March 3, 2023 • ComplianceLegislative & Regulatory

Post-Settlement Update: CMS Provides Instructions to Providers when WCMSAs Involved

On February 23, 2023, the Centers for Medicare and Medicaid Services (CMS) issued a transmittal (Transmittal #: R11874MSP) regarding, “Significant Updates to the Internet Only Manual (IOM) Publication (Pub.) 100-05 Medicare Secondary Payer (MSP) Manual, Chapter 3.”

At a high-level, the edits in Chapter 3 provide procedures and direction for providers to:  

  • Identify when a WCMSA is involved;
  • Bill against the WCMSA;
  • Bill Medicare when the WCMSA doesn’t cover all charges for the service due to exhaustion of the WCMSA (and indicate what the WCMSA paid for).

These procedures for providers are critical to ensuring coordination of benefits post-settlement and highlight the necessity for proper administration. This article will take a deeper dive into the background of these changes and additional key takeaways.


By way of background, CMS’ Internet Only Manuals (IOMs) “are a replica of the Agency's official record copy. They are CMS’ program issuances, day-to-day operating instructions, policies, and procedures that are based on statutes, regulations, guidelines, models, and directives. The CMS program components, providers, contractors, Medicare Advantage organizations and state survey agencies use the IOMs to administer CMS programs. They are also a good source of Medicare and Medicaid information for the general public.”

Chapter 5 (IOMs covering MSP) contains 8 chapters. The applicable notice here relates to Chapter 3, which is titled, “MSP Provider, Physician, and Other Supplier Billing Requirements.”

The notable update in Chapter 3 related to WCMSAs and post-settlement administration can be found at section, titled, “Responsibility of Provider Where Benefits May be Payable Under a Workers’ Compensation Medicare Set-Aside Agreement (WCMSA).” It indicates these changes will be effective and implemented on March 24, 2023.

The pertinent section covers an overview of WCMSAs and also notes four (4) areas where a WCMSA may exist:

  1. The condition was claimed as work-related and received full-and-final settlement that included funds for future care;
  2. The beneficiary previously filed a workers’ compensation claim for the same condition;
  3. The beneficiary indicates that a WCMSA exists; or
  4. The HETS 270/271 transaction shows that a “W” MSP WC record exists.

The new section further specifies the following procedures:

“An MSP record is not a reason to deny services, but information as to who is the appropriate primary payer for that situation. Providers must first verify via the HETS 270/271 transaction whether a “W” record exists. Where there is an indication showing a “W” MSP WCMSA record exists, the patient should have a WCMSA that may pay for services, and the provider bills the patient, directly. If the WCMSA does not pay for all the services due to total exhaustion, the provider may submit a Medicare bill indicating what the WCMSA paid. Medicare may then pay as a primary or secondary payer, dependent upon the WCMSA status. The provider should determine whether any other MSP provisions apply and bill accordingly. If no other primary payers are available, the provider submits:

  • A bill in accordance with the regular billing procedures indicating occurrence code 24 (insurance denied) and the date of denial in FL 31-36; and
  • A supplementary statement calling attention to the fact that WCMSA denied payment or annotates FL 80, remarks, with the reason.”

Breaking it Down

In order to understand the IOM updates, it’s necessary to have background on how Medicare coordinates benefits post settlement with a WCMSA (i.e., how Medicare denies benefits if it believes there are funds in the WCMSA, and where the beneficiary seeks treatment for injuries associated with the WCMSA).   

CMS’ mechanism to coordinate benefits post-settlement involves flagging a Medicare beneficiary’s Common Working File (CWF) with an applicable WCMSA marker / code. The CWF system is utilized by CMS and Medicare Administrative Contractors (MACs) as a single 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.

MACs are private health care insurers that have been awarded a geographic jurisdiction to process Medicare Part A and Part B medical claims or Durable Medical Equipment (DME) claims for Medicare Fee-For-Service (FFS) beneficiaries. See, “What’s a MAC.”

Since October of 2009, CMS has utilized a unique WCMSA marker to code 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.

“The WCMSA administrator must send annual attestations summarizing the account transactions

to the contractor responsible for monitoring the case [i.e., the Benefits Coordination & Recovery Center (BCRC)]. The contractor is then responsible for verifying that the funds from the WCMSA were spent on medical services for Medicare-covered services… Additionally, the contractor 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 of an amount equal to the WCMSA plus any accrued interest from the account. For those with structured settlements, the marker is removed in any period where the beneficiary exhausts their available funds; however, it is replaced once the anniversary fund deposit occurs until the entire value of the WCMSA is demonstrated as entirely exhausted.” See WCMSA Reference Guide, v3.8, Sec. 18.

