On January 17, 2025, the Centers for Medicare & Medicaid Services (CMS) issued version 4.2 of the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide with significant updates on the CMS review process specific to $0 Medicare Set-Asides (MSA).
What does the 1/17/2025 update state will change?
As of July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation.
How did the CMS submission process work for $0 MSAs prior to this update going into effect?
Currently, and through 7/17/2025, CMS accepts MSA submissions through the voluntary process where the submitters request a review for CMS approval of $0 MSAs. There are certain criteria that must be met for CMS to agree that no money needs to be set aside to account for future medical expenses in a settlement. Generally speaking, these situations where a $0 MSA is appropriate are categorized as legal $0 MSAs (meaning there is no coverage under state law) and medical $0 MSAs (the injury fully resolved and no further treatment is needed). If the MSA submission satisfies CMS’ criteria, a $0 MSA would be approved by CMS.
Can settling parties still obtain a $0 MSA if CMS is ending review of them on July 17?
Yes! CMS has clarified that while they are ending review of $0 MSAs, a future medical allocation is not necessary under certain conditions. These conditions include:
- 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
- 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.
CMS further clarifies situations where the above conditions may be demonstrated. These situations include:
- 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; or
- 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; or
- 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; or
- 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.
Is CMS changing the criteria as to what is appropriate for the parties not allocating future medical in a WCMSA settlement?
No. While CMS has added new language to the WCMSA Reference Guide about what situations are appropriate for a $0 MSA, these principles have been in place already. CMS just didn’t document them explicitly in the user guide. If a MSA is submitted to CMS prior to 7/17/2025, CMS used the same situations noted in the version 4.2 WCMSA Reference Guide to determine if a $0 MSA is appropriate. CMS has just put these conditions in writing going forward since CMS will no longer be reviewing and approving $0 MSAs.
One notable item is that CMS indicates denied claims where treatment or indemnity was paid for investigational purposes can still mean the claim is appropriate for a $0 MSA. Historically, CMS has taken the position that any payments for workers’ compensation benefits on denied claims will disqualify the MSA from being approved for a $0 MSA. This language marks a divergence from how CMS has previously viewed payments during an investigative period at the onset of the claim.
How does this impact my settlements that incorporate a $0 MSA going forward?
The biggest change is going to be that parties will not get CMS approval on $0 MSAs. As CMS states, participation in the CMS submission process is the best way to achieve finality with CMS with regard to the parties’ obligations to Medicare. However, this will move $0 MSAs into a similar category of claims that include situations where CMS will not review a MSA submission. CMS currently will not review MSAs that are below the CMS threshold for review, and $0 MSAs will soon be another class of claims CMS will not review. The parties still have an obligation to take Medicare’s interest into consideration with these settlements, so it is important to establish best practices with $0 MSAs going forward to ensure that they are compliant with what CMS views as appropriate per the WCMSA Reference Guide.
Were there any other updates to the WCMSA Reference Guide?
In Section 9.4.3, CMS clarified that the WCRC final determination on WCMSA allocations primarily relies on the claimant’s past use and future recommended treatment as supported by the medical records. While evidence-based guidelines for medication and medical treatment can be reviewed, they are secondary to the treating provider. If the treating provider and evidence-based guidelines are at odds, the treating provider will be given preference in determining future medical care.
Section 9.4.5, CMS corrected a long standing mathematical error for example calculations for allocations that include intrathecal pump, spinal cord stimulator or peripheral nerve stimulator replacements.
How can ExamWorks help me with $0 MSAs or other allocations for future medical?
ECS and our expert MSA team is available to assist you with your Medicare Set-Aside needs and help make sure your settlements adequately consider Medicare’s interest. We will continue to keep readers apprised of further agency developments from CMS as we monitor this and all areas of MSP compliance closely. ECS MSA clients should address any questions to mspcompliance@examworkscompliance.com. Should you have any questions on these developments please contact Michael Flower at 678-222-5485 or Michael.Flower@ExamWorksCompliance.com.
