October 04, 2011


October 04, 2011

As a refresher to our July 2011 newsletter, there is no statutory or regulatory authority requiring CMS approval of a workers’ compensation Medicare set‑aside arrangement (WCMSA).  A series of CMS policy memos clearly implied a “requirement” over the past several years, but in May 2011 CMS issued another policy memo which confirmed:

There are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review…

So the question remains as to what to do in cases that meet current work-level review thresholds.  We all know that Medicare has mandated that the future medical interests of Medicare be “reasonably” considered and protected in workers’ compensation settlements that close out medical rights.  Plainly put, however, CMS does not mandate a specific mechanism to protect the future interests of Medicare.  CMS has declined guidance on how parties might unconditionally be assured that Medicare’s interests have been completely protected.

CMS approval of a WCMSA is not required but it is important that any medical allocation be engineered with careful consideration of CMS policy and procedure.

It has often been regarded that a benefit to obtaining CMS approval is that an amount of money determined by CMS is adequate at the time of settlement.  There is no statutory or regulatory authority for this proposition.

The enforcement issue that CMS and Medicare have to deal with is what constitutes “reasonable” protection and consideration of the future interests of Medicare.  Recall, first, that in cases that do not meet a current work-level review threshold, CMS has instructed parties that CMS will not review a set‑aside proposal.  The future interests of Medicare must still be reasonably considered and protected in those cases, but Medicare has not developed its own practice protocols for non‑threshold cases.  A majority of cases meeting review thresholds, and a majority of cases that do not meet work-level review thresholds, do not involve clear future medical liability or, the care which might be contemplated in those cases is remote in time.  When a case meets a work-level review threshold, direct and purposeful measures to protect Medicare’s future interests are necessary.  While CMS recognizes a CMS – approved set‑aside is the recommended compliance mechanism for ensuring that Medicare’s future interests are considered, CMS has also clearly told us that submission of the set‑aside is a voluntary process.

When CMS declines to review a set-aside, a recent District Court case from Arkansas may be instructive.  In Smith v. Marine Terminals (August 2011), claimant Smith received $265,000.00 in workers’ compensation benefits paid under the LHWCA.  He also maintained a Jones Act claim sounding in negligence.  While the LHWCA case was dismissed, the paid workers’ compensation benefits remained, and when a settlement of the Jones Act case was reached, it was learned that Smith was a Medicare beneficiary.  The various parties agreed that workers’ compensation would waive its lien, that a future Medicare allocation was to be estimated and sent to CMS for approval, and that Smith would receive $1 million; among other terms.

A Medicare set-aside estimate of some $14,647.00 was sent to CMS.  CMS ultimately decided to not review the estimate, ostensibly citing work level review thresholds.  This, even though the settlement terms quite plainly exceeded known CMS work level review thresholds.

To effectuate the settlement worked out by the parties, and on a Motion to Determine Medicare Set-Aside, the District Court made the following findings, among others:

1.         The parties reasonably considered the interests of Medicare in the overall settlement.

2.         The $14,467.00 set-aside estimate is approved by this court as fairly and reasonably taking in to account the interests of Medicare (emphasis supplied).

Other findings by the Court set out the status and relationships of the parties, addressed conditional payments, and recognized Medicare.

Would the “finding” about the adequacy of the set-aside be binding on Medicare? Various CMS Policy memos suggest the answer is a “no.”  However, the issue is the reasonableness of the measures taken to consider Medicare’s interests.  The estimate in Smith was professionally prepared.  The future interests of Medicare were properly considered in the context of the voluminous CMS Policy memos.

Management of the relative “risk” of Medicare is straightforward.  There is no requirement that CMS approve a set-aside in a workers’ compensation case.  There is no statutory basis for a “guarantee” associated with CMS approval of a set-aside.  Thorough knowledge of CMS policy, expertise with workers’ compensation law, and experienced counseling helps determine what is reasonable in a given case.

Medicare’s future interests are not necessarily implicated in every case (whether the case meets a work-level review threshold or otherwise).  Taking Medicare-related measures in every non‑threshold case is unnecessary and unrealistic.  Similarly, awaiting CMS approval of the set‑aside of certain cases that actually do meet review thresholds may well be unnecessary.  What is important is that cases with anticipated future medical requirements, whether meeting a work-level review threshold, or otherwise, be identified well before definitive settlement discussions begin.  Protocol should also be initiated to single out those cases with finite and completed medical care.  Definitive steps can be taken to sufficiently protect the future interests of Medicare without the necessity of a lengthy CMS approval process.


“MSPRC” is the Medicare Secondary Payer Recovery Contractor.  MSPRC handles conditional payments, among other responsibilities.  MSPRC is, first, combining and merging with the CMS COBC (Coordination of Benefits Contractor).  CMS is soliciting bids for one centralized contract for recovery and coordination efforts.  This is, in part, in response to the Congressional attention paid to the conditional payment process; as discussed in previous newsletters.

Next, the new “self-service” automation at MSPRC will assist us in ascertaining conditional payment/lien status, and will expedite the resolution process.


Wiedner & McAuliffe has participated in the CMS training program for online MSA submission.  Per CMS, the online MSA submission portal should be available shortly.\


In a September 29, 2011 Policy Memorandum from CMS dealing with Liability Insurance situations, it was announced:

…Where the beneficiary’s treating physician certifies in writing that treatment for the liability insurance – related injury has been completed as of the date of settlement and no further care will be required, Medicare will consider its future medical interests satisfied …

This is discussed in our recent Alert.  While the essential position of CMS is similar in workers’ compensation situations, it is important to note that in liability cases, CMS now says there is no need for the beneficiary to submit the certification to CMS, and no need to submit a proposed Liability set-aside for review by CMS.


We have been your trusted source for expert workers compensation defense for nearly 40 years. Your responsibilities under the Medicare Secondary Payer Law are legalobligations. These obligations are framed by State workers’ compensation law.

Our considerable experience with what is covered by Medicare and also what CMS requires in medical allocations, means that Wiedner & McAuliffe is your premier Medicare compliance choice.