To summarize, in a situation with a submitted and approved WCMSA, a Medicare beneficiary’s CWF is flagged with a WCMSA Marker (noted as “W) and through the attestation reporting process (on an annual basis and/or at any point when the account temporarily exhausts or permanently depletes). When there are funds in the WCMSA the marker is “present” denoting that the WCMSA should pay primary, and when it is reported that funds are exhausted / depleted, the marker is “not present”, indicating that funds have been “appropriately exhausted before Medicare begins to pay for care related to the WC Settlement.” See WCMSA Reference Guide, v3.8, Sec. 2.3.

On March 24, 2023, the applicable section of the IOM will require providers to identify whether an MSP WCMSA indicator / marker (“W”) is present via the HIPAA Eligibility Transaction System (HETS). As noted above, this record will exist when there are funds available in the WCMSA account. When a marker is present, the provider should bill the patient or administrator directly. It’s important to note that CMS has indicated, “[p]roviders should also accept payment from professional administrators holding Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) funds. Providers should not bill Medicare where a third party holds and administers one of these WCMSA funds.” See MLN Matters Number: SE17019, titled, Accepting Payment from Patients with a Medicare Set-Aside Arrangement.

The new provisions in IOM Chapter 3 indicate that if there are insufficient funds to cover all the services due, then the provider may submit a bill to Medicare indicating what the WCMSA paid and Medicare may then pay as primary or secondary, pursuant to the WCMSA status. The provision also indicates the provider should make a determination as to whether other MSP provisions apply and to bill accordingly. 

Key Takeaways

Importance of Attestation & Administration

Changes to the IOM also highlight the necessity to ensure annual attestation reporting occurs timely and accurate as “CMS will continue to deny claims related to the WC injury until final exhaustion attestation is received and documented. Attestation is highly important to ensure claims are paid properly after exhaustion.” See Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements (“Self-Administration Toolkit”), v1.3, Sec. 8.

Failure to properly utilize MSA funds or submit attestation could result in Medicare denying benefits – i.e., refusing to pay for certain expenses related to the workers' compensation injury post-settlement until the entire settlement is exhausted. WCMSA Reference Guide, v3.8, Sections 10.5 & 17.3 – also Sec. 4.3 (vis-à-vis non-submits). Ametros’ recent study outlined the frequency and occurrence of WCMSA denials. It is critical that the injured individual properly administer their WCMSA to avoid denial of benefits.

Emphasis on Provider Education vis-à-vis WCMSAs

With respect to WCMSAs, CMS has typically educated the provider industry via Medicare Learning Network (MLN) Articles and through communication by way of the MACs. It appears that similar information was published on MAC websites (on February 14, 2023) prior to the release of this notice. See Palmetto GBA.

The direction to providers here is codified in CMS policy and we commend CMS for clarifying and presenting provider billing procedures in order to ensure proper coordination of benefits post-settlement when a WCMSA is involved. These policies will assist beneficiaries and professional administrators, like Ametros, in ensuring that providers appropriately bill against the WCMSA funds when they are available.

Partial Payment from WCMSA

The WCMSA Self-Administration Toolkit indicates that, “[i]n the event that you have WCMSA funds to pay part of a bill, ask health care providers to send the entire bill to Medicare and do not pay the bill yourself.”  See Self-Administration Toolkit, v1.3, Sec. 11. However, Sec. of Chapter 3 in the forthcoming IOM states that, “[i]f the WCMSA does not pay for all of the services due to total exhaustion the provider may submit a Medicare bill indicating what the WCMSA paid.” At Ametros, we’ve employed the latter procedure and exhaust / deplete the WCMSA funds towards an applicable item/service. Ensuring proper communication with a provider when this situation arises is critical to coordinating benefits with a WCMSA post-settlement.


The updated provider policies and procedures in this IOM highlight CMS’ increasing oversight over WCMSAs post-settlement and the vital necessity of proper administration to ensure continuity of care and that there is no disruption or denial in benefits.

Should you have any questions about this new notice or how Ametros’ services can assist, please do not hesitate to contact us.

Reach out to our team!