Decoding CMS Development Letters: Prevention, Trends, and Effective Responses

July 2, 2025

Avoid CMS Development Letter Delays: Learn How in Our Upcoming Webinar

The Centers for Medicare & Medicaid Services (CMS) continues to issue an increasing number of CMS Development Letters following Medicare Set-Aside (MSA) submissions, and not all of them make sense. While some requests are warranted, many appear unnecessary, resulting in delays, frustration, and additional work for claims teams.

At Tower MSA Partners, our strategy has always been to prevent Development Letters before they happen. Even with meticulous planning, CMS sometimes requests additional documentation to finalize its review. That’s why it’s critical to know how to anticipate, address, and respond to these letters when they arrive.

Join us for a live webinar on July 23, 2025, at 2:00 p.m. ET as Tower’s Chief Compliance Officer, Dan Anders, and CMS Submission & MSP Compliance Manager, Brittany Wilkerson, break down:

- - The most common CMS Development Letter requests you can expect
  - Unusual and emerging requests CMS is making
  - Proactive steps to prevent Development Letters
  - How to partner with Tower to avoid or quickly resolve these requests

You’ll also have the opportunity to submit questions in advance to be answered live during the session.

Don’t let CMS Development Letters slow down your settlement process.

Register

CMS 2024 WCMSA Metrics: Key Trends in Medication and Treatment Costs

December 4, 2024

stethoscope and pill bottle on representing WCMSA trends

CMS 2024 WCMSA Metrics: Key Insights into Costs and Trends

The Centers for Medicare and Medicaid Services (CMS) has released its 2024 data on Workers’ Compensation Medicare Set-Aside (WCMSA) reviews. This year’s metrics highlight two significant trends: declining prescription drug costs and rising medical treatment costs.

For employers, insurers, and other stakeholders, understanding these trends is crucial for effective planning and cost management. Here’s a breakdown of the key findings and how Tower MSA stands out in the industry.

CMS WCMSA Metrics Overview: 2020–2024

CMS’s fiscal year 2024 data provides a five-year perspective on MSA reviews, comparing proposed amounts to CMS-recommended (approved) amounts. Here are the major takeaways:

Consistency in Review Numbers:
CMS completed 14,862 MSA recommendations in 2024, closely aligning with the five-year average of 15,138.
Decrease in Recommendations:
After a 9% rise in recommended amounts between 2022 and 2023, 2024 saw a 6% drop.
Stable Average MSA Amounts:
The average approved MSA decreased slightly to $85,927 in 2024 from $86,453 in 2023. However, this remains above the five-year average of $83,851.
Variance Between Proposed and Approved Amounts:
The variance, which increased to 22% in 2023, remained steady at 21% in 2024.

Key Trends in Costs

Prescription Drug Costs Continue to Decline

CMS data reveals a notable 33% decrease in average prescription drug costs over five years, from $26,574 in 2020 to $17,807 in 2024. This decline reflects:

Reduced opioid use in workers’ compensation cases.
Increased allocation of generic medications over brand-name drugs.

Treatment Costs Are Rising

While prescription costs have fallen, the average treatment costs have increased by 15% since 2020, signaling a shift in the cost structure for MSAs.

How Tower MSA Partners Compares to Industry Averages

Tower MSA Partners has consistently achieved lower costs for its clients, significantly outperforming industry averages in both total MSA and prescription drug components.

Average Approved MSA (2020-2023):
- CMS: $82,332
- Tower: $63,005 (23% lower)
Prescription Drug Component (2020-2023):
- CMS: $22,048
- Tower: $14,286 (35% lower)

Through targeted interventions like our Physician Follow-up service, Tower mitigates costs while ensuring compliance with CMS requirements.

Why CMS Metrics Matter

These annual metrics provide invaluable insights for stakeholders managing workers’ compensation cases. They not only reflect trends in CMS review processes but also offer benchmarks to evaluate cost-saving strategies.

Tower MSA’s cost-effective approach demonstrates that significant savings are possible with a robust review and allocation methodology.

Have Questions? Let’s Connect

If you want to learn more about how CMS metrics impact your workers’ compensation program—or explore cost-saving opportunities—contact Dan Anders, Chief Compliance Officer, at Daniel.anders@towermsa.com or call 888.331.4941.

