Last November, the Centers for Medicare & Medicaid Services (CMS) did something unprecedented. CMS announced, in a one hour webinar, its future plans to require responsible reporting entities (RREs) to report Medicare Set-Aside (MSA) data as part of the quarterly Section 111 reporting process. Today, CMS released the details of their plan to require that this data be reported beginning on April 4, 2025.

By merging two elements of CMS’ coordination of benefits program – MSAs and Section 111 reporting – and by announcing unexpected major changes to the Section 111 claim input file for the first time in thirteen years, CMS forged a path that will lead to significant changes for the workers’ compensation community.

What Are the New Reporting Requirements?

Simply stated, CMS will now collect MSA data for all workers’ compensation settlements reported through Section 111 mandatory insurer reporting. Medicare Set-Aside data will be required with all total payment obligation to the claimant (“TPOC” but what we in the real world refer to as settlements) reports regardless of whether the voluntary MSA review process is followed, and regardless of the settlement value. In November, CMS explained that the reported data would be posted to each applicable beneficiary’s Common Working File (CWF) and that the beneficiary will be provided with a written notice outlining the process for attestation and exhaustion.

CMS will now require that MSA data (including zero dollar MSAs) be reported in all TPOCs, regardless of the total settlement amount. The new policy language is as follows:

“All MSA funding for WC settlements shall be reported regardless of whether or not an approval was previously sought from the CMS. This change will be prospective for TPOCs on or after the implementation date. For example, records submitted on a production file with a TPOC date on or after April 4, 2025, will be subject to the new edits.”

CMS has a long-established voluntarily WCMSA approval process for all Medicare beneficiary workers’ compensation settlements greater than $25,000. While submission of a WCMSA to CMS for review and prior approval is not required, Federal regulations prevent parties from shifting the burden for post-settlement medical care onto Medicare.[1] The new reporting requirements clearly appear to be Medicare’s attempt to close what the agency likely perceives as an information gap – claims that exceed the review thresholds but are not voluntary submitted to CMS for review and approval.

Can CMS Do This? Should CMS Do This?

CMS believes that it is entitled to collect WCMSA data as part of its coordination of benefits activities. In today’s announcement CMS explained that “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.” It is true that Medicare Set-Asides assist beneficiaries on coordinating their workers’ compensation settlement funds to avoid a burden shift to Medicare (and, for the beneficiary, ensure the continuity of Medicare benefit).

But should CMS do this? That’s the deeper and frankly more troubling question. CMS has never asked for MSA data outside of the voluntary WCMSA review process. Parties have always had the option to submit claims to Medicare’s Workers’ Compensation Review contractor for review and approval when the total settlement amount exceeds the applicable workload threshold. CMS has similarly always had the option to match Section 111 reporting settlement data to WCMSA approval data and – where no approval was sought – inquire with the beneficiary or claims payer as to whether the parties settled in accordance with Federal regulations.

While over 100,000 WCMSA proposals have been submitted to CMS over the course of Section 111 reporting, to our knowledge the agency has never used Section 111 data in this (seemingly obvious) way. Rather than use the data that CMS already has, every RRE and TPA handling claims in settling states will need to now undertake projects to collect and report on this data. CMS seems to believe that all RREs have all of the required information natively within discrete fields within their claims systems. Almost all do not and must now undertake a project to do something for CMS that the agency could quickly do with some high-level Excel skills.

New Fields

The new required and optional fields are as follows (with ECS comments on some of the fields):

• Field 37 – MSA Amount.

This is a required field for all cases with a workers’ compensation TPOC (a/k/a full and final settlement) greater than $0.00. CMS describes this as the “dollar amount of the MSA.” If there is no MSA, the RRE should enter all zeroes. For all cases with an MSA (including an evidence-based MSA or some other allocation of future medical that is not submitted to Medicare), the RRE should report the total MSA amount. The MSA amount should be reported as the “total payout” for any structured settlement MSAs.

• Field 38 – MSA Period.

This field is required in all WC TPOCs. This is the “time in years that the MSA is expected to cover the beneficiary.” In most cases, this will be the life expectancy for the beneficiary calculated within the MSA. If there is no MSA, the RRE should report “0” as the MSA period.

• Field 39 – Lump Sum or Structured / Annuity Payout Indicator.

This is a required field. RREs should report an “S” for structured MSAs. For lump sum MSAs, an “L” should be reported. If the MSA is $0, then the RRE should enter a blank space.

• Field 40 – Initial Deposit Amount.

A required field for reporting MSA seed money.

• Field 41 – Anniversary Deposit Amount.

 A required filed for reporting MSA annual payments.

• Field 42 – Case Control Number.

An optional field for reporting the WCRC Case Control Number (CCN) for a previously submitted WCMSA. This field will return a new CW08 Error if it does not match a CCN on file. [NOTE, we await guidance as to whether CW08 is a soft-edit or a hard error.]

• Field 43 – Professional Administrator EIN.

An optional field for entering the EIN of the professional administration company. [NOTE: ECS generally discourages reporting data in optional fields.]

Timeline and Next Steps

Testing of the new fields will be available on October 7, 2024. Any WC TPOC reported on or after April 4, 2025 must include data in the required fields. CMS is repurposing space in the middle of the claims input file specification to make these changes. While not technically challenging in a vacuum, the development and operational work to ensure accurate, complete, and timely data collection and reporting will present challenges for the industry.

ECS will provide detailed information to all of our Section 111 reporting customers regarding these changes, the associated impact, and the ways that ECS may assist in overcoming the potential technical and operational obstacles presented. We will continue to keep readers apprised of developments. Should you have any questions on these developments please contact Marty Cassavoy at 781-517-8085 or Martin.Cassavoy@examworksocmpliance.com. ECS Section 111 reporting clients should address any questions to their assigned MMSEA Compliance Manager or via email at MIRService.Support@examworkscompliance.com.

[1] See 42 CFR 411.46(b)(2) “If a settlement appears to represent 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. For example, if the parties to a settlement attempt to maximize the amount of disability benefits paid under workers' compensation by releasing the workers' compensation carrier from liability for medical expenses for a particular condition even though the facts show that the condition is work-related, Medicare will not pay for treatment of that condition.”