The Centers for Medicare & Medicaid Services updated its Workers’ Compensation Medicare Set-Aside Reference Guide (Version 3.5) with new language on non-CMS-approved products used to address future medical care.

The update specifically addresses products commonly called evidence-based MSAs or non-submit MSAs. CMS says these products may be viewed as a potential attempt to shift financial burden to Medicare when they are not submitted, reviewed, and approved before settlement.

CMS Addresses Non-Submit MSAs in Updated WCMSA Guidance

CMS states that it cannot be certain Medicare’s interests are adequately protected unless a proposed amount is submitted, reviewed, and approved through the process described in the reference guide before settlement.

As a matter of policy and practice, CMS says it will deny payment for medical services related to the workers’ compensation injury or illness until the claimant demonstrates appropriate exhaustion. This could require exhaustion equal to the total settlement less procurement costs, rather than only a CMS-approved WCMSA amount.

Key Takeaways From the CMS Policy Update

CMS directly addresses evidence-based and non-submit MSAs in the reference guide.

The agency says non-CMS-approved products may be treated as a potential attempt to shift financial burden to Medicare.

CMS also states that it may deny payment for medical services related to workers’ compensation injuries until the total settlement has been exhausted.

This policy does not appear to be limited only to future MSAs. It could also affect existing non-submit MSAs unless CMS provides further clarification.

Questions About Non-Submit MSAs and CMS Approval

This does not appear to be a completely new CMS position. CMS has long stated that when an MSA is not approved, Medicare may deny related medical claims or pursue recovery for claims it paid, up to the full amount of the settlement.

What is different is that CMS now directly addresses evidence-based MSAs, non-submit MSAs, and vendor indemnifications that may accompany those arrangements. CMS also indicates that a claimant may need to demonstrate complete exhaustion of the net settlement amount before Medicare resumes primary payment for injury-related care.

What This Means for Payers and Beneficiaries

If a non-submit MSA was used to settle a case, CMS involvement is typically triggered when Medicare is asked to pay for injury-related medical care.

If the MSA amount is enough to cover that care, the beneficiary may not have an immediate issue. However, if the MSA is exhausted, CMS has made clear that it may deny payment.

For payers, this may create concern if indemnification, guarantees, or other liability provisions were used in connection with a non-submit MSA. Those provisions may be tested if Medicare denies payment for future injury-related care.

Cost-Effective CMS-Approved MSAs Are Possible

The non-submit MSA route is often based on the belief that CMS-approved MSAs include unrealistic allocations. However, Tower MSA Partners has found that MSA costs can often be contained while still pursuing CMS approval.

Tower does this through a clear understanding of CMS’s MSA pricing methodology, proactive record review, and targeted physician statements. This process helps move cases toward settlement while reducing the risk that CMS may later deny payment for future injury-related medical care.

Please contact Chief Compliance Officer, Dan Anders, with any questions about this or any other MSP compliance issue at Daniel.anders@towermsa.com or 888.331.4941.

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