When the Centers for Medicare and Medicaid Services (CMS) added Section 4.3 to its WCMSA Reference Guide on January 11, 2022, CMS appeared to take aim at the use of Evidence-based Medicare Set-Asides (EBMSA), even though the submission of a workers’ compensation Medicare Set-aside (WCMSA) remains a voluntary process as CMS has long stated.[1] With CMS’s plans to collect WCMSA reporting data through Section 111 Total Payment Obligation to the Claimant (TPOC) reporting, it may be a good time reconsider the EBMSA landscape.
How does an EBMSA differ from a WCMSA?
By way of background, there is no statute or regulation which requires the use of a workers’ compensation Medicare Set-aside (WCMSA) in a settlement and submitting a WCMSA has always been, and continues to be, a voluntary process.[2] The benefit of including a WCMSA is to establish an amount which may be utilized by the claimant to pay for future medical treatment and which CMS may accept in lieu of the total settlement amount to protect its interest. The provisions of 42 CFR § 411.46 generally address the issue of future medicals in workers’ compensation settlements. This regulation focuses, in part, on Medicare’s ability to exclude payment of future medical benefits related to a workers’ compensation commutation settlement and if a compromise settlement is “… an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized.”[3] CMS cites 42 CFR § 411.46 as the basis for CMS to deny payment for Medicare-covered claim related treatment until the beneficiary pays medical expenses equal to the amount of the settlement.[4]
However, since WCMSA submission is voluntary, the industry, in general, has gradually adopted use of EBMSAs, which are not submitted to CMS for approval, but still are intended to reasonably calculate injury related future medical treatment based on sound medical principles and clinical guidelines within the intent and obligations of 42 CFR § 411.46. Since EBMSAs are not submitted, they can also be supplemented with indemnification provisions to further protect the parties if CMS later determines the EBMSA amount was insufficient.
CMS accepts the use of EBMSAs in the settlement of workers’ compensations claims
CMS continues to reiterate in its most recent version of their WCMSA reference guide and in its webinars that the submission of a WCMSA remains a voluntary process.[5] Additionally, as part of its recent TPOC/WCMSA webinars, CMS explained that the new requirement to submit WCMSA data as part of TPOC reporting is also applicable to non-submit allocations, including EBMSAs.[6] CMS notes, in general that this new reporting requirement will help the agency to better coordinate benefits when a WCMSA, or similar type of allocation, is included as part of a workers’ compensation settlement.[7]
As part of CMS’s new TPOC/WCMSA reporting requirements, CMS intends to place a marker into the “common working file” to signal when WCMSA funds are available to pay for claim related treatment and will remove it once the funds are exhausted.[8] CMS has also stated that while they retain the right to review reporting data, they do not intend to simply deny benefits based on the use of an EBMSA and instead, their compliance concerns would initially focus on instances where WCMSA funds are fully and prematurely spent in the first few years after settlement.[9]
Effectively using EBMSAs for WC settlements
In the author’s experience, CMS, in general, has not strictly enforced Section 4.3 and the agency has not indicated that it plans to do so. As such, EBMSAs remain a viable option and can be an effective tool in the settlement of a workers’ compensation claim. In our experience, it’s critical to keep certain considerations in mind when leveraging an EBMSA for settlement, including:
- Starting April 4, 2025, CMS will require and receive WCMSA information as part of the TPOC reporting of workers’ compensation claims and, as such it will have visibility into non-submit EBMSAs to coordinate benefits. CMS will no longer be unaware of the EBMSA amount and funding.
- EBMSAs should reasonably give appropriate consideration for future medical treatment based on the treatment and recommendations for an individual.
- State workers’ compensation jurisdictional requirements should be considered and included as part of the analysis.
- An indemnified EBMSA is not necessary if an EBMSA is appropriately allocated, but if indemnification is offered it should be reliably supported.
How Verisk can Help
At Verisk, our EBMSA allocations are all reviewed and completed by a nurse and an attorney. We also recognize that each case is different, and the reports are customized to the facts of the case and the treatment recommended for the individual. By forgoing CMS’s voluntary submission process, the parties have an opportunity to evaluate the potential Medicare-covered future medical exposure without subjecting the claim to CMS’s formulaic and, often, unrealistic pricing methodology. This can often lead to faster settlements and more reasonable allocations. While Verisk always stands by its work product and allocations, Verisk will also support certain qualifying EBMSAs with additional protection if needed.
Questions?
Please contact us or the author if you have any questions regarding the above or how Verisk can assist you with EBMSAs or other Medicare Set-Aside services.
[1] In general, as part of Section 4.3, CMS 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” and, in those instances, may deny payment of medical services. CMS’s WCMSA Reference Guide, Version 4.1 (August 1, 2024), Section 4.3.
[2] For example, CMS in its current WCMSA Reference Guide states: “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requires that you comply with CMS’ established policies and procedures in order to obtain approval.” (CMS’s emphasis) There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requires that you comply with CMS’ established policies and procedures in order to obtain approval. (CMS’s emphasis). CMS’s WCMSA Reference Guide, Version 4.1 (August 1, 2024), Section 8. The author notes that CMS has included this verbiage in each of its several WCMSA Reference Guide versions since CMS first released its WCMSA Reference Guide back in 2013.
[3] See 42 CFR § 411.46.
[4] See CMS’s WCMSA Reference Guide, Version 4.1 (August 1, 2024) Section 4.3.
[5] See, n.1 above.
[6] See, CMS’s WCMSA TPOC/WCMSA “Question and Answer” Session (April 25, 2024) and CMS’s TPOC/WCMSA webinar (April 16, 2024).
[7] See, CMS’s WCMSA TPOC/WCMSA “Question and Answer” Session (April 25, 2024) and CMS’s TPOC/WCMSA webinar (April 16, 2024) and 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. On this point, CMS’s February alert states, in part, as follows: “Collection of the information is necessary to assist Medicare in making appropriate determinations concerning coordination of benefits under U.S.C. 1395y(b)(8)(ii), since Medicare should not be a primary payer for future medical services related to a WC injury as specified in the WC settlement as per 42 CFR 411.46.” 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.
[8] CMS’s TPOC/WCMSA webinar (April 16, 2024).
[9] CMS’s TPOC/WCMSA webinar (April 16, 2024).