Effective today, CMS will no longer accept or review Workers’ Compensation Medicare Set-Aside (WCMSA) proposals with a zero-dollar allocation. Zero-dollar allocations are typically secured in conjunction with settlements of denied claims or when there is evidence that the work-related injury has resolved. A zero-dollar WCMSA proposal may still be secured and attached to the Compromise and Release Agreement to establish that Medicare’s interests have been considered and protected. Additionally, the Compromise and Release Agreement language should address how Medicare’s interests have been protected such that a zero-dollar allocation is supported.
CMS’ WCMSA Reference Guide section 4.2 outlines the following conditions that may be demonstrated in the Compromise and Release Agreement language to support a zero-dollar allocation:
1. Claimant’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
2. The Employer/Insurer 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
3. A WCJ has determined, by a ruling on the merits, that the Employer/Insurer 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
4. The WC settlement leaves the Employer/Insurer responsible for ongoing medical benefits.
This new CMS rule does not change the long-standing rule that the parties in workers’ compensation cases must always protect Medicare’s interests. The new rule does, however, require the parties to take some extra steps when utilizing a zero-dollar WCMSA in conjunction with settlement, specifically, more thoughtfully crafting the Compromise and Release Agreement language to specify why a zero-dollar allocation is appropriate and to ensure that liability for future medical treatment is not being shifted onto CMS.
