (3) “corrected” example calculations for Intrathecal Pump, Spinal Cord Stimulator, and Peripheral Nerve stimulator replacements (Section 9.4.5).[1]
These updates, related compliance considerations, and how Verisk can help, are outlined as follows:
1. CMS will no longer review $0 WCMSA submissions
CMS has released one of the most notable and impactful updates in the recent years related to its WCMSA program, by announcing that effective July 17, 2025, it will no longer review $0 WCMSA submissions as part of its WCMSA review/approval process. These updates were made to Section 4.2 of the WCMSA Reference Guide titled “Indications that Medicare’s Interests are Protected.”
By way of background, a $0 WCMSA, in general, is typically utilized in scenarios where a workers’ compensation (WC) settlement does not reflect compensation for the need for future medical treatment related to the claim and, as such, no money is set aside from the WC settlement to pay for Medicare covered claims related treatment post-settlement. Historically, if a settlement meets the CMS review thresholds the parties may choose to submit a $0 WCMSA proposal to CMS workers’ compensation review contractor (WCRC) for review and approval.[2] If the $0 WCMSA proposal is subsequently approved, this indicates that CMS agrees that its interests are protected.[3] On this point, CMS in Section 4.2 states, in pertinent part, that “[w]hen CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.”[4] As result, there is often significant benefit to receiving CMS’s approval.[5]
Against this backdrop, per CMS’s new update to Section 4.2 of the WCMSA Reference Guide, CMS notes that it will no longer review WCMSA proposals and states as follows:
“Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero- dollar ($0) allocation. Entities should consider the [below stated conditions] in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation." [6]
Accordingly, parties will no longer be able to secure CMS’s approval of a $0 WCMSA effective July 17, 2025, and must instead rely on independently determining and documenting whether the claim meets any of the following conditions as stated in Section 4.2 to determine if a $0 WCMSA is appropriate:
a) The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement); and
b) There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment.
These conditions may be demonstrated through one of the following:
- The individual's treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatments or medications related to the settling WC injury or illness; or
- The workers’ compensation insurer or self-insured employer denied responsibility for benefits under the state workers’ compensation law and the insurer or self-insured employer has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement; or
- A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the workers’ compensation insurer or self-insured employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services; or
- The workers’ compensation claim was denied by the insurer/self-insured employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.[7]
As noted above, if any of these conditions are met CMS states that “[a] WCMSA is not necessary … because when they are true, they indicate that Medicare’s interests are already protected.”[8]
Why documenting $0 WCMSAs will remain important going forward
While CMS will no longer review $0 WCMSA requests starting July 17, 2025, it will be important to document use of $0 WCMSAs as part of workers’ compensation settlements. On this point, it is important to note that CMS, as outlined above, states that “[e]ntities should consider the above parameters in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation.”[9] (authors’ emphasis).
In addition, keep in mind that under CMS’s new TPOC/WCMSA reporting requirements certain WCMSA data points must be reported to CMS, as part of the Section 111 reporting process, regarding all workers’ compensation settlements involving a Medicare beneficiary that meet the current Section 111 TPOC reporting thresholds starting April 4, 2025.[10] This reporting applies even in situations where no WCMSA will be included as part of the settlement. In this latter instance, a $0 WCMSA value must be reported. CMS has stated that while it will accept TPOC data with the MSA Amount reported as $0, it reserves the right to audit $0 dollar value submissions if it suspects cost shifting to Medicare may have occurred.[11] Further, CMS has stated that it reserves all potential recourses in instances of suspected non-compliance, including possible False Claims Act actions.[12]
Thus, notwithstanding the fact that CMS will no longer review $0 WCMSA submissions, insurers reporting $0 WCMSAs should consider the applicability of CMS’s criteria under Section 4.2 and documenting the basis for a $0 WCMSA. With the upcoming TPOC/WCMSA reporting requirements and WCMSA program changes, CMS appears to be requiring more of RREs while at the same time seemingly removing a pathway to certify compliance within its WCMSA program. In this regard, understanding and documenting the bases for inclusion of a $0 WCMSA may prove helpful in the event CMS decides to audit or question the inclusion of a $0 WCMSA in a particular claim.
Verisk can help you document $0 WCMSAs
CMS’s decision to sunset its $0 WCMSA approval process should not prevent parties from continuing to leverage $0 WCMSAs to settle workers’ compensation claims when appropriate and applicable. As noted in Section 4.2 outlined above, CMS will still consider certain scenarios as examples of where a WCMSA is not necessary, and inclusion of a $0 WCMSA would be appropriate.
