The Hunger Games Guide to CMS Submission of MSAs


The question of whether to submit Workers’ Compensation Medicare Set Asides (WCMSA) to the Centers for Medicare and Medicaid Services (CMS) for review and approval has become a topic of increased interest and discussion ever since the CMS implementation of Medicare Part D prescription drugs in WCMSAs in 2009. With the addition of Part D prescription drugs, total WCMSA amounts have increased nearly 2/3rds. A combination of the CMS requirement to price Part D drugs in WCMSAs using Redbook Average Wholesale Price (AWP) and the CMS review practice of costing out an injured worker’s current medication profile over an average 24-year life expectancy, has raised legitimate questions about MSA submissions to CMS for review and approval.

A Historical Look at MSAs and CMS Submission

While it is often believed that MSAs are only relevant to injured workers who are 65 years of age or older, the data reveals that 31% of all MSAs involve Medicare beneficiaries who are age eligible, whereas 69% of injured workers are eligible for Medicare due to disability, having qualified for Social Security Disability benefits.  The Medicare Secondary Payer, CMS regulations 42 CFR 411.46 and 42 CFR 411.47 explain that considering and protecting Medicare’s interest in a settlement means that the settling parties must make a reasonable allocation of a portion of the settlement to pay for future medicals at the time of settlement, whenever future medicals are closed.  It was not until the CMS Patel Memo, released July 23, 2001, that CMS attempted to explain how to consider Medicare’s future interest.  This was in response to the question from the CMS regional offices about how to evaluate Medicare’s future interests for Workers’ Compensation settlements. While the Memo acknowledged the question posed, it did not detail any specific methodology for forecasting Medicare’s future interests in a Workers’ Compensation settlement, leaving payers puzzled about how best to meet this obligation.

As a result, the first MSA companies emerged to produce formalized WCMSA reports. These companies used “watered down” life care planning principles, components of an accepted methodology used for valuating future medical care for litigated claims, to fill a need for forecasting MSAs. This untested, short-cut approach was sold as a solution for non-group health plans and third party administrators, to satisfy MSP requirements.  This methodology, unfortunately, became the standard for the WC industry as well as that of CMS. These same companies also encouraged CMS submission of WCMSAs as a best practice, and WC payers accepted this guidance without question.  Hence, the CMS submission of WCMSAs became the gold standard despite the MSP statute language that CMS submission is a voluntary process.

The Rules of the Game of CMS Submission of WCMSAs

On May 11, 2011, CMS issued a memorandum reiterating guidance regarding the submission of WCMSAs which states, “Submission of a WCMSA proposal to CMS for review and approval is a recommended process. There are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review.”  For some primary payers, this CMS recommendation is interpreted as a requirement to submit MSAs to CMS for review and approval to mitigate any risk.

The May 29, 2014 CMS WCMSA Reference Guide poses the question, “Should I consider submitting a WCMSA proposal?” to which CMS responds, “an individual or beneficiary may consider seeking CMS approval of a proposed WCMSA amount for a variety of reasons. The primary benefit is the certainty associated with CMS reviewing and approving the proposed amount with respect to the amount that must be appropriately exhausted. It is important to note, however, that CMS approval of a proposed WCMSA amount is not required.”


What is certain is that MSAs approved by CMS are on average, 20-30% more than what our data analytics reveals is the actual medical spend, post settlement.  If one considers an average MSA amount for a WCMSA is $80,000; then the primary payers are bearing a greater burden for future medical care than what is reasonable and probable by an average cost of $20,000 per MSA.


For those primary payers who choose to submit, the CMS WCMSA review workload threshold is often confused with when to consider a MSA as opposed to when to submit a MSA to CMS. The July 11, 2005 CMS Memo states,”… all beneficiaries and claimants must consider and protect Medicare’s interest when settling any workers’ compensation case; even if review thresholds are not met, Medicare’s interest must always be considered.”   While the CMS workload review threshold can change at any time, the current CMS workload review threshold is as follows:

When is it best to submit a WCMSA to CMS?  Submitting a WCMSA prior to the settlement of a claim, is CMS’ recommended approach.  Submitted prior to the settlement offers an opportunity for the parties to secure structured annuities and finalize settlement documents without the disruption of having to revise settlement documents and funding sources if CMS counters with a higher or lower amount upon its review of the WCMSA.  A CMS counter-higher demand can place all parties at a disadvantage, if funding methods and documents must be revised, post settlement.


What is submitted to CMS to support the proposed WCMSA amount?  CMS requires that the most current two years of medical treatment records, two years of complete claims payment history and prescription drug profile, any/all relevant supporting documents, all rated ages including a rated age attestation statement indicating that all rated ages ever received for a particular claimant have been provided to CMS for its review, as well as the funding method for the MSA (lump sum versus annuity payments), method of administration (professional versus self administration) and lastly, the proposed total settlement amount.   This list may seem simple enough, but in 2013, CMS offered a list of top submitter errors, including:


  1. Incomplete or insufficient medical treatment records
  2. Incomplete or insufficient or missing claims payment history
  3. Missing or excessive amounts of medical treatment records
  4. Insufficient or missing prescription drug claim information
  5. Missing, unclear or miscalculated total settlement amount
  6. Insufficient response or failure to respond to development letter requests
  7. Medicare Set Aside amounts for Part A/B and Part D not clearly differentiated
  8. Submission of unrelated, unnecessary or duplicate documents
  9. Incorrect references for a State which does not have a State Fee Schedule
  10. No rated age confirmation or attestation form
  11. Incorrect pricing of prescription drugs
  12. Multiple dates of injury and body parts, medicals which remain open for specific body parts


