Updated WCMSA Reference Guide (Version 3.6) released

March 24, 2022 / 10 min read

The Centers for Medicare and Medicaid Services (CMS) has released an updated Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide (Version 3.6, March 15, 2022).

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As part of Reference Guide Version 3.6, CMS makes what it terms as “clarifications” [1]regarding the application of its evidenced-based medicine MSA (EBMSAs) and non-submit MSA policy as stated in Section 4.3 of the Reference Guide. As more fully outlined below, in general, CMS’s new updates to Section 4.3 state that its EBMSA/non-submit MSA policy as stated in Section 4.3 applies to “all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022” and that this policy is not intended to affect settlements not meeting CMS’s WCMSA review thresholds. In this regard, these updates essentially memorialize the information provided by CMS as part of the agency’s February 17, 2022, WCMSA webinar. In addition, CMS made other verbiage updates to Section 4.3, along with changes to other Reference Guide sections impacting WCMSAs as outlined below.

The following provides a general overview of the updates made by CMS in WCMSA Reference Guide Version 3.6:

Clarifications to Section 4.3

By way of background, CMS added Section 4.3 into the WCMSA Reference Guide Version 3.5 in January 2022 and the agency discussed the changes as part of its recent WCMSA update webinar.

This section, titled “The Use of Non-CMS-Approved Products to Address Future Medical Care,” sets-forth CMS’s policy and position regarding what is commonly referred to as “evidenced-based” or “WCMSA non-submit” MSAs which are future medical arrangements that are not submitted by the settling parties to CMS for the agency’s review and approval, although the settlement meets CMS’s WCMSA review thresholds. As part of Section 4.3, CMS states that they view these arrangements, as “a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement” and when a settlement includes a non-CMS approved MSA, CMS may deny payment for Medicare covered medical services related to the WC injuries until it is satisfied that the entire net settlement amount was spent for claim related treatment.

After CMS introduced Section 4.3 in January, two questions that remained unclear concerned (i) whether CMS’s policy would apply retroactively or prospectively and (ii) whether CMS intended this policy to apply to non-CMS approved MSAs that parties may include in settlements that do not meet CMS’s WCMSA review thresholds.

Through new Reference Guide 3.6, CMS has now added language to Section 4.3 attempting to clarify these two issues.

Specifically, as to the first question, CMS has added language indicating that the policy set forth in Section 4.3 applies to “all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022.”

Regarding the second question, CMS has added language stating that it “does not intend for this policy to affect any settlement that would not otherwise meet its WCMSA review thresholds,” although it reminds the settling parties that its “comment does not relieve the settling parties of an obligation to consider Medicare’s interests as part of the settlement.” The full text of Section 4.3 as now contained in WCMSA Reference Guide Version 3.6 is provided for the reader’s convenience as part of this endnote for those interested.[2

On these two issues, the new language added to Section 4.3 reads in full as follows:

Notes: This official policy shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022; however, flags in the Common Working File for notifications received prior to that date will be set to ensure Medicare does not make payment during the spend-down period. CMS does not intend for this policy to affect any settlement that would not otherwise meet review thresholds. This comment does not relieve the settling parties of an obligation to consider Medicare’s interests as part of the settlement; however, CMS does not expect notification or submission where thresholds are not met.

In reviewing this new language, several important items are noted. First, CMS clarifies that its EBMSA/non-submit policy as outlined in Section 4.3 applies to settlements occurring “on or after” January 11, 2022. Second, and of note, if CMS receives the notification of a pre-January 11, 2022 settlement using a non-CMS approved MSA, it will continue to flag the common working file to prevent Medicare from making payment for WC claims related treatment. Presumably, once CMS receives an attestation that the non-CMS approved MSA is fully and properly exhausted, it would remove the common working file flag accordingly. In contrast, for claims that settle after January 11, 2022, CMS, would require an attestation of the full expenditure of the net settlement amount before removing the flag. Third, CMS clarifies that it's EBMA/non-submit policy does not impact workers’ compensation settlements that do not meet its WCMSA review thresholds.

