Medicare's Interest in Workers' Compensation Settlements: Understanding WCMSA Review Thresholds and the CMS Approval Process

When a workers' compensation settlement involves a Medicare beneficiary, the Centers for Medicare & Medicaid Services (CMS) has a vested interest in ensuring the settlement adequately protects Medicare's future interests. This is where Workers' Compensation Medicare Set-Aside Arrangements (WCMSAs) come into play.

What is a WCMSA? A WCMSA is a financial agreement that sets aside a portion of a workers' compensation settlement to cover future medical expenses related to the work injury that would otherwise be covered by Medicare. The goal is to prevent the parties from inappropriately shifting the burden of paying for those medical expenses onto Medicare.

WCMSA Review Thresholds: CMS won't review every WCMSA proposal. To manage its workload, CMS has established specific review thresholds that must be met for a WCMSA to be submitted for CMS approval. These thresholds are:

• Claimant is a Medicare Beneficiary: If the claimant is already enrolled in Medicare, CMS will review a WCMSA proposal if the total settlement amount is greater than $25,000.

• Claimant Has a Reasonable Expectation of Medicare Enrollment: If the claimant is not yet enrolled in Medicare but is reasonably expected to enroll within 30 months of the settlement date, CMS will review the WCMSA proposal if the anticipated total settlement amount for future medical expenses and disability or lost wages over the life of the settlement agreement is expected to be greater than $250,000.

The CMS WCMSA Review Process:

When a WCMSA proposal meets the review thresholds, the submitter can submit it to CMS for approval. CMS uses a contractor, the Workers’ Compensation Review Contractor (WCRC), to perform an independent review of the proposal.

Here's an overview of the key steps involved:

1. Submission: The WCMSA proposal can be submitted to CMS electronically through the WCMSA Portal (WCMSAP) or by mail as a paper copy or CD. The portal submission is the preferred and more efficient method.

2. Initial Review: Upon receipt, the BCRC (Benefits Coordination & Recovery Center) reviews the submission for completeness and accuracy. If information is missing or if the proposal doesn't meet the review thresholds, the submitter will be notified and asked to provide the necessary information.

3. WCRC Review: If the submission is complete and meets the thresholds, the case is forwarded to the WCRC for a detailed review. The WCRC team consists of licensed healthcare professionals who evaluate the medical and prescription drug costs proposed in the WCMSA.

4. Medical and Prescription Drug Cost Evaluation: The WCRC uses a multi-step process to determine the adequacy of the proposed WCMSA amount. They consider factors such as the claimant's diagnosis, treatment history, medications, life expectancy, and applicable state laws.

   • The WCRC uses evidence-based guidelines and current medical literature to determine the likely need for and cost of future medical treatment and prescription drugs.

   • They also consider the claimant's past use of healthcare services and the recommendations of treating physicians.

5. Determination: Based on their review, the WCRC makes a recommendation to CMS regarding whether the proposed WCMSA amount adequately protects Medicare's interests.

   • Approval: If the WCRC recommends approval, CMS will issue a letter to the submitter approving the WCMSA at the proposed amount or a different amount determined by CMS.

   • Conditional Approval: If CMS believes the proposed amount does not adequately protect Medicare’s interests, CMS may conditionally approve the WCMSA at a higher amount.

   • Denial: If the WCRC determines the case does not meet the requirements of a WCMSA, they will deny the review.

Importance of CMS Approval: Obtaining CMS approval of a WCMSA provides certainty for both the claimant and the settling parties. If a WCMSA is not approved by CMS, Medicare may deny payment for future medical expenses related to the work injury, potentially leaving the claimant responsible for those costs.

Key Takeaways: WCMSAs play a vital role in protecting Medicare's interests when workers' compensation settlements involve Medicare beneficiaries. Understanding the review thresholds and the CMS approval process is essential for ensuring that settlements are structured in a way that complies with Medicare's requirements and safeguards the claimant's access to future medical care.

Disclaimer: This post is intended for informational purposes only and does not constitute legal advice. Consult with a qualified attorney for legal advice tailored to your specific situation.