CMS Updates WCMSA Reference Guide: New Policy on EBMSAs

January 12, 2022

Yesterday, CMS released an updated Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide. Version 3.5 of the guide contains two new sections and no other changes. The additional sections relate to evidence-based on non-submit Medicare Set-Asides and the pre-requisite steps prior to submitting a workers’ compensation settlement for review. ECS has evaluated the additional sections and has concerns about not only about the new policy language, but also inherent contradictions presented by the new policies. Let’s take them in turn:

Section 4.3 on The Use of Non-CMS-Approved Products to Address Future Medical Care

CMS added a section regarding “non-CMS-approved products” that may be used by beneficiaries post-settlement, in order to reduce the likelihood of shifting payment for injury-related treatment onto Medicare.  The full text of the new policy is as follows:

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 giving 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.” (emphasis added)

The new policy indicates that CMS “cannot be certain” that “non-CMS-approved products” will “adequately protect” Medicare’s interests.  CMS further indicates that “non-CMS-approved products” will be treated as “a potential attempt to shift financial burden” onto the Medicare program.  Finally, within that same section (but without making any direct reference to “non-CMS-approved products) CMS indicates that it will take action and deny payment up to the full amount of the settlement.

Importantly, nothing has changed in underlying policies regarding the decision to submit or not to submit.  Medicare review and approval of a qualifying workers’ compensation settlement is not required, and remains classified as “voluntary, yet recommended” by Medicare.  Similarly, CMS has retained language indicating that “Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.”

Review, Analysis, and Recommendations

For the last twenty years insurers, self-insureds, TPAs, and claimants have had the opportunity to elect to participate in Medicare’s voluntary review process.  If an election is made to have Medicare review a settlement, parties have been on notice that they must be able to meet all of the parameters set by Medicare for voluntary review.  Those parameters, initially, were relatively simple.  Medical records, claims payment history, consent of the beneficiary, a proposed settlement amount, and a proposed MSA amount were all that was required by Medicare.  Over time, Medicare’s list of requirements grew, delays (in many cases) mounted, and the list of obstacles presented by Medicare’s voluntary review program became significant.  Apart from resolving a crisis whereby Medicare’s review contract lapsed and the agency failed to review and approve any settlement for nearly eighteen months in 2012 and 2013, the only element of CMS review that has improved is the turnaround time where review can be achieved in less than two weeks (perhaps because so many companies have elected to opt out of CMS review).

As obstacles to swift and appropriate review have become more prevalent, more and more companies have (in whole or in part), opted out of submitting cases to CMS for review and approval.  It is important to draw a distinction between the decision to voluntarily opt-out of Medicare review for practical concerns, and the decision to opt-out to frankly undercut Medicare.  Non-submit programs that employ appropriate guardrails such as certified life care planners, pharmacists, professional administration, and structured settlements simplify the process and create cost certainty while at the same time ensuring that Medicare’s interests are adequately protected.   While, in some cases, CMS will ask that for an allocation to include treatments that no reasonable person would believe the claimant would ever have, an MSA that is voluntarily not submitted to CMS may choose to exclude these unnecessary treatments.  Parties have always been on notice that Medicare “may deny related medical claims or pursue recovery” should those un-allocated treatments materialize at a later date.

ECS Recommendations Regarding Section 4.3

ECS recommends that companies that – as a matter of policy – have elected to not submit settlements to CMS closely review Section 4.3.  While Section 4.3 does not alter the underlying policy that parties must be aware that CMS may decline to pay for future treatment, it does signal an intent to deny payment “as a matter of policy and practice.”  Depending upon a company’s risk tolerance, it may be appropriate to alter and adjust internal guidance around CMS submission (or lack thereof).  In all cases, companies that elect to opt-out of CMS’ voluntary review program should employ appropriate guardrails on all claims that are eligible for submission, but where submission is not made.  ECS’ certified life care planners, pharmacy experts, and lawyers, in conjunction with our preferred professional administration provider Ametros and structured settlement partner Chronovo ensure that no stone is left unturned on your claims, whether your organization choose to submit or not.

New Section 7.0

Not to be overshadowed is a new Section 7.0.  Section 7.0 lists a four step process prior to CMS review and approval, including – for the first time – the creation of draft settlement documents.  CMS’s four-step program is as follows:

  1. Analysis of the claim and medical information in order to determine the amount of money required for the fund
  2. Negotiation of a tentative settlement and preparation of draft settlement documents to settle the WC case, incorporating terms for creation and administration of the WCMSA (CMS is not a party to the settlement)
  3. Obtaining approval from CMS for the amount of the proposed WCMSA
  4. Finalizing the settlement and funding the WCMSA

Note that CMS lists “preparation of draft settlement documents” as step two.  CMS has recently – in many zero allocation cases – delayed review of a claim until the provision of settlement documents.  While provision of settlement documents is not typically required for review of a WCMSA proposal, ECS is concerned that this over-simplified sequence lays foundation for Medicare to demand the provision of draft settlement documents prior to review of a claim.  We hope that this is not the first step in another one of the many obstacles that  have been added to the process over the last twenty years.

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