wcmsa - Solutions for Workers' Compensation and Liability Settlements

01/Apr/2025

Starting April 4, 2025, significant changes are coming to Section 111 reporting requirements for workers’ compensation claims involving Medicare beneficiaries. If you’re a Responsible Reporting Entity (RRE), it’s time to prepare for a broader scope of data reporting, especially when it comes to Workers’ Compensation Medicare Set-Asides (WCMSAs).

Under the new requirements, all workers’ compensation claims involving a Total Payment Obligation to the Claimant (TPOC) must now include WCMSA-related data when the injured party is a Medicare beneficiary. This applies regardless of whether the WCMSA was reviewed or approved by Medicare. CMS has updated reporting requirements published in the NGHP User Guide of the MMSEA Sections 111, which you can view the following chapters below.

Here is a breakdown of what needs to be reported:

1. Medicare-Approved WCMSAs:
  - If your settlement includes a WCMSA that was reviewed and approved by CMS, you must report the relevant WCMSA data.
2. WCMSAs Below the Review Threshold:
  - Even if the WCMSA wasn’t submitted for CMS review because the total settlement amount falls below the Medicare workload review threshold, the WCMSA information still needs to be reported.
3. Zero-Dollar WCMSAs:
  - When a settlement explicitly states that no funds are allocated for future medical care, this is considered a Zero-Dollar WCMSA. These must also be reported.
4. Unsubmitted WCMSAs:
  - If the parties developed an MSA or allocated funds for future medical treatment but chose not to submit it to Medicare, that information must now be disclosed.

What Should You Do Now?

If you’re a claims professional, insurer, or third-party administrator, be prepared to:

- Review your Section 111 reporting processes and confirm they can handle the new data requirements that can be found.
- Coordinate with your WCMSA vendors to ensure you receive the necessary data for inclusion in your reporting.
- Educate your claims team and legal partners about the upcoming changes so all parties are aligned before April 4.

Takeaways

The expanded Section 111 reporting requirements reflect CMS’s ongoing efforts to protect the Medicare Trust Funds. While they may add complexity to the reporting process, these changes also provide an opportunity for claims handlers to strengthen compliance and improve documentation practices.

For Additional Information

As always, Medivest remains committed to assisting our clients with the creation and administration of WCMSAs. Medivest will continue to monitor changes occurring at CMS and will keep our readers up to date when any new changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us at 877.725.2467.

Medivest

22/Jan/2025

On January 17, 2025, CMS updated its Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide to reflect a new policy in Section 4.2 to no longer review zero-dollar WCMSAs as of July 2025. Other announced changes in the WCMS Reference Guide, now in version 4.2, include an update of WCRC Review Considerations in Section 9.4.3 and corrected example calculations for Intrathecal Pump, Spinal Cord Stimulator, and Peripheral Nerve stimulator replacements were made in Section 9.4.5.

On January 21, 2025, CMS indicated via email and its website that it will be implementing two operational changes to the WCMSA review process in the first half of 2025 as follows:

“Amended Reviews: Currently, amended review requests cannot be submitted until 1 year after a WCMSA case has been approved. Effective April 7, 2025, amended review requests will be allowed at any time after a WCMSA case is approved.

Zero-Dollar Set-Asides: Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation. Entities should still consider the parameters available in the WCMSA Reference Guide (PDF) to determine whether a zero-dollar WCMSA allocation is appropriate and should maintain documentation to support that allocation.”

As a refresher, the WCMSA Reference Guide, in Section 4.2, which describes when a zero-dollar MSA is appropriate, used to list three conditions to determine when Medicare’s future interests in a Workers’ Compensation settlement had been protected. The Reference Guide’s updated Section 4.2 has been revised significantly, and now includes only two conditions to indicate when Medicare’s future interests are protected in a WC settlement with several examples of when the second condition is met as listed in the text below:

“4.2 Indications That Medicare’s Interests Are Protected

Submitting a WCMSA proposed amount for review is never required. But WC claimants must always protect Medicare’s interests. A WCMSA is not necessary under the following conditions because when they are true, they indicate that Medicare’s interests are already protected:

a) 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

b) 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.

These conditions may be demonstrated through one of the following:

• 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.

In addition, if a settlement leaves WC carriers with responsibility for ongoing medical and prescription coverage once the settlement funds are fully spent, then a WCMSA is not necessary.

Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero- dollar ($0) allocation. Entities should consider the above parameters in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation.

Notes:

… If Medicare made any conditional payments for WC injury-related services furnished prior to settlement, then Medicare will recover those payments. In addition, Medicare will not pay for any WC injury-related services furnished prior to the date of the settlement for which it has not already paid.

CMS will not issue “verification letters” stating that a WCMSA is not necessary.

In instances where the above conditions are not met, CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. 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.”

