CMS’s New $0 WCMSA Policy Starts 7/17/25 – Key Points and How Verisk Can Help

May 15, 2025 / 12 min read

Major changes are coming to $0 Workers’ Compensation Medicare set-asides (WCMSA) practices starting in July 2025. As outlined more fully below, earlier this year the Centers for Medicare and Medicaid (CMS) announced that effective 7/17/25, the agency will no longer accept or review $0 WCMSA proposals.^[1]

By way of brief background, a $0 WCMSA 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, parties could choose to submit a $0 WCMSA proposal to CMS for review and approval for settlements meeting CMS’s WCMSA voluntary review thresholds.^[2]If CMS approved the $0 WCMSA proposal, this indicated that CMS agreed that its interests were protected.^[3]However, effective July 17, 2025, parties will no longer be able to secure CMS’s approval of a $0 WCMSA. Instead, as discussed below, the parties will need to independently determine and document whether a $0 WCMSA is appropriate.

woman-reviewing-data-in-office

To help prepare for this important policy change, the authors outline key points, and how Verisk can help, as follows:

1. CMS will no longer review or accept $0 WCMSA proposals effective 7/17/25.

CMS announced its new policy earlier this year in January first via an agency alert and then as part of a WCMSA Reference Guide update.^[4] Per CMS, “[e]ffective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero- dollar ($0) allocation. Entities should consider the … parameters [outlined by CMS in Section 4.2 of the WCMSA Reference Guide] in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation.” CMS’s WCMSA Reference Guide, (Version 4.3, April 7, 2025), Section 4.2.

2. CMS lists specific conditions to consider in determining whether a $0 WCMSA may be appropriate as part of Section 4.2 of the WCMSA Reference Guide.

Even though CMS will no longer accept or review $0 WCMSA proposals effective 7/17/25, parties may still utilize $0 WCMSAs after 7/17/25, but they must independently determine and document whether a $0 WCMSA is appropriate per Section 4.2 of the WCMSA Reference Guide.

In this regard, CMS states that “[e]ntities should consider the [below] parameters in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation” as outlined by CMS in Section 4.2 of the WCMSA Reference Guide as follows:

(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.

The conditions set forth in (a) and (b) may be demonstrated through one of the scenarios below as follows:

Treating Physician Statement

CMS states: “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.”^[5]

Claim denied and no payments made (except for investigational purposes)

CMS states: “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.”^[6]

Court ruling on the merits

CMS states: “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.”^[7]

Claim denied per state’s “pay and investigate” statute

CMS states: “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.^”[8]

If any of the above conditions are met, then, per CMS, “[a] WCMSA is not necessary … because when they are true, they indicate that Medicare’s interests are already protected.”^[9]Importantly, keep in mind, if a $0 WCMSA is applicable, CMS states that parties should “maintain documentation to support that allocation” as discussed more fully in point #3 below.^[10]

Conversely, if any of above conditions are not met, CMS states that its “voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs.”[11]

3. Maintaining documentation in support of a $0 WCMSA will be important per CMS.

Under CMS’s new policy, it will be important to maintain documentation in support of a $0 WCMSA. As noted above, CMS as part of Section 4.2, 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.”^[12](author’s emphasis). Thus, it will not only be important to determine whether a $0 WCMSA is applicable per the conditions outlined in Section 4.2, but also to maintain documentation supporting the decision to include a $0 WCMSA as part of the settlement.

4. CMS reserves the right to audit $0 MSA values as part of its new TPOC/WCMSA reporting requirements.

From another angle, it is important to consider CMS’s recently implemented TPOC/WCMSA reporting requirements when addressing $0 WCMSAs. Briefly, under the new TPOC/WCMSA reporting requirements, insurers must report several different WCMSA data points, including $0 MSA values, regarding workers’ compensation settlements with Medicare beneficiaries reportable as TPOCs as part of Section 111 reporting.^[13] As part of the new requirements, CMS reserves the right to audit reported $0 MSA values if it suspects cost shifting to Medicare may have occurred.^[14] Further, CMS has stated that it reserves all potential recourses in instances of suspected noncompliance with its new requirements, including possible False Claims Act actions.^[15] From the authors’ view, this potential CMS scrutiny and liability further underscores the importance of understanding CMS’s conditions to determine if a $0 WCMSA is appropriate and maintaining documentation in support of a $0 WCMSA per Section 4.2.