CMS Extends Deadline for Publication of Final Section 111 Penalties Rule

February 20, 2023

Stamp icons representing regulatory enforcement of Section 111 reporting by CMS.

There was much expectation that the Centers for Medicare and Medicaid Services (CMS) would meet the February 18, 2023 deadline to release a final rule on Section 111 reporting civil money penalties (CMPs). However, it was not to be. CMS extended its deadline for publishing the final rule by a year to February 18, 2024.

Recall that the purpose of the rule is to set out specific criteria for when CMS may impose penalties for what it considers a failure to report or improper reporting. A summary of the proposed rule can be found here.

In the notice, CMS explains the reason for the extension:

. . . We are not able to meet the initial targeted 3-year timeline for publication due to delays related to the need for additional, time-consuming data analysis resulting from public inquiry. It was not possible to conclude this data analysis on the initial, targeted timeline for the proposed rule because public listening sessions raised additional concerns that CMS believed were important to properly and thoroughly research prior to publishing the final rule. We have decided that it is critical to conduct additional analysis about the economic impact of the rule. We are preparing additional data analysis and predictive modeling to better understand the economic impact of the proposed rule across different insurer types. This data analysis is designed to review the actual current reporting and model potential penalties that would be imposed were the final rule in place. Along with delays resulting from the agency’s focus on the COVID- 19 public health emergency, we determined that additional time is needed to address the complex policy and operational issues that were raised. We are extending the publication deadline so as to provide the most accurate, complete, and robust data possible to confirm the intent and economic impact of the final rule.

Practical Implications

Besides not having to worry about penalties for another year, we are pleased CMS is taking the time to complete a data analysis of the impact of its penalty regulation. While in its initial regulatory announcement, CMS indicated its rule would not have a significant economic impact, we, as well as others, noted in our comments to the proposed regulation that the authority to impose penalties of up to $1,000 per day per claim could lead to millions of dollars of penalties on even one claim. This is most definitely a significant economic impact.

As required by law, CMS will eventually make its penalties rule final and issue penalties. Accordingly, while we await that final rule, you have been granted more time to ensure the accuracy and timeliness of your reporting.

Current Tower Section 111 reporting partners have access to our Section 111 Management Dashboard, which gives you complete visibility into your claims from a global level all the way down to specific claims. This, along with our standard error reports and consultation on error correction, is the best path forward to eliminate the potential for CMS to impose penalties.

If you do not yet partner with Tower for Section 111 reporting, now is an excellent time to consider the benefits of a platform which seamlessly manages Section 111 reporting, conditional payments, Medicare Set-Aside triage, clinical and legal interventions, MSA preparation, and CMS submission activities. Don’t hesitate to contact Tower’s Chief Compliance Officer, Dan Anders, at 888.331.4941 or daniel.anders@towermsa.com, with any questions.

Related Articles

Tower MSA Partners Ready to Steer Clients Through Pending Section 111 Civil Money Penalties

WorkCompWire: Plan Now to Avoid Pending Medicare Reporting Penalties

MSPN Elects Dan Anders as President

February 3, 2021

Dan Anders who was quoted in the Claims Journal

Tower’s Chief Compliance Officer, Dan Anders, has been elected president of the National Medicare Secondary Payer Network (MSPN). MSPN is the premier organization for individuals, companies and law firms who want to stay apprised of Medicare Secondary Payer compliance developments and collaborate on industry leading education and advocacy efforts. Check out the news release: Tower MSA Partners Dan Anders Elected President of the National Medicare Secondary Payer Network.

This is the second time in three years Tower has had one of our executives at the helm of this organization. Our CEO, Rita Wilson, served as president in 2018.

Dan takes office as the organization completes rebranding itself from its former name of the National Alliance of Medicare Set-Aside Professionals (NAMSAP) to the National MSP Network. Over the years, the Centers for Medicare and Medicaid Services (CMS) expanded its MSP enforcement mechanisms beyond Medicare Set-Asides. The organization kept pace, adding Medicare conditional payment recovery, mandatory insurer reporting to Medicare, and MSA professional administration and settlement structuring to its education and advocacy initiatives.