WCMSA transparency has improved with the introduction of the CMS WCMSA Reference Guide in 2014, but inconsistencies remain in CMS’ technical approach to the review and approval process, creating challenges for claim settlements among non-group health primary payers.  Namely, CMS does not acknowledge state rules and guidelines in their future care forecasts, leaving primary payers holding greater liability for future costs, where state rules/ laws dictate otherwise.  CMS guidance requires the use of Workers’ Compensation state fee schedules for the pricing of future care; however, our data reveals that CMS seldom adheres to a state fee schedule, and in fact, seldom adheres to any usual or customary pricing. As there is no indefinable pricing source that is used by CMS, this places primary payers at a disadvantage, given their contracted and state fee schedule rates.


How can a primary payer reasonably protect Medicare’s future interests and still settle claims?  This is an important and valid question to ask as one evaluates the facts of a case and considers available options to satisfy both requirements to mitigate risk and contain claim costs.


Are there any penalties for CMS Non-submission of Medicare Set Asides?  While case law exists, which demonstrates the requirement to consider Medicare’s future interests, there has been no CMS challenge to date against a primary payer for considering Medicare’s interests without submitting the MSA to CMS for review and approval.  As MSA methodology has never been “proven” to be valid, and there is no empirical evidence of its accuracy, such a dispute would be difficult to prove that any burden was shifted to Medicare.  Some speculate that if an MSA pre-maturely exhausts, or if the proposed funds do not last for a beneficiaries’ life expectancy, then CMS may retrospectively conclude that Medicare’s interests were inadequately protected, thus triggering risks of non-compliance such as:

  1. The Medicare beneficiary may lose Medicare benefits, permanently or temporarily until funds are restored.
  2. CMS will NOT recognize the settlement and will require exhaustion of the entire settlement amount before the beneficiary may use Medicare benefits for injury related care
  3. CMS will hold all parties to the claim responsible for protecting Medicare under the MSP act
  4. There are scores of examples of CMS’ actions towards Medicare beneficiaries, unable to prove either the existence of a MSA or the proper exhaustion of MSA funds.


The Future of Medicare Set Asides and CMS Submission of MSAs

There is current legislation (HR 2649/ S 1514) with bipartisan support for streamlining MSAs and avoiding CMS submission by use of a “qualified MSA” in which a reasonable MSA could be produced and payment for future medical care related to the injury is paid directly to CMS at the time of settlement.  Other provisions to support CMS submission of MSAs would require that CMS and its Workers’ Compensation Review Contractor (WCRC) be required to review and approve a MSA within 60 days of submission. Further, CMS and its WCRC would be required to follow state workers’ compensation law in the valuation of future medical care and costs, and CMS would be obligated to permit a pro rata reduction in MSAs, relative to compromised settlements.  This bill has wide support, but has been re-introduced several times.  The direct protection to Medicare via a direct MSA payment to CMS may hold greater appeal during a Republican administration.

How to Win at the Hunger Games of CMS Submission of MSAs

If the decision is made to submit a MSA to CMS for review:

  • The decision belongs to the Primary Payer and is dependent upon the facts of the case and the primary payers’ risk and cost-benefit analysis.
  • A risk and cost benefit discussion should occur among all parties to the claim, including the beneficiary / plaintiff counsel, so all parties agree and understand their risks.
  • If submission of a MSA is elected, work with the MSA preparer to ensure that future medical exposure is mitigated, PRIOR to submission, and all supporting documentation is provided.
  • Use an experienced submitter to ensure best results and eliminate risk of submitter errors
  • Remember to mail the final settlement documents to CMS!

If the decision is made NOT to submit an MSA to CMS:

  • The decision belongs to the Primary Payer and is dependent upon the facts of the case and the primary payers’ risk and cost-benefit analysis.
  • A risk and cost benefit discussion should occur among all parties to the claim, including the beneficiary / plaintiff counsel, so all parties agree and understand their risks.
  • Do something, rather than avoid/ ignore the obligation entirely. Demonstrate & document “good faith”.
  • Leaving future medicals open is a risky option as many of these claims continue to incur medical costs, creating excess / re-insurance claims that could have been prevented had the future medicals been closed along with the indemnity portion of the claim.
  • Exercise your options to address the protection of Medicare’s future interests using:
  1. Appropriate settlement language;
  2. A MSA Estimator to preview exposure or validate an existing MSA;
  3. Generate an Analytic-Powered MSA in minutes, which is built on the data modeling of over 1 billion medical claim transactions and 2500 MSAs submitted and reviewed by CMS. An Analytic-Powered MSA has the power of hundreds of thousands of similar claims to validate future care and its results will crush any argument between two separate and competing MSAs which may be produced by the litigant parties;
  4. A conventional MSA professionally written by an experienced Life Care Planner;
  5. Consider post settlement account administration support for the beneficiary, or a professional custodian to ensure the Medicare beneficiary’s success with the proper management and expenditure of MSA funds.

Consider an integrated, technology based risk management platform to identify MSP exposure, measure and monitor compliance and leverage the power of data for claims decision-making.  If MSP is not measured or monitored, then your MSP program is out of compliance!  Care Bridge International offers a valid, streamlined and cost-effective approach compared to conventional methods.

To download our CMS Submission and Non-Submission checklists: Click Here
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Jessica Klement, Customer Experience Manager
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