New CMS Policy Targets “Evidence-Based” or “Non-Submit” MSAs
The newest version of the “Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide” contains just one change, but this one change was apparently intended to send a strong message to WCMSA industry.
According to the new reference guide dated January 10, 2022, CMS is concerned that products commonly called “evidence-based” or “non-submit” MSAs are not adequately protecting Medicare’s interests. As noted by CMS, many of these MSA products intend to indemnify insurance carriers and Medicare beneficiaries against future conditional payments made by CMS. This type of product would presumably protect the parties to a settlement against any attempt by CMS to seek reimbursement on the basis an MSA was “underfunded.” Here is the full text:
4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care
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.
Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, Version 3.5, pp. 6-7 (Centers for Medicare & Medicaid Services, January 10, 2022, COBR-Q1-2022-v3.5).
Of note, CMS did not change any of its prior language in the reference guide making it clear the submission process is completely voluntary, as follows:
There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.
Id., pp. 1, 8-9 (emphasis original). Of further note, this italicized language is found twice in the reference guide. As such, there has been no change in the CMS policy that does not require participation in the voluntary submission program. However, if a settlement meets the voluntary workload review threshold and is not submitted to CMS for review, then CMS will now apparently make a presumption, as a matter of internal policy and practice, that the settlement does not adequately consider Medicare’s future interests. Consequently, Medicare will deny payment for any treatment it considers related to the work accident until the claimant’s entire net settlement recovery has been exhausted paying for such treatment. So even if an MSA has been included in the settlement, if the MSA has not been approved by CMS, the entire MSA will be disregarded.
What is not clear is how CMS may allow the parties to overcome—or rebut—this presumption. We expect CMS may provide further guidance on this topic, and we will continue to monitor this important issue.
As always, parties should adequately consider Medicare’s interests, whether the settlement will qualify for voluntary submission to CMS for formal review. The decision to participate in the voluntary submission process should be made by the parties on a case-by-case basis.
Have questions about this recent update by CMS? Contact Teague Campbell’s Medicare Settlement Solutions team to discuss available options.