The Centers for Medicare & Medicaid Services (CMS) released Version 3.6 of the Workers’ Compensation Medicare Set Aside (WCMSA) Reference Guide on March 21, 2022 (version dated March 15th). Most notably, this update provides clarification around the use of non-CMS-approved MSAs.
By way of background, CMS first issued a policy position around non-submits in the January, 2022 (Version 3.5) WCMSA Reference Guide. Following this, CMS hosted a webinar on February 17th, addressing, among other things, the non-submit policy.
Breaking Down the Changes
The full text to each of the respective provisions can be found immediately below.
January 11, 2022 (v3.5)
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.
March 15, 2022 (v3.6)
A number of industry products exist for the purpose of complying with the Medicare Secondary Payer regulations without participation in the voluntary WCMSA review process set forth in this reference guide. 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 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.
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.
What hasn’t changed?
CMS still maintains that non-submit MSAs are viewed as a potential cost-shift in apparent contravention of 42 CFR 411.46. Moreover, importantly, the policy still indicates a requirement to show complete exhaustion of the settlement amount rather than the MSA amount.
What’s new?
In version 3.6, CMS has softened its language relative to potential denials in instances of non-submits. Whereas in v3.5, the policy position indicated “CMS will deny payment,” v3.6 states that, “CMS may at its sole discretion deny payment…”
Importantly, the updated policy position also allows for a showing that, “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.” Following a potential denial, it appears there will be an opportunity for the beneficiary to prove the MSA and utilization were sufficient and appropriate.
With respect to being retrospective or prospective, v3.6 indicates that the non-submit policy will apply to CMS’s notice of settlement receive on or after January 11, 2022. However, it’s also noted that flags in a beneficiary’s Common Working File (CWF) received prior to January 11th will be set so that Medicare does not make payment during the spend-down period.
Finally, one last difference between the two iterations is that CMS clarified that the non-submit policy was not meant to affect any settlements that wouldn’t otherwise meet the current workload review thresholds. It is noted that the addition of this clarifying comment is not meant to: 1) relieve parties of obligations to consider Medicare’s interest; and that; 2) CMS doesn’t expect notification or submission where thresholds are not met.
Importance of Post-Settlement Administration
Since our last article regarding CMS’s policy position, there have been indications that CMS has transmitted letters to underlying payers identifying instances of non-submits and re-articulating their policy. However, beyond these letters, the authors are unaware of instances where CMS has denied medical payments due to a non-submit or made a determination of insufficiency relative to a non-submit allocation. Thus, it is still unclear as to the scope of CMS’ potential enforcement regarding the non-submit policy. It is still yet to be seen how this policy will play out in practice. Regardless, it is critical to ensure proper administration of funds post-settlement – regardless of a submit or non-submit MSA. Just as CMS recommends submission of an MSA, they also “highly recommend” professional administration. See WCMSA Reference Guide, v3.6, Sec. 17.1 Since CMS is placing emphasis on attestation reporting and oversight of non-submit spend, Ametros is here as a neutral party to help guide insurers, self-insureds, TPAs, MSA vendors, claimants, and attorneys through the myriad of post-settlement issues potentially associated with this new policy.
Ametros will be following these issues very closely and will provide updates as warranted. In the interim, please contact us with any questions.
