On January 17, 2025, the Centers for Medicare & Medicaid Services (CMS) issued Version 4.2 of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide with three key points of change:
- Policy updates on unfunded ($0) Medicare Set-Asides (MSA) requests (Section 4.2);
- Revised funding calculations for intrathecal pumps, spinal cord stimulators, and peripheral nerve stimulators (Section 9.4.5).
- Direct address of evidence-based medicine as a pricing protocol (Section 9.4.3)
CMS has long published a list of conditions that demonstrate that Medicare’s interests are protected in settlement and has formalized this process through the approval of non-funded ($0) MSAs. Per the new Reference Guide, CMS has expanded the conditions that support an unfunded MSA and confirmed that as of July 17, 2025, CMS will no longer accept or review proposals with a zero-dollar ($0) allocation. Parties are instead to consider the following parameters in determining whether a zero-dollar MSA is appropriate and maintaining the necessary documentation to support the allocation.
Those conditions are as follows:
- The individual’s treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatment related to the settling injury; or
- The claim is denied under the jurisdiction’s workers’ compensation law and no payments have bene made for medical or indemnity outside of investigational purposes prior to settlement, medical/indemnity benefits are not being paid, and the settlement agreement does not allocate for future or past medical services as a condition of settlement; or
- A court/commission/board of competent jurisdiction has determined by a ruling on the merits that the insurer or employer does not owe additional medical or indemnity benefits, such benefits are not actively being paid, and the settlement agreement does not allocate for specific future medical services; or
- The claim was denied within the jurisdiction’s statutory timeframe, allowed to pay without prejudice during an investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.
The prongs for whether Medicare’s interests are protected are in keeping with the philosophy of previous Reference Guides; however, there is a radical departure in practice. Previously, parties could obtain a $0 approval from CMS, thus insulating the claimant from a future denial of benefits resulting from the alleged injuries. Without the option to obtain a $0 approval, the protections afforded by submission in such cases are unclear. CMS has repeatedly opined that non-submission MSAs may still be fully protective of Medicare’s interests upon a showing of the evidence post-benefit denial; however, the new Reference Guide declines to clarify a process for speedy resolution of benefit denials in cases which satisfy one of the aforementioned conditions. Whether injured parties will per se have a benefit denial from Section 111 reporting and whether there will be an administrative process for swift redress of any denial are presently unclear.
The Reference Guide also purports to correct inconsistencies in the pricing requirements for intrathecal pumps, spinal cord stimulators, and percutaneous nerve stimulators; however, inconsistencies in the pricing metric still remain. The narrative of the Reference Guide retains the following description, wherein replacements are calculated by subtracting the number of years since the most recent placement date from the life expectancy and dividing the result by seven or nine, depending on the intervention:
To calculate the number of replacements, the claimant’s life expectancy less the number of years from the most recent placement date is divided by seven, decimals are dropped, and the whole number is used for determining replacement over the life expectancy. Pricing includes necessary pump refills over the claimant’s life expectancy.
However, the Reference Guide examples immediately following instruct that the number of years from the most recent replacement instead be added to the life expectancy, with the total divided again by seven or nine, depending on the intervention:
Beneficiary life expectancy is 12 years and an IT pump was placed three years prior. Take the 12 years, add three years for the most recent placement, divide the remainder by seven, and use the whole number with that result. (12+3)/7 = 15/7 = 2.14
While the Reference Guide does claim to have corrected the pricing inconsistencies on these interventions, inconsistencies nonetheless remain unchanged from prior versions of the Reference Guide.
Finally, the Reference Guide contains a new provision in Section 9.4.3 which indicates that the WCRC relies on past and future treatment recommendations in making its funding determinations and will take into consideration evidence-based guidelines and peer-reviewed medical literature in support of same.
The Reference Guide illustrates this change with a discussion of joint replacements as follows:
Medical pricing may vary based on injury, age, location, and other factors. Each submission is reviewed independently of other submissions for claimants with the same injury and age. This accounts for any differences in WCMSA amount determination.
For example, a reasonably healthy and active 45-year-old claimant who recently had total knee replacement surgery is likely to require a revision of the surgery (second knee replacement) during his 30-year life expectancy, as the replacement joint wears out. However, another 45- year-old claimant with a recent total knee replacement but who is sedentary and in poor health due to diabetes mellitus and coronary artery disease may not require or be a satisfactory risk for such a revision in the future.
The Guide does not clarify, however, the metrics it uses to determine which similarly situated injured worker is a candidate for ongoing replacements and which is not, how the parties may anticipate which claims do not require future treatment and which—despite fulsome support that ongoing treatment is not needed—will nonetheless require ongoing interventions.
GRSM will continue to monitor these ongoing changes and how the WCRC review contractors implement them from a practical perspective in their allocations, what these changes mean for parties participating in the WCMSA submission process, with real-time updates forthcoming.
Please contact the authors for assistance or questions regarding this update.