CMS Updates Section 4.3 of the WCMSA Reference Guide

March 21, 2022

The Centers for Medicare & Medicaid Services (CMS) has updated its recently unveiled Section 4.3 of the Workers’ Compensation Medicare-Set Aside (WCMSA) Reference Guide. As we first reported in January, Section 4.3 of the Reference Guide clarified CMS’ policy regarding evidence-based or non-submit MSAs, which CMS labels as “non-CMS-approved products.” CMS followed up the January update with a February Town Hall call wherein the agency indicated that clarifications would be coming, leading to this updated Section 4.3.

The Changes

The updated Reference Guide retains language referring to evidence-based and non-submit MSAs as “non-CMS-approved products,” but completely revises and replaces CMS’ enforcement activities whenever it encounters these claims.  The new language is as follows:

“CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.”

Breaking Down the New Language

The new language incorporates two concepts that align with our historical understanding of CMS’ policy with regard to settlements that avoid Medicare’s MSA review thresholds.  First, CMS now says that the agency “may at its sole discretion deny payment” for related medical claims (emphasis added).  The word “may” replaces the prior use of the word “will” and indicates that parties could see negative enforcement if the beneficiary seeks coverage for settlement-related conditions. Second, CMS explains that exhaustion of the settlement amount may not be required if “it is shown, at the time of the exhaustion of the MSA funds” that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate.”

What Does this all Mean?

We are pleased that CMS has – on the record – explained that parties who elect to not submit their claims to CMS need not worry about future treatment denials if it is the case that they can demonstrate “sufficient” future medical funding and “appropriate” use.  This aligns with our historical assessment of not only WCMSA policy, but also 42 CFR 411.46.  The new language makes clear that parties must not inappropriately shift the burden of future medical care onto the Medicare program, either by unreasonably under-allocating post-settlement medical care or by misappropriating funds designated for post-settlement medical care. 

From the beginning, we have remarked about the similarity between this episode and an abortive attempt by CMS in November 2016 to eliminate the review of zero allocations.  That policy adjustment was rescinded, whereas this one was amended.  But, in both situations, the correct call was made.  Nothing in the regulations suggested that a beneficiary could be forced to spend a full settlement amount on future medical treatment over and above an otherwise reasonable MSA that was simply not pre-approved by CMS.  By making this adjustment, CMS confirms that parties must be judged by the reasonableness of their actions and that their individual decision to avoid CMS “voluntary yet recommended” pre-approval process should not improperly result in a lifetime of rejected medical care for the beneficiary.

Prospective Enforcement and Further Clarifications

CMS indicated that Section 4.3 will “apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022” but that it will also be applied to those settlements received by CMS prior to that date where a Common Working File (CWF) flag had already been set.  This means that CMS enforcement will be prospective, as it is believed that a small number of Medicare compliance companies simultaneously notified Medicare of settlement whenever a resolved claim eschewed CMS review. In response to reports that parties had sought CMS review simply to avoid Section 4.3, CMS added that the agency “does not intend for this policy to affect any settlement that would not otherwise meet review thresholds.”  Parties settling claims for below the existing review thresholds should simply ensure that they are not shifting the burden for post-settlement care onto the Medicare program.

Final Word

We are pleased with the changes in Section 4.3, which align with our historical evaluation of Medicare’s future medical policies and regulations.  We appreciate the hard work that CMS’ policy team in Baltimore put into this, and appreciate the swift update to the reference guide to avoid further confusion and to clarify parties’ ongoing responsibilities.

What’s Next

ECS will closely monitor Section 4.3 for any changes and/or clarification and will work with our clients and advocacy group partners to ensure that CMS has a full understanding of the multitude of reasons that parties may decline to submit.  Should you have any questions about any of these topics, or if you want to learn more about our response to these changes, contact your local or national account manager or Marty Cassavoy at or 781-517-8085.

Marty Cassavoy

Marty Cassavoy

Marty Cassavoy is the Sr. Vice President of MSP Compliance and Business Development at ExamWorks Compliance Solutions. Marty and his team develop solutions for challenges in all areas of Medicare Secondary Payer compliance and across all insurance types. An attorney licensed to practice law in Massachusetts, Marty works out of ExamWorks’ Woburn, Massachusetts office and can be reached at 781-517-8085 or