Dan looks forward to working with MSPN’s Executive Committee and Board, consisting of the most experienced and knowledgeable professionals in the MSP compliance community, to accomplish the organization’s 2021 goals.

Additionally, he will continue the organization’s positive working relationship with CMS’s Division of MSP Program Operations, which enables MSPN members to ask questions and raise concerns and provide solutions directly with those who develop and implement MSP policy while learning the agency’s reasoning and viewpoint firsthand.

If you would like to learn more about MSPN, please contact Dan Anders at daniel.anders@towermsa.com or (888) 331-4941, ext. 219.

PAID Act Becomes Law

December 16, 2020

The recently enacted PAID Act ensures that insurance carriers have access to Medicare Advantage plan enrollment information

On December 11, 2020, President Trump signed into law HR 8900, Further Continuing Appropriations Act, 2021, which included the provisions of the Provide Accurate Information Directly Act or PAID Act (It is named Transparency of Medicare Secondary Payer Reporting Information in Section 1301 of the law).

What does all this mean? In short, the PAID Act requires the Centers for Medicare and Medicaid Services (CMS) provide applicable plans (liability insurance, no-fault insurance and workers compensation laws or plans) access to Medicare beneficiary enrollment status in Medicare Advantage and Part D Prescription Drug plans. Currently, this information can only be obtained from claimants which impedes the applicable plans’ efforts at mitigating their exposure to reimbursement claims from these Medicare Advantage and Part D plans.

Background on PAID Act

CMS has consistently asserted that Medicare Advantage and Part D plans have the same or similar rights of recovery under the Medicare Secondary Payer (MSP) Act as CMS itself. Federal courts have largely agreed with CMS’s position, notably finding Medicare Advantage plans can seek post-settlement reimbursement against applicable plans, including double damages.

Presently, the applicable plans do not have access to Medicare Advantage and Part D plan enrollment information. CMS claims statutory privacy limitations prevent it from providing access. Plans are forced to rely on claimants to voluntarily share their Medicare Advantage plan or Part D plan enrollment, an inconsistent and unreliable method.

To address this problem, a group of industry stakeholders, through the Medicare Advocacy Recovery Coalition (MARC), advocated for the PAID Act. The National Medicare Secondary Payer Network (formerly NAMSAP), in which Tower is a corporate partner and member, endorsed the bill in 2018.

The bill, now law, provides that if through the Section 111 query process the claimant is identified as a Medicare beneficiary, then CMS must also respond with the following:

Whether a claimant subject to the query is or during the preceding 3-year period has been, entitled to benefits under the program under this title on any basis; and

to the extent applicable, the plan name and address of any Medicare Advantage plan under part C and any prescription drug plan under part D in which the claimant is enrolled or has been enrolled during such period.

In other words, if the claimant has been enrolled in a Medicare Advantage or Part D plan in the prior three years, the applicable plan will have access to that information through the Section 111 Mandatory Insurer Reporting query process.

Practical Implications

We applaud the passage of the PAID Act, which will make it easier for payers to proactively identify and then investigate and resolve Medicare Advantage and Part D Prescription Drug plan reimbursement claims. As a result, claims can be settled with confidence that a reimbursement claim or lien will not pop-up weeks, months or years later.

CMS has one year after the date of enactment, that is December 11, 2021, to have the enhanced Section 111 query process in place. When Tower receives technical guidance on how this change will be incorporated into the current Medicare beneficiary query process, we will update our Section 111 reporting clients.

As always, if you have any questions, contact Dan Anders, Tower’s Chief Compliance Officer, at daniel.anders@towermsa.com or 888.331.4941.

WorkCompCentral Explains the PAID Act

Celebrex and Abilify Price Drops Trigger MSA Reductions

December 14, 2020

Vial of pills illustrating MSA Reductions in RX costs

Recently, the lowest average wholesale price of Celebrex 200mg and the price of multiple strengths of Abilify dropped dramatically resulting in major MSA reductions.

A widely used, non-steroidal anti-inflammatory drug, Celebrex (Celecoxib), is FDA-approved for several conditions:

Ankylosing spondylitis
Juvenile rheumatoid arthritis
Acute migraines
Osteoarthritis
Acute pain
Primary dysmenorrhea
Rheumatoid arthritis

Per Red Book, the lowest average wholesale price for Celecoxib 200mg dropped from $1.79 to $0.33, an 81.56% price reduction.