The second to last paragraph of Section 9.4.3 was substituted from:

“The WCRC relies on evidence-based guidelines for prescription medication and medical treatment allocations; however, these are guidelines, not rules. The final determination is also based on the claimant’s past use and future recommended treatment as supported by the medical records and by current peer-reviewed medical literature. See Appendix 4 for a list of resources the WCRC uses.”

to the following:

“The WCRC final determination relies on the claimant’s past use and future recommended treatment as supported by the medical records. Evidence-based guidelines for prescription medication and medical treatment allocations and current peer-reviewed medical literature are also reviewed; however, these are guidelines, not rules. See Appendix 4 for a list of resources the WCRC uses. Treating provider plans are given preference where the two are at odds.”

The corrected example calculations in 9.4.5 for intrathecal (IT) pump pricing should be reviewed by allocators and their price coders to make sure that WCMSA pricing for IT pumps is consistent with the corrected calculations in the updated Reference Guide.

Take Aways:

• The new “no review” policy for zero-dollar MSA’s seems driven in large part to spirited feedback provided to CMS from the WCMSA community. There were several CMS panel discussions with MSP Network membership at the September 2024 MSP Network educational conference in Baltimore during which many of the concerns now addressed in updated Section 4.2 of the Reference Guide concerning WC cases with no payments toward denied body parts (other than during investigation periods), determinations made by WC judges/commissions at the state level, and statutory limits on payment of future medicals by WC carriers were brought up and debated.

• The drop of the one year waiting period before submitting Amended Reviews is another step toward more fair reviews by CMS and also seems to be a result of strong advocacy by those who submit allocation reports, the attorneys, who represent those entities, and the MSP Network stakeholder community at large.

• This is encouraging as it shows that CMS does listen to feedback from the MSP stakeholder community.

For Additional Information

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

15/Jan/2025

It is getting close to that time of year when mailboxes begin to receive W-2 statements and 1099-INT statements. If an injured individual has either a Self-Administered Medicare Set-Aside (MSA) account or a Professionally-Administered MSA account, the individual will be sent a 1099-INT by January 31^st and a copy will be filed with the IRS. The 1099-INT shows interest earned in the account during the previous tax year.

Liability and Workers Compensations cases should follow the Workers Compensation Medicare Set-Aside (WCMSA) Reference Guide, until CMS publishes a Liability Medicare Set-Aside (LMSA) Reference Guide. Until that time arrives, the WCMSA Reference Guide should be considered a single point of reference for both Liability and Workers Compensation cases. To download the WCMSA Reference Guide Version 4.1, dated August 1, 2024, click here.

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.
The interest must be deposited into the MSA account to be used for MSA-covered expenses.
You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

A6. Assuming that there is adequate documentation for the amount of incremental tax that the claimant must pay for the interest earned on this set-aside account, the claimant or his/her administrator may withdraw an amount equal to the additional tax as a “cost that is directly related to the account” to cover the additional tax liability. Such documentation should be submitted along with the annual accounting.”

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare their tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return
Exclude the MSA interest income in the income tax return

In other words, if the Member must pay the IRS an increased income tax amount as a result of the interest earned from their MSA account, the additional income tax burden can be paid from the MSA account. This is considered a cost associated with having the MSA account and CMS allows this expense to be paid from the MSA account. Once a year, Medivest will send CMS an attestation for every applicable professionally-administered MSA account. Any MSA reimbursement of the additional income tax burden will be included in this attestation.

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Medivest’s highly trained representatives can help you figure out if Medicare may have an interest in your settlement. We assist all settling parties to navigate the MSP complexities and provide you with cost-saving strategies for your settlement. For questions about your account or setting up a new professional administration account please contact us here.

Medivest

05/Dec/2024

On November 26th, 2024, the Centers for Medicare & Medicaid Services (CMS) shared a new report titled Workers’ Compensation Medicare Set-Aside (WCMSA) Fiscal Year Statistics 2024. The report provides five fiscal years of data regarding Workers’ Compensation Medicare Set-Aside (WCMSA) Proposed Value and Workers’ Compensation Review Contractor Values (WCRC) from 2020 to 2024.

Analysis

There was a 5.6% decrease in the number of WCMSA allocation reports that were submitted to CMS for review from 15,743 in Fiscal Year (FY) 2023 to 14,862 in FY 2024. There was also a drop in average settlement value of 4.7% from an average of $159,976.93 in FY 2023 to only $152,487.15 in FY 2024.

Despite this drop in settlement values, the WCMSA proposals for allocation reports submitted to CMS remained relatively flat, only dropping less than 2/10ths of one percent from $70,887.33 in FY 2023 to $70,775.58 in FY 2024. Counterhighers from CMS, correspondingly remained relatively flat moving from its published increase between the submitted versus recommended amount of 22% in FY 2023 to an increase of 21% in FY 2024.

