MSA: To Submit or Not to Submit

Recent updates from CMS introduce significant changes to the reporting and submission requirements for Medicare Set-Asides (MSAs), impacting all Responsible Reporting Entities (RRE). Understanding these changes is crucial to ensuring compliance and avoiding potential penalties. Two important dates to remember are April 4, 2025 and July 17, 2025.

Effective April 4, 2025, all RRE will be required to report any WCMSA amount within the Total Payment Obligation to the claimant, even a zero-dollar allocation. The only exception to this reporting requirement is if the settlement is $750 or less. This new reporting requirement gives CMS access to every single worker’s compensation claim if it involves a Medicare beneficiary. CMS will then instruct the claimant on how to properly exhaust the MSA. Annual reports must be submitted to CMS, showing proper use of the MSA funds. Once the funds are properly exhausted, Medicare will resume coverage for injury-related medical care. Of importance, if the MSA amount is reported as zero, CMS has the right to audit the submission if it is suspected that the parties are attempting to shift work-related medical costs to Medicare.

The goal of establishing an MSA is to set aside sufficient funds to cover the lifetime cost of medical expenses that would otherwise be payable by Medicare for work-injury related conditions. While the RRE will now have to report the amount of an MSA, the need to submit an MSA to CMS for approval remains optional.

Currently, CMS will only review WCMSA proposals that meet the following criteria:

• The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00; or
• The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

The recent update confirms “submitting a WCMSA proposed amount for review is never required.” See, Section 4.2.? It further explains that Medicare’s interests are already protected in the following instances:

1.?????? If the injured worker is only being compensated for past medical expenses; and

2.?????? There is no evidence that the individual is attempting to maximize the other aspects of the settlement such as lost wages or permanent disability to Medicare’s detriment.

The guidelines explain that the above conditions can be demonstrated through one of the following criteria:

1.?????? The claimant’s treating doctor documents in the medical records, to a reasonable degree of medical certainty, that the claimant will no longer require any treatment or medications related to the workers compensation injury; or

2.?????? The claim is denied, and no benefits have been paid and there is no allocation of medical benefits in the settlement; or

3.?????? The Court determines, by issuing a decision on the merits, that respondent does not owe any additional medical or indemnity benefits and there is no allocation of medical benefits in the settlement; or

4.?????? The claim as denied following an investigation regarding compensability where benefits extended were paid without prejudice and there is no allocation of medical benefits in the settlement.

The guidelines state that unless an MSA is submitted, reviewed, and approved by CMS prior to settlement, CMS cannot be certain that the Medicare’s interests are adequately protected. As such, “CMS may at its sole discretion deny payment for medical services related to WC injuries or illnesses, requiring attestation of appropriate exhaustion [of benefits] equal to the total settlement,” rather than a CMS-approved WCMSA amount.

However, Section 4.2 specifically states that as of July 17, 2025, CMS will no longer accept submissions for zero-dollar MSAs. While this will allow respondents to finalize settlements much faster, if CMS refuses to review zero-dollar allocations, the question becomes how to ensure that Medicare’s interest is adequately protected to avoid a denial of payment for medical services related to the WC injuries.

CMS highlights the importance of thorough documentation in cases where an MSA is not submitted to Medicare for approval, which includes all zero-dollar allocations. In these instances, it is crucial to obtain an opinion letter from an independent third party MSA vendor, outlining the legal justification and mitigating circumstances that make a zero-dollar allocation appropriate. Additionally, the letter should explain in detail the reliance on the criteria outlined above to support a zero-dollar allocation. A recent revision to Section 9.4.3 reinforces the need to have clear medical documentation to support the exclusion of certain medications or treatment protocols as part of an MSA.

While not submitting an MSA can speed up the settlement process, it will require strong documentation and compliance measures to prevent issues in the future. On the other hand, while submitting an MSA that meets the threshold requirement offers certainty that CMS will honor the allocation, this can lead to delays and stricter oversight. The good news is as of April 7, 2025, the one year waiting period to submit an amended review of an MSA is being eliminated. This benefits respondents in allowing faster resolutions and potential costs savings from overfunding an MSA based on medical expenses that are no longer needed.?

Given the new updates from CMS, employers, third party administrators, and insurance carriers should review their MSA reporting procedures to ensure compliance before the April 4, 2025, deadline, and develop a policy regarding the handling of all MSAs whether it’s a zero-dollar allocation or not. Please contact me at [email protected] for further information.