CMS Issues New WCMSA Reference Guide with Significant Updates for $0 MSAs
On January 17, 2025, CMS issued an updated WCMSA Reference Guide (Version 4.2) addressing the criteria for $0 MSAs and providing that CMS will no longer review $0 MSA proposals beginning July 17, 2025. Instead, CMS expects parties to maintain documentation showing that a $0 MSA is appropriate. The new Reference Guide includes the guidance below in Section 4.2 detailing the circumstances in which CMS would view a $0 MSA as appropriate.
4.2 Indications That Medicare’s Interests Are Protected
Submitting a WCMSA proposed amount for review is never required. But WC claimants must always protect Medicare’s interests. A WCMSA is not necessary under the following conditions because when they are true, they indicate that Medicare’s interests are already protected:
a) The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement); and
b) There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment.
These conditions may be demonstrated through one of the following:
The individual's treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatments or medications related to the settling WC injury or illness; or
The workers’ compensation insurer or self-insured employer denied responsibility for benefits under the state workers’ compensation law and the insurer or self-insured employer has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement; or
A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the workers’ compensation insurer or self-insured employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services; or
The workers’ compensation claim was denied by the insurer/self-insured employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.
In addition, if a settlement leaves WC carriers with responsibility for ongoing medical and prescription coverage once the settlement funds are fully spent, then a WCMSA is not necessary.
Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation. Entities should consider the above parameters in determining whether a zero-dollar WCMSA allocation is appropriate and maintain documentation to support that allocation.
Notes:
If Medicare made any conditional payments for WC injury-related services furnished prior to settlement, then Medicare will recover those payments. In addition, Medicare will not pay for any WC injury-related services furnished prior to the date of the settlement for which it has not already paid.
CMS will not issue “verification letters” stating that a WCMSA is not necessary.
In instances where the above conditions are not met, CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.
CMS had recently discussed the possibility of discontinuing the review process for $0 MSAs and providing guidance for parties on determining when a $0 MSA is appropriate. We are glad to see this change implemented. The new Reference Guide is also significant in that CMS had not previously published guidance on $0 MSAs in denied cases. Instead, the review contractor would process cases based on unpublished criteria.
The new Reference Guide is available at https://www.cms.gov/files/document/wcmsa-reference-guide-version-42.pdf. If you have any questions, please do not hesitate to contact us.