The biggest change in the WCMSA CMS review statistics in recent years is that in 2022, when Section 4.3 was first added to the Reference Guide, the average counterhigher jumped from a 13-15% increase for FY 2020-2022 to what may be a “new era” for the last two years being between a 21-22% increase. Taking the average of 14% from FY 2020 – FY 2022 to the average of a 21.5% counterhigher increase for FY 2023 – FY 2024, this amounts to 31% increase in the counterhigher percentages!

Proposed MSAs and Total Settlement Amounts

Pre-CMS review WCMSAs constituted around 46% of the total settlement amount in FY 2024 up from 44% in FY 2023.

Medical vs Rx

Medical items and services represented approximately 79.3 % of the approved MSA amounts, whereas Rx represented 20.7% of the approved WCMSA amounts in FY 2024. The medical portion was 76.9% in FY 2023 with Rx accounting for 23.04% of the MSA in FY 2023. In FY 2020 by contrast, the medical portion was 68.6% and Rx expenses represented 31.4% of approved WCMSA amounts. Rx expenses have declined by 34% since FY 2020 as a percentage of the WCMSA . While several factors are likely to be at play here, CMS’ use of sometimes aggressive NDCs to price drugs may be one culprit. Medivest consistently sees submitted MSAs priced using drug NDCs unavailable in the actual market, and well below market average.

Take Aways

While reviews by CMS could in theory include acceptances or even reductions in the amount proposed by submitters as counterlowers, those who submit WCMSA’s have come to know that CMS reviews of WCMSA’s most often come back in the form of a counterhigher. It is important to distinguish a counterhigher from the term counter offer used in contract negotiations. While the WCMSA submission process is entirely voluntary, CMS’s Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide (WCMSA Reference Guide) language and CMS operations consider the CMS review/approval response to be CMS’ final position on the acceptable amount to be set aside to protect Medicare’s future interests in the settlement, unless there is a successful Re-Review (allowed only for instances where there is a math error or the discovery of a document in existence prior to the time of submission but not included in the submission which is then allowed to be provided for the once only Re-Review opportunity). As a result, many in the industry say CMS uses the counterhigher to “voluntell” the parties the amount required to be set aside from their settlement for their WCMSA amount and that if an alternate amount is set aside or no amount is set aside, injury related medicals otherwise covered by Medicare could be denied by Medicare up to the settlement amount minus procurement costs instead of up to the CMS approval amount.

As background, total WCMSA submissions to CMS declined steadily between CMS’ FY 2020 and FY 2022, descending from 16,517 to 13,752, a reduction of almost 17% in three years. FY 2023’s 15,743 submission count seemed to have been a reversal of that trend until the 14,862 number for FY 2024 was reported. This seems to be the market shaking out the initial scare from Section 4.3. in which CMS had for the first time discussed “non-submit” or “evidence-based” MSA allocation reports as potential attempts to shift the burden of payment for injury related Medicare covered medicals to Medicare.

Proposed vs Recommended

While one can understand that CMS wants to protect the Medicare Trust Funds for both Medicare Part A and Part B, it does not seem to be productive for CMS to unfairly punish those who decide to voluntarily submit MSA’s in accordance with CMS WCMSA Reference Guide methodology. The statistics described above show that while the settlements have come down recently, the amount of the submitted WCMSA’s have not, so it’s not as if submitters have been lowballing their submissions. Those carriers who embraced a non-submit program in recent years to avoid higher WCMSA amounts associated with large counterhighers from CMS, may have not yet seen enough consequences to encourage a large return to voluntary submission practices.

The Big Question

These are statistics from those WCMSA’s submitted for approval, meaning they were written by industry-trained professionals in an attempt to match CMS’ recommended methodology. If the industry for those who submit have been consistent, but there has still been an increase in the counterhigher percentages, what has changed at CMS? While the fear in the stakeholder industry used to be focused on financial recovery by CMS under the Medicare Secondary Payer Act (MSP), could it be that CMS’s position concerning non-submitted WCMSA’s is evolving in the form of future Medicare denials for injured claimants who will be left to their own devices to attempt administrative appeals over those denials? The discussions of Section 4.3 of the WCMSA Reference Guide may have just the start of the new era, while CMS continues to build out its computer system in the background. Now, we are aware that there are new Section 111 Reporting requirements include the reporting of WCMSA amounts for all TPOC settlements involving current Medicare beneficiaries whether the WCMSA was submitted to CMS for review or not. Furthermore, the new Civil Monetary Penalty enforcement for untimely Section 111 reporting of ORM and TPOC applicable as of October of this year to be audited in October of 2025 seem to be clear additional steps of the new era, with additional data for CMS to continue to expand Medicare medical and Rx denials in the future. Routine reviews of business practices are prudent in any industry and as we head into another fiscal year, it is a great time to review your business practices to confirm your firm or company is taking the steps to help ensure best in class compliance standards that align with your clients’ interests and risk tolerances.

For Additional Information

2401229_MKTG_Blog_WCMSA-Ref-Guide-V4.1-1200x601.jpg

Sandy Simpson

02/Aug/2024

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 4.1 on August 1, 2024. This Reference Guide replaces Version 4.0 which was released on April 1, 2024. There are a few notable changes when comparing the two Reference Guides.