In addition to CMS’s new “notes” section as quoted above, CMS made a few small, but notable, changes to other parts of Section 4.3. In this regard, in the third paragraph of Section 4.3 it is noted that CMS has changed what originally read as “will” to “may at its sole discretion deny payment for medical services related to WC injuries …” Further, in the same paragraph, CMS expands what originally read as “illness” to “… 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.” [3]

From these changes, it appears CMS has softened the original language contained Section 4.3 released in WCMSA Reference Guide Version 3.5 which, presumably, were made to provide CMS the flexibility to assess the amount allocated in non-CMS approved MSAs. This would seem to align with one point CMS discussed as part of its recent WCMSA webinar. Specifically, on the webinar CMS indicated that if the claimant can demonstrate that a non-CMS approved MSA was properly and fully exhausted, it may review the allocation to determine if the amount was reasonable. If the allocation is determined to be reasonable, then CMS may choose not to require full exhaustion of the net settlement amount. However, it may be reasonable to assume that CMS is likely to apply the CMS WCMSA allocation review standards as the baseline to measure reasonableness and, consequently, unless the allocation was priced in accordance with those standards, there is significant risk that CMS would disagree with the allocation amount upon exhaustion.

Other Updates

In addition to the above changes to Section 4.3, CMS made noted updates to Sections 9.4.1.1, 10.2, and 16.1, as follows:

Section 9.4.1.1 – Most Frequent Reasons for Development Requests: CMS revised this section to include additional details and guidance regarding development requests. The most significant changes made include CMS’s indication that medical records are needed, even in disputed claims, and that “draft or final settlement agreements and court rulings are required documents for all submissions if they exist.”

Section 10.2 – Consent to Release Note: CMS added new language stating that the use of an electronic signature is only valid if it is E-SIGN Act compliant.

Section 16.1 – Re-Review: CMS added new language indicating that when a re-review determination concludes that no error was identified, CMS will not review additional re-review requests for the same error.

Assessing the updates

Overall, the updates made by CMS to Section 4.3 are basically in line with the points CMS discussed as part of its WCMSA webinar discussion and serve to provide better clarity as to CMS’s intended application of its EBMSAs/non-submit policy. One point not addressed as part of the new updates, but which was a significant takeaway from the recent WCMSA webinar, concerns CMS’s current inability to link Section 111 reporting date, such as the reporting of TPOC (total payment obligation to the claimant), as part of CMS’s potential enforcement of Section 4.3. However, while CMS does not currently have this ability, going forward close attention should be paid to whether CMS moves to close this gap, especially given that Section 4.3’s addition to the Reference Guide can be viewed as CMS essentially putting the industry on notice that it may enforce its EBMSA/non-submit policy against applicable settlements that do not include a CMS-approved WCMSA after January 11, 2022.

As for the changes outside of Section 4.3, while these are less prominent, they are still impactful. For example, CMS’s updated language in Section 9.4.1.1 stating that medical records are required, even in denied cases, is a culmination of CMS’s trend to formally tighten its review process to make the approval of zero MSAs more challenging. Further, CMS’s update to its re-review process as noted in Section 16.1 may prove particularly problematic given the current absence of a formal appeals process. We will continue monitoring developments on these fronts and will continue to work with our customers on challenging CMS determinations and positions as may be applicable.

Questions?

Please feel free to contact the author if you have any questions regarding CMS’s new updates or WCMSA issues in general.

[1] In Chapter 1.1 of WCMSA Reference Guide Version 3.6, CMS outlines its updates as follows: Clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3), as well as documentation and re-review tips (Sections 9.4.1.1 10.2, and 16.1).

[2] Section 4.3: The Use of Non-CMS-Approved Products to Address Future Medical Care

A number of industry products exist for the purpose of complying with the Medicare Secondary Payer regulations without participation in the voluntary WCMSA review process set forth in this reference guide. 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

As a matter of policy and practice, 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.

Notes: This official policy shall apply to all notifications of settlement that include the use of a non-CMS-approved product received on, or after, January 11, 2022; however, flags in the Common Working File for notifications received prior to that date will be set to ensure Medicare does not make payment during the spend-down period.

CMS does not intend for this policy to affect any settlement that would not otherwise meet review thresholds. This comment does not relieve the settling parties of an obligation to consider Medicare’s interests as part of the settlement; however, CMS does not expect notification or submission where thresholds are not met.

[3] The third paragraph in Section 4.3 as updated states in full as follows:

Updated Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide (Version 3.6) released – CMS makes further clarifications to its WCMSA EBMSA/non-submit policy and other updates

Clarifications to Section 4.3

Other Updates

Questions?