Employers, workers’ compensation insurers and third party administrators are under ever increasing pressure to consider and protect the interests of Medicare when settling claims. Under federal law, any entity found to be shifting the burden to Medicare to pay for future medical costs related to an injured individual’s workers’ compensation, liability, automobile injury, accident or illness can be held liable for double damages, penalties, and fines.


In order to be compliant in these complex times and protect Medicare’s interests, an appropriate amount of settlement money should be “set-aside” for the payment of future medical costs that might otherwise be paid by Medicare. ADM’s Medicare Set-Aside (MSA) program assists in meeting these obligations by preparing a comprehensive Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA)


Projecting the future Medicare covered medical needs for a claimant “post settlement” is complex.  ADM utilizes a team of experts to include Case Managers certified as life care planners, Doctors of Pharmacy, and Attorneys assuring the Medicare Set-Aside (MSA) created coincides with Medicare’s expectations and will be approved when submitted to CMS.


ADM’ Medicare Compliance Services Include the Following:

  • CMS Submissions
  • Conditional Payment Research
  • Conditional Payment Negotiation
  • Life Care Plans
  • Medical Cost Projections
  • Medicare Set-Aside Allocations
  • MSA Resolution and Mitigation Services
  • Rx Analysis and Outcome Management

What are WCMSAs?


A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare (“Medicare covered”). When a proposed WCMSA amount is submitted to CMS for review and the claimant (who may or may not be a beneficiary) obtains CMS’ approval, the CMS-approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment. 


The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-injury-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost. WCMSAs may be funded by a lump sum or may be structured, with a fixed amount of funds paid each year for a fixed number of years, often using an annuity. 


Any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account. If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received any portion of a third-party payment either directly or indirectly—a right to recover, or take back, that payment. CMS also has a subrogation right with respect to any such third-party payment. “Subrogation” literally means the substitution of one person or entity for another. If Medicare exercises its subrogation rights, Medicare is a claimant against the responsible party and the liability insurer to the extent that Medicare has made payments to or on behalf of the beneficiary for services related to claims against the responsible party (and the responsible party’s liability insurance). In this example, Medicare is substituting for the claimant in this situation. Medicare can be a party to any claim by a beneficiary or other entity against a responsible party and/or his/her liability insurance, and can participate in negotiations concerning the total liability insurance payment and the amount to be repaid to Medicare. 


Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted. These arrangements are typically not created until the individual’s condition has stabilized so that it can be determined, based on past experience, what the future medical expenses may be. CMS prefers this, so that future medical and prescription drug costs can be planned with a reasonable degree of certainty. 


Once the CMS-approved set-aside amount is exhausted and accurately accounted for to CMS, Medicare will pay primary for future Medicare-covered expenses related to the WC injury that exceed the approved set-aside amount.


Do I Need an MSA?


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 all three are true, they indicate that Medicare’s interests are already protected: 


  1. 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); 
  2. 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; and 
  3. c) The individual’s treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury. 


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.


  • 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 the at a WCMSA is not necessary.
  • 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.


For more information from CMS, Download CMS’s WCMSA Reference Guide Version 3.2 October 5, 2020


If you would like additional information on ADM’s MSA program and how we may further assist your claim, please call 866-491-5199, ext. 100 and we will be glad to address your questions.

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