Changes in Version 4.1 of this Guide Include the Following Changes

By CMS’ request, the guide has been updated with details about WCMSA coordination with other health insurers (Section 4.1.3).

To download the new WCMSA Reference Guide v4.1 click here.

This guide reflects information compiled from all WCMSA Regional Office (RO) Memoranda issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules. The intent of this reference guide is to consolidate and supplant all historical memoranda in a single point of reference. Please discontinue the reference of prior documents.

For Additional Information

Sandy Simpson

29/May/2024

When resolving a workers’ compensation case, the employer looks to see if the injured employee is a Medicare beneficiary and if there will be injury-related future medical care. If the answer to both questions is yes, then they must comply with the guidelines set forth by the Medicare Secondary Payer (MSP) statute.

With healthcare and Medicare costs on the rise and as the open claim moves through the settlement process, below are some settlement objectives to help keep costs down and stay MSP compliance.

WCMSA Arrangement: Centers for Medicaid and Medicare Services (CMS) recommends this method to ensure that Medicare’s interests are protected when settling a workers’ compensation claim that includes future medical expenses. Note that the WCMSA Arrangements are prepared based on today’s costs.
MSP Compliance: Employers are mandated to follow the MSP statute; it will ensure Medicare compliance when considering Medicare’s interest in the settlement. Failure to do so, you could face legal consequences from breaching the settlement agreement. CMS can also obtain reimbursement of injury related payments made from anyone involved in the settlement, including the worker, workplace, insurance companies and attorneys.
Cost Control: Striving to move an open claim toward settlement in the least expensive manner.
Future Medical Care: Employers can help prioritize the injured employee’s well-being for future medical care after settlement by hiring Medivest for Professional Administration services. Medivest Professional Administration ensures the Medicare Set-Aside (MSA) funds are spent according to the allowable guidelines whereby preserving the MSA dollars.

When to Request a WCMSA?

A WCMSA is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease that would normally be covered by Medicare. All parties involved in a workers’ compensation case have significant responsibilities under the MSP statute to protect Medicare’s interests when resolving cases that include future medical expenses.

Does the settlement contemplate future medical needs?
Is the injured employee eligible or receiving Medicare benefits?
Has the injured employee applied or re-applied for Social Security Disability Insurance (SSDI)?
Is the injured employee 62.5 years old?

Common WCMSA Cost Drivers

When a Medivest WCMSA Arrangement is ordered, a Cost Driver Analysis report will be included. A Cost Driver Analysis report identifies the various costs that are driving up the WCMSA amount, such as opioids, injections, and surgeries. Below are some common WCMSA cost drivers when a report is prepared.

Poly Pharmacy: The use of multiple drugs and lifetime pharmacy costs.
Implantable Devices: Devices such as spinal cord stimulators, intrathecal pain pumps which also includes replacement cost and mediation refills.
Surgeries and Replacement Costs: Non planned surgeries.

WCMSA Cost Mitigation Strategies

When carriers and employers optimize cost mitigation strategies, they can achieve an accurate and timely settlement. The following are examples of helpful strategies.

RX Drug Cost: Reducing prescription drug costs can be used as a pre-MSA strategy by weaning/tapering off some medications, choosing a generic substitution, or using a physician letter (to address changes in medications.
Cost Drivers: Identify treatments or medications that are driving up the total amount of the WCMSA. Review and possibly implement the recommendations provided in the Cost Driver Analyst report to help reduce the WCMSA amount.
Rated Age: If medical records show evidence of a reduced life expectancy, then a Rated Age may be obtained and used when calculating the WCMSA. CMS approves Rated Ages when used in WCMSAs which reduces the life expectancy thus reducing the overall amount of the WCMSA figure.
Structured Settlement: Fund the MSA with a structured settlement instead of a lump sum. CMS approves MSAs to be structured and Medicare will cover expenses for the injured employee during temporary exhaustion if the MSA allocation was approved by CMS. Also, utilizing a structure can provide significant cost savings for the funding party compared to a lump sum payment.

Ready To Order Your WCMSA?

Begin by completing an online referral by clicking here and upload the following documents.

Most recent 2 years of medical records
Most recent 2 years of Rx invoice
Most recent 2 years of indemnity payouts (Work Comp cases only)

About Medivest

Medivest has worked with carriers and employers for over 2 decades to understand their unique needs and responsibilities to their injured workers. Every WCMSA Arrangement is produced by a highly trained nurse that possesses a wealth of knowledge and experience in the preparation of these reports. We understand that creating and maintaining a WCMSA can be complex, let Medivest prepare your next report. Our nurses and staff hold industry certifications or designations including CMSP, CMSP-F, CPC, MSCC, CSSC, JD, RN, and BSN.