Abilify (Aripiprazole) is an antipsychotic drug FDA-approved for the following conditions:

Schizophrenia
Acute treatment of manic and mixed episodes associated with bipolar
Adjunctive treatment of major depressive disorder
Irritability associated with autistic disorder
Treatment of Tourette’s disorder

Per Red Book, the lowest average wholesale price for multiple strengths (2mg to 30mg) of Aripiprazole dropped from the $30 to $36 range to a range of $0.07 to $0.17 per dose, an almost 100% price reduction.

Tower Action in Response

Because Tower’s system tracks all medications allocated in MSA reports, we have already pulled reports from the past two years that allocated these medications and advised clients of the potential for MSA reductions. You can also contact us to determine whether a particular MSA qualifies for MSA reductions. Revisions to the MSA can be done now or prior to MSA submission to CMS.

Please contact Dan Anders, Tower’s Chief Compliance Officer, at Daniel.anders@towermsa.com or (888) 331-4941 with questions.

Medicare Conditional Payment Recovery Threshold for 2021

December 1, 2020

chart, dollars and a fountain pen illustrating conditional paument recovery threshold post

In an 11/25/2020 Alert, the Centers for Medicare and Medicaid Services (CMS) announced that the 2021 conditional payment recovery threshold for liability, no-fault and workers’ compensation settlements will remain at $750. Accordingly, Total Payment Obligations to the Claimant, TPOCs, in the amount of $750 or less are not required to be reported to CMS through the Section 111 Mandatory Reporting process, nor will CMS attempt to recover conditional payments for TPOCs of this amount (The threshold does not apply to liability settlements for alleged ingestion, implantation or exposure cases).

By way of background, pursuant to the SMART Act of 2012, CMS is required to annually determine a threshold amount such that the cost of collection does not outstrip the amount recovered through such collection efforts. CMS’s calculations, which can be found here, resulted in maintaining the $750 threshold.

Practical Implications

As CMS is keeping the $750 threshold for mandatory reporting and conditional payment recovery there are no changes to the reporting processes or determinations as to when conditional payments should be investigated or resolved.

November CMS Mandatory Reporting and Conditional Payment Updates

November CMS News: Mandatory Reporting and Conditional Payment Updates

November 24, 2020

Hand writing What's New?" on a chalkboard for CMS news update

Here’s a recap of recently announced CMS news:

CMS News #1: Medicare Conditional Payment Appeals Guide

In follow-up to its September 2020 webinar on Medicare conditional payment appeals through the Commercial Repayment Center (CRC), CMS converted the slides into an appeals guide. The guide, which can be found here, provides a breakdown of the Medicare conditional payment appeals process and the bases for appeals.

CMS News #2: Updated MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting Guide

Earlier in November, CMS released a Technical Alert and an updated MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting User Guide, Version 6.1, to announce “Section 111 Edits to no Longer Cause Record to Reject.”

In short, starting April 5, 2021, several error codes will be converted into what CMS calls “soft edits.” Soft edits are still considered errors by CMS but will not cause the entire record to be rejected. Examples of such data errors are in fields reporting middle initial of claimant’s name and alleged cause of injury. The Responsible Reporting Entity (RRE) is still responsible for correcting these errors in the next quarterly file submission.

Additionally, a new soft edit will be added and applied to NGHP Claim Input File Detail Record files when users submit a no-fault insurance claim where the policy limit is less than $1000.00. The input files will be accepted but a new CP13 error will be returned on the response files.

Finally, Claim Input File Detail Records submitted prior to the effective date of the injured party’s entitlement to Medicare will be rejected and returned with a Disposition Code ‘03’ instead of an SP31 error. As a result, if the purpose of the report was to indicate ongoing responsibility for medicals has been accepted (ORM=Y), then the claim will need to be re-submitted in the next quarterly reporting period (at which point the claimant is presumably entitled to Medicare).

