Synergy Blog

The Evolution of The Workers’ Compensation Medicare Set-Aside (WCMSA) Arrangement

April 8, 2021

Rasa Fumagalli JD, MSCC, CMSP-F

The nature of the Workers’ Compensation Medicare Set-Aside (WCMSA) has evolved over the years since the 2001 Patel Memo. That evolution has seen us move from every WCMSA that met the Center for Medicare and Medicaid Services (CMS) internal workload review threshold being submitted to CMS for review, to now a practitioner may be offered an evidence-based medicine WCMSA, a “certified” WCMSA or a compromise WCMSA. An understanding of the differences between these various types of proposed WCMSAs and their projection methodology is important when it comes to settlement discussions.

The WCMSA that most practitioners are familiar with is the “traditional” WCMSA. This type of WCMSA is submitted to CMS for review when CMS’ internal workload review threshold is met. Although CMS recommends that parties seek Agency (CMS) review of the WCMSA, the WCMSA Reference Guide (Guide) specifically states: “There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review.” The Guide further states that “if you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.”

The Guide includes the general frequency schedules for various diagnostic studies, implants, and drugs used by the Workers Compensation Review Contractor (WCRC) in determining future treatment costs. Given the “cookie-cutter” projection methodology that is used by the WCRC, the CMS-determined WCMSA may, at times, overfund the future treatment. The benefit to CMS review, however, is the assurance that CMS will become the primary payer upon review/approval of the allocation and proper exhaustion of the WCMSA funds.

A second type of WCMSA is the evidence-based medicine WCMSA. This may or may not be submitted to CMS for review. Rather than projecting future treatment based on the Guide’s frequency schedules, the projections instead focus on evidence-based medicine guidelines, such as those that may be found in the Official Disability Guidelines (ODG) or American College of Occupational and Environmental Medicine (ACOEM) guidelines.  It is generally lower than a “traditional” WCMSA and will also limit projections based on state law arguments. If the evidence-based medicine WCMSA is submitted to CMS for review and approved by CMS, the WCMSA may more accurately allocate funds for the future treatment.

A practitioner may also be presented with a “certified” WCMSA that is not submitted to CMS for review. The “certified” WCMSA projection methodology looks to evidence-based medicine guidelines. It also comes with an assurance that the reasonableness of the certified WCMSA projections will be defended against any challenges by CMS. The WCMSA funds, however, must be either professionally administered or “self-administered with support” in order to extend the life of the funds. Since this type of WCMSA is not submitted to CMS for review, CMS is not bound by it.

The compromise WCMSA is used in disputed settlements and is never submitted to CMS for review. It is based on the calculation methodology that is outlined in 42 C.F.R. § 411.47. Although this provision discusses conditional payments, it should equally apply to the apportionment of future medical damages in a compromise settlement.

Conclusion

Although the majority of WCMSAs are prepared by the defense, it is important that the practitioner scrutinize the methodology used in the WCMSA projections. If the WCMSA is not going to be submitted to CMS for review, an evidence-based medicine projection methodology is more appropriate than the “cookie cutter” projections used in the traditional WCMSA. This difference is particularly significant when the WCMSA is to be carved out from the settlement rather than added to the settlement. When in doubt as to the best approach, Synergy’s team is available to guide you through your Medicare Secondary Payer compliance options.

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