Sandy Simpson

02/Apr/2024

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 4.0 on April 1, 2024. This Reference Guide replaces Version 3.9 which was released on May 15, 2023. There are a few notable changes when comparing the two Reference Guides.

Changes in This Version 4.0 of this Guide Include the Following Changes:

Instruction specific to beneficiaries has been added to encourage them to use their Medicare.gov access to the portal for the most efficient method of submitting attestations (Sections 11.1.1 and 17.5). This user-friendly mechanism which allows CMS to gain potentially more MSA spending information than it has received via traditional mailing, may lead to CMS denying more future medical claims or potentially considering whether recovery of future medical payments that slipped through the cracks is viable.
The CDC Life Table link was updated (10.3) – available to view here.

To download the new WCMSA Reference Guide v4.0 click here. This guide reflects information compiled from all WCMSA Regional Office (RO) Memoranda issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules. The intent of this reference guide is to consolidate and supplant all historical memoranda in a single point of reference. Please discontinue the reference of prior documents.

For Additional Information

Medivest

06/Dec/2023

On December 4th, 2023, Centers for Medicare & Medicaid Services (CMS) shared a new report titled Workers’ Compensation Medicare Set-Aside (WCMSA) Fiscal Year Statistics 2023. The report provides four fiscal years of data regarding Workers’ Compensation Medicare Set-Aside (WCMSA) Proposed Value and Workers’ Compensation Review Contractor Values (WCRC) from 2020 to 2023.

Takeaways

Total Submissions
Total WCMSA submissions to CMS declined steadily between CMS’ FY 2020 and FY 2022, descending from 16,517 to 13,752, a reduction of almost 17% in three years. FY 2023’s 15,743 submission count represents a reversal of that trend for the time being. This may be the result of the appearance of Section 4.3 in the WCMSA Reference Guide in 2022, in which CMS speaks about “non-submit” or “evidence-based” MSA programs, describing them as “a potential attempt to shift financial burden”.

Proposed vs Recommended
Those who decided to voluntarily submit their proposed WCMSA to CMS for review were rewarded with recommendations that were, all told, 22.95% percent higher than the proposed amount. For comparison, the average percentage difference between the submitter’s proposed MSA and CMS’ recommended MSA for CMS’ FY 2020 through FY 2022 was 13.9%. This is an increase of roughly 65% in CMS’ FY 2023 versus the prior three years’ average. Not only is the counter percentage higher, but the total recommended amount is higher. So, it’s not as if submitters have been lowballing their submissions. For those who embraced a non-submit program for fear of significantly higher MSA counters, CMS dangled no carrots in FY 2023 to encourage a return to voluntary submission.

Proposed MSAs and Total Settlement Amounts
WCMSAs submitted by the industry have, on average, consistently ranged between a proposed amount of $70,439 and $74,847 between CMS’ FY 2020 and FY 2023. Total Settlements utilizing WCMSAs over the same period have averaged between $159,579 and $171,170. Accordingly, WCMSAs constitute around 43% of the total settlement amount in which they are included (pre-CMS recommendation).

Medical vs Rx
Medical expenses with MSAs have increased steadily in recent years and CMS’ FY 2023 is no exception. CMS’ recommended total for the medical portion of submitted WCMSAs is up 13% since 2020. Conversely, Rx expenses have declined by 33%. While several factors are likely to be at play here, CMS’ use of sometimes aggressive NDCs to price drugs may be one culprit. Medivest consistently sees submitted MSAs priced using drug NDCs unavailable in the actual market, and well below market average.

The Big Question

These are statistics from those WCMSA’s submitted for approval, meaning they were written by industry-trained professionals in an attempt to match CMS’ recommended methodology. If the industry is consistent, what has changed at CMS? Also, what does this say about CMS’s position concerning non-submitted WCMSA’s that were written to Evidence-Based Medicine or other non-submit standards in light of the previously modified Section 4.3 of the WCMSA Reference Guide?

For Additional Information

Sandy Simpson

31/May/2023

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.9 on May 15, 2023. This Reference Guide replaces Version 3.8 which was released on November 14, 2022. There are a few notable changes when comparing the two Reference Guides.

To download the new WCMSA Reference Guide v3.9 Click Here.

