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Zero allocations: CMS backs down from drastic changes

As we outlined in a blog post last week, there’s been a lot of buzz surrounding the Centers for Medicare & Medicaid Services’ (CMS) approval of zero allocations. From the moment CMS proposed changes to the process, we outlined why we strongly believe that the workers' compensation industry should not stand idly by while wholesale changes are made to the long-standing practice of zero allocations. On Halloween night, those efforts were vindicated.

Last night, CMS provided the following announcement on its “What’s New” page:


“CMS recently received inquiries regarding procedural changes in the way that CMS’ Workers’ Compensation Review Contractor (WCRC) reviews proposed zero-dollar Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) amounts. CMS determined changes had transpired without prior notification. Effective immediately, the WCRC will utilize procedures that were previously in effect. CMS continually evaluates all policy and procedures related to WCMSA reviews and will publish any pending changes when or before they go into effect.”

So, for now, CMS is maintaining the status quo when it comes to zero allocation review procedures. Until CMS makes a subsequent announcement, the basic requirements to obtain a zero allocation CMS approval remain as follows:

  1. The claim is denied; and
  2. No payments, medical or indemnity, have ever been made.

The background on these events is that last week CMS tested an additional requirement for zero allocations: that parties obtain an “on the merits” determination in addition to the above-referenced requirements. We contended that this additional requirement would simply not work in certain jurisdictions or in true disputed settlements.

We’re pleased that CMS has now reverted to their prior policy, and we strongly believe that the preservation of the existing policy is in the best interest of CMS, Medicare beneficiaries, and the workers' compensation community at large. CMS has supported zero allocation reviews for more than a dozen years—across multiple workers' compensation review contractors.

In the future, we urge CMS to consider the positions of all industry stakeholders in jurisdictions where CMS approval, while a matter of federal policy, has morphed into a matter of state requirements. Any change in the zero allocation review process would needlessly affect Medicare beneficiaries.

We continue to strongly believe that it’s in the best interest of the entire workers' compensation industry for the existing zero allocation process to remain unchanged. We’ll continue to advocate for this issue on behalf of our clients as well as the workers' compensation industry at large.

Sid Wong, J.D.

Sid Wong is vice president of policy, Casualty Solutions at Verisk. You can contact Sid at

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