Spotlight on WCMSAs - preparing for CMS' new TPOC reporting requirements

Starting April 4, 2025, the Centers for Medicare and Medicaid Services (CMS) will require Section 111 Responsible Reporting Entities (RREs) to report certain workers' compensation Medicare set-aside (WCMSA) data points for all settlements involving Medicare beneficiaries as part of TPOC reporting.^[1] In the big picture, this new reporting requirement will significantly expand the Section 111 reporting process as CMS will, for the first time, start to capture WCMSA data points as part of TPOC reporting.

On the one hand, CMS's new reporting process involves certain technical Section 111 updates to the actual mechanics of Section 111 reporting, such as additional Claim Input data fields and new Section 111 error codes. On the other hand -- and importantly -- this new process also suddenly hoists several WCMSA compliance considerations back into focus which cannot be overlooked.

With WCMSAs in the spotlight, this article raises several points to consider and how Verisk can help insurers improve (and simplify) WCMSA compliance going forward as follows:

WCMSA consideration points

1. Understanding CMS' objective is important.

It is first important to understand CMS' objective behind its new TPOC/WCMSA reporting requirement. Likely no surprise here - it is all about preserving CMS' secondary payer status. On this point, CMS states that "[c]ollection of [this] information is necessary to assist Medicare in making appropriate determinations concerning coordination of benefits under U.S.C. 1395y(b)(8)(ii), since Medicare should not be a primary payer for future medical services related to a WC injury as specified in the WC settlement as per 42 CFR 411.46. All MSA funding for WC settlements shall be reported regardless of whether or not an approval was previously sought from the CMS."^[2]As the above statements reflect, CMS views this process as a means to assist the agency with its larger efforts toward proper coordination of benefits from a compliance standpoint. This could very well signal, as discussed more fully below, a new focus on WCMSA compliance, which could have significant implications for insurers going forward.

1. All WCMSAs involving Medicare beneficiaries will need to be reported.

The scope of CMS' new policy is significant as RREs will be required to report WCMSA data in a variety of different contexts where WCMSAs are utilized concerning settlements involving Medicare beneficiaries.

Specifically, RREs will be required to report WCMSA data points regarding WC settlements involving Medicare beneficiaries that include a WCMSA that has been submitted to, and approved by, CMS as part of the agency's voluntary $25k WCMSA review threshold.^[3] In addition, and importantly, RREs will also need to report non-submit MSAs, evidence based MSAs (EBMSAs), and similar arrangements involving settlements with Medicare beneficiaries that are not submitted to CMS for approval.^[4] Further, WCMSAs included in settlements with Medicare beneficiaries that do not meet CMS' WCMSA $25k review threshold (a "non-threshold MSA") must also be reported, as well as situations where ongoing responsibility for medicals (ORM) continues for some injuries associated to the claim but not others.^[5]Reporting will be also be required regardless of the WCMSA amount.^[6] Also important to note, RREs will even have to report if no WCMSA is included in the settlement.

1. Remember, CMS's WCMSA review thresholds are not "safe harbors."

Many times, when it comes to WCMSAs much of the discussion (and debate) typically focuses on whether a WCMSA should be submitted to CMS for review/approval in situations where the settlement meets the agency's voluntary WCMSA review thresholds.^[7] However, as noted above, the fact that CMS will also require insurers to report WCMSAs included in settlements concerning Medicare beneficiaries that do not meet CMS's $25k WCMSA review threshold (a non-threshold MSA) is noteworthy and serves as an important reminder that CMS does not consider its WCMSA review thresholds as "safe harbors."

On this point, CMS has long stated that its "[review] thresholds are created based on CMS' workload, and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare's interests in all WC cases and ensure that Medicare pays secondary to WC in such cases."^[8] Along these lines, CMS further references its review thresholds as "workload management tool[s] and not … substantive dollar or 'safe harbor' threshold[s]."^[9]

To illustrate this point, CMS actually includes an example in its Reference Guide involving a settlement with a Medicare beneficiary that does not meet its $25k WCMSA review threshold, noting in that example that the parties "must consider CMS' future interests" even though the settlement does not meet its review threshold. On this point, CMS provides the following example: "A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim[ant] is offered [a] settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS' future interests even though the case would not be eligible for review.Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00)." (authors' emphasis).^[10]

1. CMS will now have unprecedented visibility into WCMSA practices - compliance considerations (and concerns)

The TPOC/WCMSA reporting process will give CMS unprecedented visibility into the use (and non-use) of WCMSA arrangements as part of WC settlements. Significantly, this process will give CMS all the key elements it needs to evaluate WCMSA funding and compliance at its fingertips - which up until this point, it was lacking. For example, RREs will need to report several data points including, MSA Amount, MSA Period, and information regarding how the MSA will be funded and administered. (Click here to review the full set of reportable data fields).

