January 27, 2022


The Centers for Medicare and Medicaid Services (CMS) has recently released an updated Workers’ Compensation Medicare Set Aside (WCMSA) Reference Guide (Version 3.5, January 10, 2022) that may have a significant impact on how parties approach settlement of a claim where an MSA and potential CMS approval of same could be at issue.  The relevant update to the Guide state, under Section 1.1, “clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3).”

The recent update provides the following:

       4.3 The use of non-CMS-approved products to address future medical care.

  • A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries.  Although not inclusive of all products covered under this Section, these products are most commonly termed “evidence-based” or “non-submit”.  42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare Program’s interest.  Unless a proposed amount is submitted, reviewed, and approved using the process described in this Reference Guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected.  As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly given reasonable recognition to both medical expenses and income replacement.  As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses.  This will result in the Claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount. 

The new CMS update appears to present an overt attempt to abolish the use of “evidence-based Medicare Set Aside” (EBMAS/non-submit) allocations in the context of settlement of future workers’ compensation medical exposure.  It is not entirely clear whether this policy shift will be applied retroactively, but certainly on a prospective basis CMS has changed “policy and practice” to deny payment for medical services under non-CMS approved products such as EBMSA/non-submit allocations.

Section 4.3 of the WCMSA Reference Guide does not expressly prohibit the use of non-CMS approved products such as EBMSA/non-submit allocations but expresses a clear unequivocal shift toward discouraging the use of such products.

The practical result of the policy shift contained in Section 4.3 of the Updated WCMSA Reference Guide will very likely result in delayed settlement of future medical exposure because claimants will insist upon use of a CMS approved product and formal MSA approval before agreeing to resolve entitlement to future medical benefits.  Otherwise, the claimant bears an additional burden of proving the entire settlement amount was exhausted and used for the payment of related medical care before Medicare will resume payment obligations for medical expenses related to the work injury.  We are doubtful that Claimant attorneys will be willing to subject their clients to this additional risk and require formal CMS approval of an MSA as a result.  These factors should be considered in those claims where an MSA is necessary that would generally fall within the CMS review guidelines, which include a settlement involving a claimant who is already on Medicare or a settlement that is for more than $250,000.00 and involves a claimant who has a reasonable expectation of Medicare eligibility within 30 months of the settlement. 

If you have any questions about the updated WCMSA Reference Guide, please contact Stephen Harris, Esq. at SHarris@c-wlaw.com or (717) 975-9600.