CMS Discredits Non-Submits in WCMSA Reference Guide Version 3.5

Whether or not to submit has through the years been touted as the main event at dozens of national conferences and seminars, promoting these sessions like MSP cage-match battles, pitting experts against one another in impassioned debate. Today Medicare put to rest more than a decade of MSP industry contention regarding whether Workers’ Compensation Medicare Set-Asides meeting Medicare’s published review thresholds must be reviewed and approved to establish validity and afford protection to Beneficiaries’ future Medicare entitlements. The decision is in and the answer is yes.

Since CMS review of a WCMSA is not a legal requirement, myriad Medicare Set-Aside products have been introduced to the workers’ compensation industry that allocate future Medicare-covered medical treatment in an effort to consider and protect Medicare’s interests without obtaining formal approval from Medicare. These allocations are usually marketed as protective solutions that save time and money by sidestepping Medicare’s rigid allocating methodology, avoiding lengthy review times and eliminating the risk of unpredictable and unjust outcomes. Common products include Evidence-Based Medicare Set-Asides and Non-Submit MSAs.

And now, so many years later, Medicare weighs in with the knockout punch: “… 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…” (emphasis added.)

While reserving the rights to deny benefits is not a new position for Medicare overall, the verbiage concerning non-submit MSAs is the most strenuous language the Agency has set forth to date; historically non-submits have been met by government silence. In its entirety, the update, entitled “4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care” states: 

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.” 

Leaning on federal regulation for support, Medicare’s update plainly sets forth its refusal to pay for claim-related treatment post-settlement unless an approved WCMSA amount is properly exhausted. The alternative to obtaining an approved WCMSA is that exhaustion of the entire net settlement amount must occur before Medicare will make post-settlement claim-related payment.

To be clear, the update does not suggest that Medicare will pursue action against primary payers for failure to obtain or fund an approved MSA value; rather, the clarification identifies the Beneficiary’s future entitlements as jeopardized if the net settlement amount is not used in its entirety for payment of claim-related Medicare-covered medical treatment. The referenced federal regulation lends the necessary authority to support Medicare’s position.

The allure of non-submit programs began in the early days of WCMSA review. The review program, initially performed by the CMS regional offices, had a slow start in the mid-aughts, plagued by mysterious allocation practices as well as pricing, allocating and rationale inconsistencies and ruinously long turnaround times. By 2012, approvals were rolling out within 30-90 days, with current times now as quick as two weeks. And with centralized review from a single Workers’ Compensation Review Contractor armed with detailed direction from the Agency, the evolution of methodology has become more and more consistent and straightforward. Additionally, transparency has improved in tandem with industry communication and the willingness of the government to openly exchange information. While not a perfect process, at this point in the lifespan of Medicare Set-Asides, improvements have reshaped the landscape, alleviating many of the concerns that commonly gave rise to consideration of non-submit MSAs.

Michelle A. Allan is a Principal at Allan Koba Compliance Solutions. She was previously a partner and Co-Chair of the Medicare Secondary Payer practice group at Gordon & Rees. She has been in the MSP industry since 2003.

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