5. Parties can still submit $0 WCMSA requests to CMS for review/approval prior to 7/17/25 if they elect.

On a final note, as outlined above, CMS’s new policy becomes effective 7/17/25. Prior to that time, parties may still submit $0 WCMSA requests to CMS for settlements that meet the agency’s voluntary WCMSA review thresholds, if they so elect, for those cases where they may be interested in attempting to secure CMS approval before CMS’s new policy becomes goes live.[16]

Verisk can help you document $0 WCMSAs

Going forward, 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 light of CMS’s new changes, Verisk can assist documenting $0 WCMSAs 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 with respect to 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 $0 MSAs and successfully navigating CMS’s prior approval process, will apply WC and jurisdictional coverage nuances as part of their evaluations. Also, we can also help you prepare and submit $0 WCMSA submissions to CMS for review/approval prior to the effective date of CMS’s new policy.

Join our $0 WCMSA Webinar – June 24^th!

On June 24^th, the authors are holding a webinar to further discuss CMS’s new $0 WCMSA policy, how it impacts claims, and how Verisk can help you navigate the changes to stay compliant. Sign up today!

Questions?

Please do not hesitate to contact the authors if you have any questions regarding CMS’s new $0 WCMSA policy. See our Medicare Set-Asides (MSA) Brochure to learn more about how we can help you with $0 WCMSAs as part of claims handling and settlement.

[1] CMS initially announced this change via an Alert in early January. CMS then incorporated this change into a WCMSA Reference Guide update (WCMSA Reference Guide, Version 4.2, January 17, 2025, Section 4.2 “Indications that Medicare’s Interests are Protected”).

[2] CMS’s WCMSA Reference Guide (Version 4.3, April 7, 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 4.3, April 7, 2025), Section 4.1. (Authors’ emphasis). Further, 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’s 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.” See e.g., CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2 As result, there is often significant benefit to receiving CMS’s approval. See e.g., CMS’s WCMSA Reference Guide (Version 4.3, April 7, 2025), Section 4.1 and 4.2.

[4] See n.1 above.

[5] CMS’s WCMSA Reference Guide (Version 4.3, April 7, 2025), Section 4.2.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] CMS’s WCMSA Reference Guide (Version 4.3, April 7, 2025), Section 4.2. On this point, CMS states in full as follows: “In instances where the above conditions are not met, CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When 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.” Id.

[12] CMS’s WCMSA Reference Guide (Version 4.2, January 17, 2025), Section 4.2

[13] Briefly, 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. Further, as part of this process,

[14] CMS’s TPOC/WCMSA Question and Answer Session, April 25, 2024.

[15] CMS’s TPOC/WCMSA Webinar (April 16, 2024).

[16] CMS outlines its WCMSA Review thresholds in Section 8.1 (“Review Thresholds”) of the WCMSA Reference Guide.

CMS states in Section 8.1, in pertinent part, as follows:

CMS will review a proposed WCMSA amount when the following workload review thresholds are met:

The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

Note: Please see Section 10.1: Section 05 – Cover Letter (E. Settlement Details) in this reference guide for more details about what information is included in determining this amount.

A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

The claimant has applied for Social Security Disability Benefits
The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision
The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits
The claimant is 62 years and 6 months old

If a threshold is met, a WCMSA can be submitted to CMS for approval. These thresholds are created based on CMS’ workload and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC in such cases. Also note that both the beneficiary and non-beneficiary workload review thresholds are subject to adjustment. CMS reserves the right to change or remove these thresholds based on Medicare’s interests. Claimants, employers, carriers, and their representatives should regularly monitor the CMS website at https://go.cms.gov/wcmsa for changes to these thresholds and for other changes in policies and procedures.

CMS’s WCMSA Reference Guide (Version 4.3, April 7, 2025), Section 8.1 (CMS’s emphasis).

Join our $0 WCMSA Webinar - June 24th.