Important Updates in the Use of Workers’ Compensation Medicare Set Aside Arrangements

By: Gregory F. Lisowski, MSA Services, LLC

Date: January 22, 2025

CMS recently outlined several new changes in the Workers’ Compensation Medicare Set Aside Arrangement review process. On January 17, 2025, the Centers for Medicare & Medicaid Services (CMS) released Version 4.2 of the Workers’ Compensation Medicare Set Aside Arrangement (WCMSA) Reference Guide. This latest version introduces several significant updates that attorneys and insurance claims adjusters should be aware of.

One of the biggest changes outlined in the Reference Guide affects the use of zero-dollar WCMSAs. Effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation. While the use of a zero-dollar WCMSA or allocation is still appropriate under certain circumstances, as of July 17, 2025, CMS will no longer review or approve a zero-dollar WCMSA submission and will not issue “verification letters” stating that a WCMSA is not necessary.

The Reference Guide spells out the following scenarios where a WCMSA is not necessary because, if true, indicate that Medicare’s interests are already protected:

1) 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

2) 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 scenarios may be demonstrated if any of the following are :

• 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.

These latest updates highlight an ever-evolving area of law which continue to have significant impacts on the ability to settle claims. MSA Services, LLC has been helping parties navigate with the requirements of the Medicare Secondary Payer Act since 2009. We are available to consult and provide legal opinions on whether the use of a zero-dollar MSA is appropriate and whether there are other strategies for demonstrating that Medicare’s interests were protected in your case.

Gregory F. Lisowski, JD MSCC
MSA Services, LLC
(866) 306-9423
glisowski@msaservicesllc.com