Upcoming Reporting Changes Emphasize Importance of Post-Settlement Workers’ Compensation MSA Administration

Shawn Deane

General Counsel & Vice President of Claims Solutions | J29

Shawn.Deane@j29inc.com  

As previously reported on in www.workerscompensation.com, the Centers for Medicare & Medicaid Services (“CMS”) plans to implement Sec. 111 reporting requirements relative to workers’ compensation settlements that include a Medicare Set Aside (“MSA”). Understandably, much has been covered regarding the technical details surrounding this upcoming change. However, the underlying basis and consequences haven’t been a particular area of focus – and therefore, will be covered here.

Background

Up until now, Sec. 111 reporting is in place to ensure proper coordination of benefits (determining primary versus secondary payer responsibility) and to facilitate recovery of conditional payments. More broadly, and in CMS’ own words, as they indicated in their April 16, 2024 webinar related to these upcoming changes: “The S111 reporting process is just part of the Medicare Secondary Payer (MSP) provisions that continue to protect Medicare Trust Funds. Protecting the Medicare Trust Funds means that CMS must make every effort to ensure that it does not pay for items and services that certain health insurance or coverage is primarily responsible for paying.” 

On April 4, 2025, CMS will mandate that Responsible Reporting Entities (RREs) – i.e., workers’ compensation insurance carriers and self-insureds – report workers’ compensation settlements, known in the parlance as Total Payment Obligation to Claimant (TPOC) events associated with MSAs. It’s important to note that these upcoming reporting changes:  

• Are only applicable to workers’ compensation settlements with MSAs
• Do not alter TPOC reporting thresholds
• Do not mandate WCMSA submission or change any current WCMSA submission policies
• Do include MSAs that were or were not submitted (regardless of whether they met voluntary review thresholds or not)

Why does CMS want to know about workers’ compensation settlements with MSAs? As will be covered below, CMS wants to know about workers’ compensation settlements with MSAs to ensure proper post-settlement coordination of benefits. In other words, CMS wants to make certain an injured individual doesn’t purchase the proverbial boat with their MSA.

Post-Settlement Coordination of Benefits of MSAs

An MSA is a determination of post-settlement Medicare-covered healthcare needs associated with the workers’ compensation injury and is in place to prevent a cost-shift to the Medicare program. Post-settlement, CMS coordinates benefits with MSAs by flagging a Medicare beneficiary’s Common Working File (“CWF”) with an MSA marker denoted as a “W” code. The CWF system is used by CMS and Medicare Administrative Contractors (MACs) as a sole data source where MACs and other contractors can verify eligibility and coordinate benefits for approval and payment of claims. See Medicare Claims Processing Manual, Chapter 27 - Contractor Instructions for CWF. Going back to October of 2009, CMS has utilized this “W” code to flag a beneficiaries’ CWF, “in order to prevent Medicare from paying primary for future medical expenses that should be covered by workers’ compensation Medicare set-aside arrangements (WCMSA).” See MLN Matters Number: MM5587. 

Post-Settlement coordination of benefits with MSAs is “…accomplished by placing an electronic marker in CMS’ systems used to pay or deny claims. That marker is removed once the beneficiary can demonstrate the appropriate exhaustion of an amount equal to the WCMSA plus any accrued interest from the account.” See WCMSA Reference Guide, v4.0, Sec. 18. “Additionally, the contractor [i.e., the Benefits Coordination & Recovery Center (BCRC)] must ensure that Medicare makes no payments related to the WC injury until the WCMSA has been used up. This is accomplished by placing an electronic marker in CMS’ systems used to pay or deny claims. That marker is removed once the beneficiary can demonstrate the appropriate exhaustion...” Id.

Critical Nature of Post-Settlement Administration & Attestation Reporting  

Following a workers’ compensation settlement, an injured individual can act as their own administrator. However, it is “highly recommended” by CMS that a professional administrator is utilized. See WCMSA Reference Guide, v4.0, Sec. 17.1. This is for good reason, especially in light of the upcoming reporting rules where CMS will have unprecedented insight and visibility into all workers’ compensation settlements with MSAs.

CMS requires the following with respect to administering an MSA:

• Placement of funds in an interest-bearing account, separate from any other account (WCMSA Reference Guide, v4.0, Sec. 17.2)
• Use of the MSA account only to pay for medical treatment related to the associated workers’ compensation claim and only if the expense is for treatment or a prescription Medicare would cover (Id., at Sec. 17.3)
• Note, there are carveouts for copying costs, mailing/postage fees, banking fees and income tax on interest income (Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements, v1.5, Sec. 4)
• Record keeping requirements related to each healthcare expenditure (See Self-Admin Toolkit, v1.5, Sec. 7)
• Annual Attestation: every year, within 30 days of the anniversary of the settlement date, the administrator must submit attestation to the BCRC attesting appropriate expenditure of the MSA funds for the preceding year. Attestation reporting must also occur in the event of a temporary exhaustion or final depletion of funds. Id., at Sec. 8
• Of note, attestation information may be submitted electronically (See WCMSA Reference Guide, v4.0, Sec. 17.6)

The forthcoming Sec. 111 changes requiring MSA information related to workers’ compensation settlements indicates CMS will be increasing post-settlement oversight and potential enforcement. CMS indicated in their November, 2023 webinar that the information reported via Sec. 111 would be used to flag a beneficiary’s CWF to prevent payment for medical services related to the work-related injuries which were accounted for in the MSA. 

Enforcement would come by way of CMS denying benefits if it was determined that MSA funds were inappropriately spent, or perhaps a denial would occur in relation to the agency’s non-submit policy found in Sec. 4.3 of the WCMSA Reference Guide:

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.

Focus on Post-Settlement Administration to Avoid Denials

To avoid potential denials, it will be critical for injured individuals to properly administer their MSA – which includes accurate and timely reporting of attestation information. For this reason, as CMS does, it is highly recommended that injured individuals utilize a professional administrator. With the forthcoming Sec. 111 reporting changes, CMS will now have exceptional visibility over all workers’ compensation settlements with Medicare beneficiaries involving MSAs – not just those that were voluntarily submitted.

While it is crucial for claims payers to prepare for upcoming MSA reporting changes, it is equally important to focus on proper post-settlement administration. Attention must be given to the potential non-compliance or mismanagement of the MSA that may result from self-administration.

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Author Bio
Shawn Deane
General Counsel & Vice President of Claims Solutions | J29
Shawn.Deane@j29inc.com  
(866) 529-6771
www.j29inc.com

As General Counsel & Vice President of Claims Solutions, Shawn Deane leads J29’s legal and Medicare Secondary Payer (MSP) services team. Shawn is a practicing attorney and has over 16 years of experience in Medicare compliance, workers’ compensation, and insurance claims. He was previously General Counsel & Senior Vice President of Risk Management & Compliance at the nation’s largest professional administrator of Medicare Set Asides. Prior to that he was Vice President of Medicare Compliance & Policy at one of the country’s largest Medicare Set Aside vendors. He’s an industry expert and thought leader in workers’ compensation, Medicare Set Asides (MSAs) and Medicare compliance.

About J29

J29 is a women-owned business that offers Medicare Secondary Payer (MSP) compliance services providing Medicare Set Asides (MSAs), conditional payment / lien services and related solutions to all workers’ compensation stakeholders – including carriers, self-insureds, third-party administrators, and attorneys.

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