Compliance Considerations

From the above points, several important compliance considerations are raised going forward as follows:

How will CMS use the WCMSA data?

CMS indicated it will mark the Medicare "Common Working File" (CWF) with a WCMSA MSP record if the TPOC includes a WCMSA. If a WCMSA MSP record exists, it represents that WCMSA funds are available to pay primary and Medicare may appropriately deny payment for treatment related to the workers' compensation injury and settlement until the funds are exhausted. Once the WCMSA funds are exhausted and Medicare is made aware, the marker may be removed along with the associated restrictions on Medicare payments. Additionally, CMS also recently indicated that it plans to develop specific guidelines for reviewing situations where the MSA Amount is reported as $0 which, per CMS, will likely be prompted by what it termed as "a clear indication" that a lack of funding for future medicals appeared to be inappropriate.^[11] CMS also suggested that, in this situation, it could decide to pursue recovery and apply a WCMSA ("W") record to CWF upon that further review.[12] Further, CMS stated that it reserves the right to review/audit these types of submissions and suggested that it might identify scenarios where it feels there is an inappropriate lack of consideration/funding for future medicals as part of a WCMSA.[13]

Re-evaluating WCMSA practices in non-threshold situations

As outlined above, the fact that CMS does not view its WCMSA review thresholds as compliance "safe harbors" should be considered, especially given that CMS has indicated that it reserves the right to review/audit MSA Amounts reported as $0. In this regard, insurers may wish to review their compliance practices regarding settlements with Medicare beneficiaries that do not meet CMS' $25k WCMSA review threshold to determine if inclusion of a WCMSA should be considered.

Non-submit MSAs and EBMSAs will now be on CMS's radar

The fact that non-submit MSAs and EBMSAs must also be reported raises important considerations regarding whether CMS will use this new reporting process to scrutinize these arrangements per Section 4.3 of CMS' WCMSA Reference Guide. It is important to keep in mind that in Section 4.3 CMS states, in part, that it views "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."^[14]

On this point, CMS further states that it "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."^[15]Up until this point, CMS has lacked the ability to identify or track non-CMS approved MSAs or Evidence based MSAs - however, CMS will now "know" about these arrangements as part of its TPOC/WCMSA reporting process. For insurers currently using non-submit approaches (or for those considering non-submission), the above consideration points should be kept in mind going forward, especially if the non-submit/EBMSA funds are regularly exhausting earlier than anticipated

How Verisk can help - improving WCMSA compliance

Verisk has taken several steps to improve (and simplify) WCMSA compliance in light of CMS' new TPOC reporting requirements as follows:

• Section 111 Reporting: Our Section 111 platforms (MSP Navigator, iComply, CS CMS) will be ready to intake and report the additional data elements for testing in October 2024. Alerts and reports will be available to ensure the timely and accurate collection of this data just as has been the case with other critical Section 111 data.
• Streamlining the process: Verisk also offers an optional add on solution within its Discovery Navigator solution that will upload/ scan settlement documents to automate the extraction of the required data elements. Discovery Navigator, our homegrown AI powered OCR product, drastically reduces the costs and time associated with reviewing medical records, and reviews settlement documents and can be utilized to extract and report the WCMSA data for Section 111 reporting.
• Improving Compliance: Given CMS will have unprecedented visibility into MSA data, ensuring that all cases that require an MSA based on a client's established protocols is critical. Leaving is up to the adjuster at the time of settlement creates compliance gaps and delays in settlement. Verisk's new MSA Link solution utilizes your Section 111 claim data to automatically start preparing an MSA allocation in accordance with your established best practices and protocols.
• Non-Threshold Cases: With CMS now collecting data on all cases regardless of threshold, Verisk has established a data-driven WCMSA compliance option, Data-Driven MSA, for Medicare beneficiary non-threshold cases (WC settlements less than $25k). This cost-effective automated allocation fuels compliance by facilitating a consistent approach to accurately allocate funds to non-threshold cases.
• Settlement: we can review your settlement language to help you address Medicare compliance obligations and memorialize the data that will need to be sent to CMS in accordance with the agency's new Section 111 reporting requirements.
• Training: we can help with education and training related to the upcoming changes.
• Holistic MSP compliance: By combining our industry leading Section 111 reporting services (MSP Navigator), with data driven lien resolution (CP Link) and future allocation (MSA Link) solutions, Verisk can facilitate an automated and holistic MSP compliance program that mitigates risk while optimizing critical adjuster resources.