CMS News #3: CMS to Host BCRC Recovery Process Webinar

On Wednesday, December 9, 2020 at 1:00 PM ET, CMS will be hosting a webinar focused on the Medicare Secondary Payer (MSP) recovery process when a Medicare beneficiary receives a settlement, judgment, award, or other payment. In other words, following its September webinar featuring the CRC, CMS is now highlighting the work of its Benefits Coordination and Recovery Center (BCRC). The announcement can be found here.

Per the announcement:

The primary intended audience is attorneys who represent beneficiaries and other beneficiary representatives. The BCRC will present a refresher on the beneficiary recovery process, including what functions can be facilitated using the Medicare Secondary Payer Recovery Portal (MSPRP). Such functions include submission of authorizations, requesting a Final Conditional Payment, and electronic payments. The webinar will also discuss alternative demand calculation options (Self-Calculated Conditional Payment Amount and Fixed Percentage Option), as well as other beneficiary recovery tips and best practices. The presentation will be followed by a question and answer session with participants.

We encourage anyone who is new to Medicare conditional payment recovery through the BCRC or would like, as CMS indicates, a refresher, to attend the webinar.

If you have any questions regarding these announcements, please contact Tower’s chief compliance officer, Dan Anders, at daniel.anders@towermsa.com or 888.331.4941.

$750 Medicare Conditional Payment Recovery Threshold Remains for 2021

CMS Introduces Pre-CPNs and Open Debt Reports in Conditional Payment Recovery Process

CMS Rolls Out Updates to NGHP User Guide

October 22, 2020

Tower MSA Partners explains CMS updates to ORM and NOINJ rules in the Section 111 reporting user guide.

Earlier this month CMS released an updated MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting User Guide (Version 6.0). Here are the key updates with analysis and practical implications.

Additional Definition of Total Payment Obligation to Claimant (TPOC)

Section 6.4 of Volume 3 (Policy Guidance) of the user guide defines TPOC this way:

The TPOC Amount refers to the dollar amount of a settlement, judgment, award, or other payment in addition to or apart from ORM. [Ongoing Responsibilities for Medicals] A TPOC generally reflects a “one-time” or “lump sum” settlement, judgment, award, or other payment intended to resolve or partially resolve a claim. It is the dollar amount of the total payment obligation to, or on behalf of the injured party in connection with the settlement, judgment, award, or other payment. Individual reimbursements paid for specific medical claims submitted to an RRE [Responsible Reporting Entity], paid due the RRE’s ORM for the claim, do not constitute separate TPOC amounts.

The update added an explanation of the TPOC amount computation to this definition:

The computation of the TPOC amount includes, but is not limited to, all Medicare covered and

non-covered medical expenses related to the claim(s), indemnity (lost wages, property damages, etc.), attorney fees, set-aside amount (if applicable), payout totals for all annuities rather than cost or present values, settlement advances, lien payments (including repayment of Medicare conditional payments), and amounts forgiven by the carrier/insurer.

CMS’s definition seems to have been largely pulled from the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide’s definition of total settlement. Its purpose in the WCMSA Reference Guide is to determine whether a settlement meets CMS MSA review thresholds. While we assume CMS’s intent is to help reporting entities better determine the TPOC amount, adding this computation definition raises some concerns:

Liens & Medicare Conditional Payments: In some cases, lien payments, including the Medicare repayment conditional payment amount, is not known at the time of settlement. This is not a problem if the injured worker is repaying Medicare out of the settlement amount. But it may be a problem if the employer or carrier is agreeing to pay Medicare with funds outside of the settlement amount because they may not have a final demand amount prior to settlement. Our solution would be for CMS to clarify that a lien payment, namely a repayment of Medicare conditional payments made directly to Medicare or to a lienholder, Medicaid for example, is not part of the TPOC computation.

Amounts Forgiven in Settlement: Besides repayment of liens, CMS also brings in the term “amounts forgiven” from the WCMSA definition of settlement. While it has never been further defined in the CMS WCMSA Reference Guide and CMS provides no further clarification here, the general understanding is that this refers to the carrier or employer’s waiver of a subrogation lien against a 3^rd party liability settlement. An employer or carrier may waive their subrogation lien for many reasons, and they may do so without having a firm dollar amount to even determine the “amounts forgiven.”