In lieu of CMS approval, Verisk can assist documenting $0 WCMSAs in light of CMS’s new changes by providing an independent third-party review, analysis, and assessment of a claim to support whether a $0 MSA is appropriate, which will be important given, as referenced above, CMS notes that documentation should be maintained to support use of a $0 WCMSA and CMS’s new TPOC/WCMSA reporting requirements. Our expert team of employees with extensive legal and medical training and experience, as well as a background in evaluating zero MSAs and successfully navigating CMS’s prior approval process, will apply WC and jurisdictional coverage nuances as part of their evaluations. Please contact the authors if you have questions or would like further information on our $0 WCMSA services.
2. CMS has updated language related decision guidelines
CMS has also updated language related decision guidelines (Section 9.4.3). Specifically, CMS has revised the language in this section to focus its reliance on the claimant’s treating medical provider’s plans over other evidence-based guidelines and literature when determining the appropriate treatment in an approved WCMSA.
On this point, prior to this update, Section 9.4.3 stated, in pertinent part, as follows: “The WCRC relies on evidence-based guidelines for prescription medication and medical treatment allocations; however, these are guidelines, not rules. The final determination is also based on the claimant’s past use and future recommended treatment as supported by the medical records and by current peer-reviewed medical literature.”[13]
As part of CMS’s new WCMSA Reference Guide, Section 9.4.3 has now been updated to read, in pertinent part, as follows: “The WCRC final determination relies on the claimant’s past use and future recommended treatment as supported by the medical records. Evidence-based guidelines for prescription medication and medical treatment allocations and current peer-reviewed medical literature are also reviewed; however, these are guidelines, not rules.”[14]
With this change, CMS appears to reassign the previously stated priority and reliance on evidence-based guidelines to rely more on treatment supported by the claimant’s medical records. It remains to be seen whether this will have an impact on the WCRC’s current practice and approval process, but it may serve to reinforce the need to have clear medical documentation to support the exclusion of certain treatment, recommended or otherwise, in an WCMSA.
3. CMS “corrects” examples for calculations for Intrathecal Pump, Spinal Cord Stimulator, and Peripheral Nerve stimulator replacements
In another new update, CMS has “corrected” calculation examples for Intrathecal Pump, Spinal Cord Stimulator, and Peripheral Nerve stimulator replacements in Section 9.4.5 of the WCMSA Reference Guide.[15] CMS has also revised the recommended calculations for implanted devices when a prior implantation has occurred. Instead of subtracting the relevant years, the WCRC will add the difference in years before dividing by 7 and using the whole number.[16] As CMS is indicating this is a correction, it is unlikely to impact any current results from their approval process. Going forward, we will continue to monitor the calculation and allocation methodology for changes.
Questions?
Please contact us with any questions regarding these updates or how Verisk can help navigate CMS’s new changes, improve your WCMSA practices and reduce WCMSA allocation costs.
[1] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 1.1 (Changes in this Version of the Guide).
[2] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Sections 4.2 and 8.0 which state, in part, the CMS’s WCMSA review and approval process is voluntary.
[3] In this regard, CMS states, the following in Section 4.1 of the WCMSA Reference Guide: “An individual or beneficiary may consider seeking CMS approval of a proposed WCMSA amount for a variety of reasons. The primary benefit is the certainty associated with CMS reviewing and approving the proposed amount with respect to the amount that must be appropriately exhausted. It is important to note, however, that CMS approval of a proposed WCMSA amount is not required.” CMS’s WCMSA Reference Guide (Version 4.1, January 17, 2025), Section 4.1. (Authors’ emphasis).
[4]CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2.
[5]nbsp;CMS’s WCMSA Reference Guide (Version 4.1, January 17, 2025), Section 4.1 and 4.2.
[6]CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2
[7] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2
[8] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2
[9] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2
[10] Under CMS’s new TPOC/WCMSA reporting process, the following five data points must be reported to CMS for all WC settlements with Medicare beneficiaries as part of the Medicare reporting TPOC reporting trigger: (a) WCMSA amount, (b) WCMSA funding method (lump sum or annuity), (c) initial deposit amount, (d) anniversary (annual deposit amount), and (e) the WCMSA period. The WCMSA case control number and professional administer EIN will be optional fields. CMS’s TPOC/WCMSA Webinar, April 16, 2024.
[11] CMS’s TPOC/WCMSA Question and Answer Session, April 25, 2024.
[12] CMS’s TPOC/WCMSA Webinar (April 16, 2024).
[13] CMS’s WCMSA Reference Guide (Version 4.2, August 1, 2024), Section 9.4.3.
[14]CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 9.4.3.
[15] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 9.4.5.
[16]CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 9.4.5.