Contact Brian Cowan at [email protected] for further information on how Verisk can help. Finally, see our supplementary resource -- Spotlight on WCMSAs - Nutshellfor more information on how this new process impacts WCMSA compliance going forward.

[1] "TPOC" is the abbreviation for "total payment obligation to the claimant." Very generally, under CMS' TPOC reporting trigger, reporting is required upon claim resolution (or partial resolution) through a settlement, judgment, award, or other payment for cases in which the claimant is/was a Medicare beneficiary as of the TPOC date and where medicals were claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals. Under CMS' current thresholds, physical trauma WC settlements greater than $750 are required to be reported under the Section 111 reporting process. The $750 threshold does not apply to settlements involving exposure, ingestion, or implantation cases. See generally, CMS' Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter III and IV, Section 6.4.4.

[2] CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007, Technical Change Alert: Change to Workers' Compensation Reporting.

[3] CMS's TPOC/WCMSA Webinar (November 13, 2023). Regarding CMS' "$25k WCMSA review threshold," CMS states as follows in its WCMSA Reference Guide: "CMS will review a proposed WCMSA amount when the following workload review thresholds are met: The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00." CMS's WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS' emphasis). In terms of what constitutes the "total settlement amount," CMS directs the reader to Section 10.1: Section 05 - Cover Letter (E. Settlement Details) which can be viewed here.

[4] CMS' TPOC/WCMSA Webinar (November 13, 2023). See also, CMS' Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter III, Section 6.5.1.1, Chapter IV, Sections 6.1 and 6.4.4, and Chapter V, Appendices A and G.

[5] Id.

[6] Id.

[7] Briefly, CMS has two-long standing voluntary WCMSA review thresholds. One threshold relates to WC settlements with Medicare beneficiaries, while the other concerns settlements with individuals who are not Medicare beneficiaries at the time of settlement as follows:

Medicare beneficiaries: CMS states its review threshold as follows: "CMS will review a proposed WCMSA amount when the following workload review thresholds are met: The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00." CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS's emphasis).

Non-Medicare beneficiaries: CMS notes its review threshold as follows: "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 or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00." CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS' emphasis).

In terms of what constitutes the "total settlement amount," CMS directs the reader to Section 10.1: Section 05 - Cover Letter (E. Settlement Details) which can be viewed here. CMS defines the term "reasonable expectation of Medicare enrollment within 30 months" to include the following situations: "The claimant has applied for Social Security Disability Benefits The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision; The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits; The claimant is 62 years and 6 months old; Th CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS' emphasis). e claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD." CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS' emphasis).

[8] CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1.

[9] Id.

[10] CMS' WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1. It is noted that CMS also provides an example of a settlement involving a non-Medicare beneficiary which does not meets its review thresholds pertaining to non-Medicare beneficiaries in which it would similarly expect its future interests to be considered as follows: "A 47 year old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement." Id. While CMS' new TPOC/WCMSA reporting process does not include settlements involving non-Medicare beneficiaries, this example further underscores CMS' point that its WCMSA review thresholds are simply agency "workload thresholds" and not compliance safe harbors.

[11] CMS' Question and Answer Session (April 25, 2024).

[12] CMS' Question and Answer Session (April 25, 2024).

[13] CMS' Question and Answer Session (April 25, 2024).

[14] CMS' WCMSA Reference Guide, Version 4.0 (April 1, 2024), Section 4.3.

[15] Id. While CMS did clarify that it may consider and accept evidence that an EBMSA or a Non-Submit MSA funding was sufficient, it has not provided any metrics or guidance regarding how that is evaluated.

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