A major change is coming July 17, 2025 as the Centers for Medicare & Medicaid Services (CMS) ceases review of Workers’ Compensation Medicare Set-Asides (WCMSAs) with a zero-dollar proposal. This policy change is detailed in Section 4.2 of the WCMSA Reference Guide version 4.3. In light of this, CMS issued updated guidance through the Reference Guide regarding the limited circumstances under which a zero-dollar WCMSA allocation remains appropriate.
CMS has specifically identified four (4) key parameters:
1) No Future Treatment
A treating physician certifies, with reasonable medical certainty, that the individual will not require future treatment or medications related to the workers’ compensation injury.
2) Claim Denial
The workers’ compensation insurer or self-insured employer has formally denied responsibility for benefits, has made no payments for medical treatment or indemnity prior to settlement, and the settlement agreement does not allocate specific amounts for future or past medical or pharmacy services
3) Judicial Determination
A court, commission, or board of competent jurisdiction has ruled that the insurer or employer does not owe additional medical or indemnity benefits, benefits are not actively being paid, and the settlement agreement does not allocate funds for future medical care.
4) Timely Denial During Investigation
The claim was denied by the insurer or self-insured entity within the state’s statutory timeframe allowed during an investigatory period, no medical benefits are actively being paid, and settlement does not allocate any specific amounts for future medical care.
The major change to the policy involved the last category of cases that now qualify for a zero allocation – cases where medical or indemnity payments were made, but where the insurer / employer timely denied the claim within the jurisdiction’s investigatory period. Individual jurisdictional guidelines vary widely on this topic, allowing for some particularly long investigatory periods. CMS’ policy now assures that many cases that previously would have been rejected as a proposed zero allocation are being approved.
Although CMS approval of zero-dollar WCMSAs was never a legal requirement, it provided reassurance to settling parties that Medicare’s interests were considered. With CMS now stepping back from reviewing zero-dollar proposals, the burden of proof for compliance shifts entirely to the parties involved. As such, proper documentation is more critical than ever to minimize the risk of future liability.
In order to ensure that Medicare remains adequately protected, parties must maintain comprehensive and thorough documentation that supports the rationale for a zero-dollar allocation. Such material includes, but is not limited to, medical records, legal documents or rulings, and settlement agreements. Furthermore, settlement documentation should clearly demonstrate which of the four (4) parameters apply, thus allowing for a zero-dollar allocation to be appropriate.
Our expert team at ExamWorks Compliance Solutions is here to assist in navigating this significant change. Whether you are evaluating a potential zero-dollar allocation or preparing settlement documentation, we are available to support you in achieving your Medicare Secondary Payer (MSP) compliance obligations. Contact our team today.