CMS’s Version 3.9 Reference Guide

Section 1.1 includes the following changes:

- All WC letters currently signed with CMS’ Director of Financial Services Group name and signature image have been updated to reflect the current CMS customer service contact information (Appendix 5).
- The CMS Regional Offices are no longer responsible for approving initial determinations. Process language and contact information have been updated throughout the guide (Sections 9.0, 9.4.6, 9.5, and 18.0, and Appendix 5).
- Clarification has been provided regarding intrathecal pump, spinal cord stimulator, and peripheral nerve stimulator replacement frequency calculation (Section 9.4.5).
- The maximum time limit for eligibility has been removed from the Amended Review process (Section 16.3).
- The 94585 ZIP code has been added to the Walnut Creek Medical Center in the table listing major medical centers (Appendix 7).
- The CDC Life Table link was updated (Section 10.3)

Appendix 5: CMS Customer Service Contact Signature Image Updated to All WC Letters

All WC letters currently signed with CMS’ Director of Financial Services Group name and signature image have been updated to reflect the current CMS customer service contact information (Appendix 5). The following letters have been updated:

Approval Letter
Zero Set-Aside Letter
Below Threshold Letter
Beneficiary Below Threshold Letter
Development Letter
Closeout Letter

CMS Regional Offices No Longer Responsible for Approving Initial Determinations

The CMS Regional Offices are no longer responsible for approving initial determinations. Process language and contact information have been updated throughout the guide (Sections 9.0, 9.4.6, 9.5, and 18.0, and Appendix 5). Clarification has been provided regarding intrathecal pump, spinal cord stimulator, and peripheral nerve stimulator replacement frequency calculation (Section 9.4.5). The maximum time limit for eligibility has been removed from the Amended Review process (Section 16.3). The 94585 ZIP code has been added to the Walnut Creek Medical Center in the table listing major medical centers (Appendix 7). The CDC Life Table link was updated (Section 10.3).

9.0 Updates: Process Language and Contract Information

WCMSA Submission Process Overview

3.8 version: The WCRC applies the CMS’ criteria in reviewing proposals and forwards the proposals along with a recommendation on the appropriate funding amount to the assigned CMS Regional Office (RO) for a final determination.
3.9 version: The WCRC applies CMS’ criteria in reviewing proposals and making a determination, forwards the final determination on the appropriate funding amount to CMS.

9.5 Updates: Regional Office Receipt to Determinations

3.8 version: Regional Office Receipt

When the WCRC completes its review and recommendation, the case is sent to the RO assigned to the case based on the claimant’s state of residence and CMS’ state and region logic. Although the RO assignment is based on the state of residence of the beneficiary, a case may be transferred from one RO to another based on the case’s legal state of venue, or because the RO that the case was originally assigned to no longer processes WCMSA cases. When the RO receives the case, they review the WCRC recommendation and make a final determination in the case.

3.9 version: Determinations

*The update pertains to cases may not progress to approvals for a number of reasons, basically switches the responsibility from the Regional Office (RO) over to the Workers’ Compensation Review Contractor (WCRC).

New Language Added

- - The WCRC may determine that the case should be closed. This can happen for a number of reasons, included: the parties are not longer settling, the case should be Black Lung instead of WC, the case is Liability rather than WC case, or the submitted has failed to submit necessary information after repeated development requests. The submitted is notified of the case closure for ineligible cases closed for insufficient information.
  - When the WCRC completes its review and recommendation, CMS issues its determination in the form of an Approval letter to the submitter with copies sent to any eligible parties. Then the case is transferred to the Consolidated Regional Office to await receipt of the settlement documents so that the case may move to Final Determination/Case Completion.

9.6 Updates: From Final Determination to Case Completion

3.8 version: Final Determination

If the claimant is living, the case meets workload review threshold, any needed development has been received, and the case is not closed for other reasons, the RO reviews the WCRC’s recommendation and makes a determination as to the final CMS-approved WCMSA amount.

3.9 version: Case Completion

If the claimant is living, the case meets workload review thresholds, any needed development has been received, the case is not closed for other reasons, and the WCRC’s recommendations have been provided, then an approval letter is issued to the submitter with a determination as to the final CMS-approved WCMSA amount.

9.4.5 Clarifications: Medical Review Guidelines

Intrathecal Pumps

3.8 version: Permanent placement of IT pump devices are included every 7 years: the claimant’s life expectancy is divided by 7, decimals are dropped, and the whole number Is used for determining replacement over the life expectancy.
3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for IT pump devices is every seven years from the most recent placement date. If the IT pump is not already placed, one year is removed from the life expectancy before the replacement calculation occurs to account for that initial replacement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.

Examples:

- - - Beneficiary life expectancy is 21 years and no IT pump is yet placed. Take the 21 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (21-1)/7 = 20/7 = 2.86
    - One initial placement is needed, plus 2 replacements.
    - Beneficiary life expectancy is 12 years and an IT pump was placed three years prior. Take the 12 years, subtract four years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
    - (12-4)/7 = 8/7 = 1.14 One replacement is needed.

Spinal Cord Stimulators

3.8 version: Permanent placements of SCS devices are included every 7 years for non-rechargeable and every 9 years for rechargeable: the claimant’s life expectancy is divided by the frequency of replacement of type, decimals are dropped, and the whole number is used for determining replacement over the life expectancy.
3.9 version: CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for SCS devices is every seven years for non-rechargeable and every nine years for rechargeable from the most recent placement date. If the SCS is not already place, one year is removed from the life expectance before replacement calculation occurs to account for that initial placement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven (or nice, depending on the unit type), decimals are dropped, and the whole number is used for determining replacement over the life expectancy.

