Top 3 Questions Clients Ask About Medicare Set-Asides (MSAs)
A Medicare Set-Aside (MSA) allocates a portion of an injured claimant’s settlement funds for all future claim-related medical expenses that are covered by Medicare. MSAs have become commonplace in workers’ compensation settlements, particularly since 2001 when The Centers for Medicare & Medicaid Services (CMS) issued the “Patel Memo.”
Generally, an MSA is appropriate in a settlement where (1) future medicals are being released; (2) the individual claimant will require claim-related, Medicare-covered medical care, and (3) the individual claimant is either a current Medicare beneficiary or has a reasonable expectation of becoming a Medicare beneficiary within 30 months of the settlement date.
Much of the above is generally well-known among workers’ compensation claims professionals; however, we often receive the following three questions regarding MSAs:
1. Now that CMS no longer reviews zeros, do you still need to have an MSA prepared?
Yes. While not a requirement, we would still recommend having a zero dollar MSA prepared for cases that meet the CMS criteria for when an MSA would not be needed even though it can no longer be submitted to CMS for review. In preparing the zero dollar MSA, your MSA partner will be able to thoroughly review the claim file and determine whether not setting any amount aside for future medicals is supported by CMS’ most recent policy guidance.
Effective July 17, 2025, CMS stopped accepting zero dollar MSAs for review. Although CMS will no longer review zero dollar MSAs, parties are still required to protect Medicare’s interest when settling claims with Medicare beneficiaries.
Section 4.2 of the CMS WCMSA Reference Guide outlines when no amount would need to be set aside for future medicals:
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); and
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.
These conditions may be demonstrated through one of the following:
• The individual's treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatments or medications related to the settling WC injury or illness; or
• The workers’ compensation insurer or self-insured employer denied responsibility for benefits under the state workers’ compensation law and the insurer or self-insured employer has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement; or
• A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the workers’ compensation insurer or self-insured employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services; or
• The workers’ compensation claim was denied by the insurer/self-insured employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.
While the zero MSA would not be submitted to CMS for review, beginning April 4, 2025 RREs are now required to report MSA information along with other required Section 111 TPOC data when a workers’ compensation claim involving a Medicare beneficiary settles. The MSA must be reported even if no amount is being set aside for future medicals. Having a zero MSA in your file that outlines how the claim meets the CMS criteria for when a zero MSA would be appropriate can offer a ready defense in the event Medicare were to raise an issue with the zero MSA amount.
2. Does Medicare allow the use of evidence-based medicine?
Yes. In several places within the CMS WCMSA Reference Guide, it is noted that Medicare reviewers reference evidence-based guidelines as resources in determining future treatment. Evidence-based MSAs are prepared using national evidence-based guidelines, such as Official Disability Guidelines (ODG) and American College of Occupational and Environmental Medicine (ACOEM) guidelines and may also be based upon state-specific evidence-based guidelines.
While evidence-based MSAs tend to result in a lower overall allocation amount as compared to a more “traditional” MSA, they remain medically and legally defensible. In submitting evidence-based MSAs to CMS for formal review and approval, we have also seen CMS agree with evidence-based methodology, which is unsurprising given that Medicare reviewers cross-reference evidence-based guidelines during their MSA review.
3. The claimant doesn’t want a particular surgery, medication or treatment. Can this be removed from the MSA?
No. Per Section 15.2.2 of the CMS WCMSA Reference Guide, Medicare does not allow a claimant to waive treatment even if the claimant states in writing that they do not wish to have a recommended surgery, medication or certain medical treatment or medications.
These items should still be included in the MSA unless additional medical records, treating physician statements, or a court order can be provided to demonstrate that certain treatment or medications are no longer recommended or that the carrier is not responsible for certain treatment or medications.
If you have questions regarding MSAs or Medicare Secondary Payer compliance, please contact us.