We see using the amounts forgiven term as a way for CMS to provide settling parties the ability to obtain an MSA approval when the WC case is settling and all or most of the settlement funds are coming from a 3^rd party liability settlement. However, in the mandatory reporting context, amounts forgiven is a specific dollar amount which must reported and thus becomes relevant to Medicare conditional payment recovery

Were the WC carrier to report amounts forgiven in the TPOC amount, CMS and its recovery contractor would assume that the injured worker has received these funds as part of the WC settlement, which is not the case. These funds are not a payment to the claimant. The injured worker presumably receives payment from the 3^rd party liability settlement and, if he or she was a Medicare beneficiary at the time of that settlement, this will be reported to Medicare. Requiring the WC carrier to report amounts forgiven in settlement and then having the liability carrier report the liability settlement is duplicative and unnecessary to protect Medicare’s interests. We hope CMS reconsiders the use of this terminology in its TPOC computation or clarifies what they mean by amounts forgiven.

Indemnity-Only Settlements are Not Reportable

Following its August 13, 2020 webinar on Section 111 reporting where CMS officials reiterated that indemnity-only settlements are not reportable as TPOC, CMS has now added the following to Section 6.5.1 of the guide, which also incorporates “property damage only” claims:

RREs are not required to report liability insurance (including self-insurance) settlements, judgments, awards or other payments for “property damage only” claims which did not claim and/or release medicals or have the effect of releasing medicals. Similarly, “indemnity-only” settlements, which seek to compensate for non-medical damages, should not be reported. The critical variable to consider is whether or not a settlement releases or has the effect of releasing medicals. If it does, regardless of the allocation (or lack thereof), the settlement must be reported.

This raises the question of whether a prior indemnity-only settlement amount is combined with a later settlement releasing medicals and reported as TPOC. As mentioned earlier, CMS’s TPOC computation definition was taken from the CMS WCMSA Reference Guide and applied to the TPOC computation. In doing so, CMS excluded the phrase “prior settlements of the same claim” to the TPOC definition. Based on this exclusion, which is consistent with other guidance in the user guide, we accept that a prior indemnity-only settlement is not reported as TPOC, even when a later settlement releases medicals.

If you have any questions, please contact Dan Anders, Chief Compliance Officer, at Daniel.anders@towermsa.com or 888.331.4941.

CMS Adds New Pricing Resource to WCMSA Reference Guide

October 14, 2020

stethescope on a Workers’ Compensation Medicare Set-Aside Arrangements

In a recent update to its WCMSA Reference Guide, the Centers for Medicare and Medicaid Services released a state-by-state list of the major medical centers it uses for pricing future medical expenses in proposed MSAs. This zip code-based list (See Appendix 7 of the guide) will help MSA preparers and submitters more accurately price surgical procedures, including spinal cord stimulators and intrathecal pumps, per CMS requirements.

Background

From the reference guide:

Hospital fee schedules are currently determined using the Diagnosis-Related Groups (DRG) payment for the median major medical center within the appropriate fee jurisdiction for the pricing ZIP code, unless otherwise defined by state law (see Appendix 7).

While that sounds good, until this update, no one but CMS and the Workers’ Compensation Review Center (WCRC), which reviews submitted MSAs for CMS, knew for certain the major medical center.

Nonetheless, Tower’s experienced clinical team has historically been successful in identifying appropriate facility pricing, thus avoiding significant variances between the proposed surgical pricing and the CMS calculation. The release of the list removes any remaining uncertainty.

Practical Implications

The list of major medical centers should eliminate one area of variances in surgical pricing. (Variances can still occur based upon differences in the type of surgery allocated or the components of the allocated surgery.) In short, it should lead to more accurate pricing surgical procedures in proposed MSAs and reduce MSA counter-highers.

The list of major medical centers has been published as part of the reference guide and also within the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP).

As a member of the National Alliance of Medicare Set-Aside Professionals, now the National MSP Network (MSPN), Tower has consistently advocated for the release of this list. We appreciate the efforts of MSPN leadership to pursue this with CMS management.

A big thank you to Steve Forry and John Jenkins at the CMS Division of MSP Program Operations and to the WCRC for their work to assemble and release this information for public use.

If you have any questions, please contact Dan Anders, Chief Compliance Officer, at Daniel.anders@towermsa.com or 888.331.4941.