Examples:

- - - Beneficiary life expectancy is 33 years and no SCS is yet placed, but a non-rechargeable unit is appropriate. Take the 33 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (33-1)/7 = 32/7 = 4.57
    - One initial placement is needed, and 4 replacements are needed.
    - Beneficiary life expectancy is 17 years, subtract six years for the most recent placement, divide the remainder by seven, and use the whole number with that result.
    - (17-6)/7 = 11/7 = 1.57
    - One replacement is needed.

Pricing for Peripheral Nerve Stimulator (PNS) Surgery

(PNS) Surgery PNS surgery involves the placement of an electrode(s) in the direct vicinity of a specific peripheral nerve located outside the brain or spinal cord, thereby directly stimulating the painful peripheral nerve. CMS policy assumes that a beneficiary would obtain the prescribed therapy within the first year following settlement if not already placed, or at the next routine interval for replacement. The routine replacement interval for PNS devices is every seven years for non-rechargeable and every nine years for rechargeable from the most recent placement date. If the PNS is not already placed, one year is removed from the life expectancy before replacement calculation occurs to account for that initial placement. To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven (or nine, depending on unit type), decimals are dropped, and the whole number is used for determining replacement over the life expectancy. PNS replacement calculations are done the same as for SCS surgeries.

Examples:

- - - Beneficiary life expectancy is 27 years and no PNS is yet placed, but a non-rechargeable unit is appropriate. Take the 21 years, subtract one year for the initial placement, divide the remainder by seven, and use the whole number with that result.
    - (27-1)/7 = 26/7 = 3.71
    - One initial placement is needed, and three replacements are needed.
    - Beneficiary life expectancy is 15 years and a rechargeable PNS was placed two years prior. Take the 15 years, subtract two years for the most recent placement, divide the remainder by seven, and use the whole number with that result. (15-2)/7 = 13/7 = 1.86
    - One replacement is needed.
    - Surgery pricing includes physician fees, facility fees, and anesthesia fees, if applicable.
    - Physician fees: CPT codes are identified and priced based on the appropriate state fee schedule (or usual and customary charges from a state).
      - 64555, Percutaneous implantation of neurostimulator electrode; peripheral nerve
        
        64555, Percutaneous implantation of neurostimulator electrode array; peripheral nerve (excludes sacral nerve)
        
        64590, Insertion or replacement of peripheral or gastric neurostimulator generator
        
        01941, Anesthesia
    - Facility fee: Generally, this procedure is handled in an outpatient setting. The appropriate APC should be included based upon surgery type.
      - 5462, Stimulator Trial
        
        5464, Stimulator Placement
        
        5464, Stimulator Replacement Consider the number of leads to be used.
    - Analysis Services: CPT 96972 can be billed every 30 days and more frequently in the first month. It should be priced four times in the first 30 days, monthly for the first year, and twice a year after the first year.
      - 95972 – Electronic analysis of implanted neurostimulator pulse generator system (e.g., rate, pulse amplitude, pulse duration, configuration of wave form, battery status, electrode selectability, output modulation, cycling, impedance, and patient compliance measurements); complex spinal cord, or peripheral (i.e., peripheral nerve, sacral nerve, neuromuscular, except cranial nerve) neurostimulator pulse generator/transmitter, with intraoperative or subsequent programming.
    - Anesthesia fee: The anesthesia fee is calculated by multiplying the time-value unit by a base value. The time-value unit is the reasonable time for a procedure. The base value is either established by the fee schedule, or by Medicare and conversion factors.
    - Trials: If an associated trial takes place before the surgery, the trial is assumed to be successful and included with the cost of surgery. PNS is one time after trial, if successful. If a trial fails, a repeat trial is usually not appropriate unless there are extenuating circumstances that led to the trial failure (equipment malfunction, early lead migration, etc.), technological advances, or an alternative neuromodulary technique that may lead to a more successful second trial (see LCD L34328). If submitters give a detailed breakdown of their proposed surgery prices, the reviewer will consider the proposed amounts.

16.3 Updates: Amended Review

3.8 version: CMS has issued a conditional approval/approved amount at least 12 but no more that 72 months prior.
3.9 version: CMS has issued a conditional approval/approved amount at least 12 months prior.

For Additional Information

Sandy Simpson

15/Nov/2022

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.8 on November 14, 2022. This Reference Guide replaces Version 3.7 which was released on June 6, 2022. There are a few notable changes when comparing the two Reference Guides.

CMS’s Version 3.8 Reference Guide, Section 1.1 includes the following changes:

Changes in This Version of the Guide Version 3.8 of this guide includes the following changes: Clarification has been provided regarding re-review requests when errors exist in the submission documentation, as well as re-review limitations (Sections 16.1 and 16.2). Note: These re-review changes are only available for approvals from September 1, 2022 forward.

To download the new WCMSA Reference Guide v3.8 Click Here.

