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CMS’ Do-Over: A Look at Version 3.6 of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide

March 24, 2022

Rasa Fumagalli JD, MSCC, CMSP-F

The Centers for Medicare and Medicaid Services (CMS) issued Version 3.6 of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Guide”) on March 15, 2022. It softened the language used in the controversial Section 4.3 of the January 10, 2022 Guide (Version 3.5). This Section addressed CMS’ view of non-submitted Medicare Set-Aside (MSA) proposals and initially provided the following:

As a matter of policy and practice CMS will deny payment for medical services related to the WC injuries or illnesses requiring attestation of appropriate exhaustion equal to the total settlement less procurement costsbefore 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.

In an apparent response to the concerns raised by the Medicare Secondary Payer (MSP) compliance industry, CMS issued a revision of this paragraph in Version 3.6 of the Guide. The current section now provides the following:

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. (emphasis added)

A note was added to this section as well. It states:

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.

Although this revised provision clarifies that Medicare will resume a primary payer status when the parties show that the initial funding of the non-submitted WCMSA was sufficient, and it was properly exhausted, the exact process for proving the sufficiency of the non-submitted WCMSA proposal has not yet been defined. It is also clear that despite the policy effective date of January 11, 2022, CMS will use notice of the non-submitted MSAs to flag the Common Working Files (CWF) to potentially avoid payments up to the total settlement, less procurement costs and paid conditional payments. This flagging of the CWF may result in the development of a process whereby CMS is reviewing the appropriateness of the non-submitted WCMSA. Documentation that supports the reasonableness of the non-submitted WCMSA should be maintained in the event that is questioned by CMS. The note also clarifies that this policy is not intended to affect settlements that do not meet CMS’ internal workload review thresholds as long as Medicare’s interests have been considered in the settlement. It is rather ironic that the non-submitted MSAs that were shared with CMS in order to avoid improper payments may face greater scrutiny than the non-submitted MSAs that were never shared with CMS.

Other revisions in Version 3.6 pertained to Section 9.4.1.1 that discusses the most frequent reasons for development letters and Section 10.2 that discusses e-signatures on Consent to Release documents. The revision to Section 16.1 is significant in that it limits parties to one re-review request per particular error claim. Synergy will continue to keep you advised of MSP compliance changes as they arise.