For your convenience, we have included the entirety of Section 16.1 and 16.2, so you will have the most up to date information regarding the process of re-review:

16.1 Re-Review

When CMS does not believe that a proposed set-aside adequately protects Medicare’s interests, and thus makes a determination of a different amount than originally proposed, there is no formal appeals process. However, there are several other options available. First, the claimant may provide the WCRC with additional documentation in order to justify the original proposal amount. If the additional information does not convince the WCRC to change the originally submitted WCMSA amount and the parties proceed to settle the case despite the lack of change, then Medicare will not recognize the settlement. Medicare will exclude its payments for the medical expenses related to the injury or illness until WC settlement funds expended for services otherwise reimbursable by Medicare use up the entire settlement. Thereafter, when Medicare denies a particular beneficiary’s claim, the beneficiary may appeal that particular claim denial through Medicare’s regular administrative appeals process. Information on applicable appeal rights is provided at the time of each claim denial as part of the explanation of benefits.

A request for re-review may be submitted based one of the following:

Mathematical Error: Where the appropriately authorized submitter or claimant disagrees with CMS’ decision because CMS’ determination contains obvious mistakes (e.g., a mathematical error or failure to recognize medical records already submitted showing a surgery, priced by CMS, that has already occurred), or

Missing Documentation: Where the submitter or claimant disagrees with CMS’ decision because the submitter has additional evidence, not previously considered by CMS, which was dated prior to the submission date of the original proposal and which warrants a change in CMS’ determination.

- Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

- Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.
- Should no change be made upon response to a re-review request (i.e., no error was identified), additional requests to re-review the same error will not be entertained.

Submission Error: Where an error exists in the documentation provided for a submission that leads to a change in pricing of no less than $2500.00, a re-review request may be made by submitting updated documents free of errors that caused the original review outcome. Amended documents must come from the originators with appropriate notation to identify that the error was corrected, along with the date of correction and no less than hand-written “wet” signature of the correcting individual. Note: This submission option is only available for approvals from September 1, 2022 forward.

- Examples include, but may not be limited to; medical records with incorrect patient identifying information or rated ages where the rated-age assessor provided incorrect information in the rated-age document.

16.2 Re-Review Limitations

Note: The following re-review limitations are only available for approvals from September 1, 2022 forward.

Re-review shall be limited to no more than one request by type.

Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

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What Should You Do Now?

Takeaways

For Additional Information

Take Aways:

For Additional Information

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.

The interest must be deposited into the MSA account to be used for MSA-covered expenses.

You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare their tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return

Exclude the MSA interest income in the income tax return

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Analysis

Proposed MSAs and Total Settlement Amounts

Medical vs Rx

Take Aways

Proposed vs Recommended

The Big Question

For Additional Information

Changes in Version 4.1 of this Guide Include the Following Changes

For Additional Information

When to Request a WCMSA?

Common WCMSA Cost Drivers

WCMSA Cost Mitigation Strategies

Ready To Order Your WCMSA?

About Medivest

Changes in This Version 4.0 of this Guide Include the Following Changes:

For Additional Information

Takeaways

The Big Question

For Additional Information

CMS’s Version 3.9 Reference Guide

Appendix 5: CMS Customer Service Contact Signature Image Updated to All WC Letters

CMS Regional Offices No Longer Responsible for Approving Initial Determinations

9.0 Updates: Process Language and Contract Information

WCMSA Submission Process Overview

9.5 Updates: Regional Office Receipt to Determinations

New Language Added

9.6 Updates: From Final Determination to Case Completion

9.4.5 Clarifications: Medical Review Guidelines

Intrathecal Pumps

Examples:

Spinal Cord Stimulators

Examples:

Pricing for Peripheral Nerve Stimulator (PNS) Surgery

Examples:

16.3 Updates: Amended Review

For Additional Information

CMS’s Version 3.8 Reference Guide, Section 1.1 includes the following changes:

To download the new WCMSA Reference Guide v3.8 Click Here.

For your convenience, we have included the entirety of Section 16.1 and 16.2, so you will have the most up to date information regarding the process of re-review:

16.1 Re-Review

A request for re-review may be submitted based one of the following:

Missing Documentation: Where the submitter or claimant disagrees with CMS’ decision because the submitter has additional evidence, not previously considered by CMS, which was dated prior to the submission date of the original proposal and which warrants a change in CMS’ determination.

Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.

Should no change be made upon response to a re-review request (i.e., no error was identified), additional requests to re-review the same error will not be entertained.

Examples include, but may not be limited to; medical records with incorrect patient identifying information or rated ages where the rated-age assessor provided incorrect information in the rated-age document.

16.2 Re-Review Limitations

Note: The following re-review limitations are only available for approvals from September 1, 2022 forward.

Re-review shall be limited to no more than one request by type.

Disagreement surrounding the inclusion or exclusion of specific treatments or medications does not meet the definition of a mathematical error.

Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

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