CMS Hits ‘Reset’ Button With Workers’ Compensation Review Contractor Procedures and Request for Approval of Zero-Dollar Medicare Set-Aside Amounts

November 2, 2016

In an announcement distributed on November 1, 2016, CMS acknowledged the receipt of many inquiries from the MSP industry regarding procedural changes in the way CMS’s  Workers’ Compensation Review Contractor (WCRC) reviews proposed zero-dollar Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) amounts.  CMS further acknowledged that as a result of these inquiries, it has determined that changes had transpired without prior notification, and that effective immediately, the WCRC will utilize (the) procedures that were previously in effect, further noting that CMS continually evaluates all policy and procedures related to WCMSA reviews and will publish any pending changes when or before they go into effect.


Prior to October, 2016, the Workers’ Compensation Review Contractor’s procedure with Zero Dollar WCMSAs in cases where evidence of a complete denial of the claim was handled as follows:

  1. The carrier’s complete denial would be evidenced by
    • a claim payment history documenting no payments for medical treatment and indemnity and
    • a letter from the adjuster or defense attorney confirming such full denial.
  2. The MSA must be submitted to CMS for approval PRIOR to obtaining a court-approved settlement.

When these conditions were met, the settlement would be recognized as a strict compromise and CMS would issue a determination letter staying no MSA is needed.

While CMS never published this procedure as an official policy in the WCMSA Reference Guide, the policy was exercised regularly and consistently.   As such, Tower, as well as many other MSP companies, incorporated this “policy” into its standard CMS submission procedure for Zero WCMSAs for denied claims.

The October ‘Surprise’

Beginning in October, 2016, with no notice, CMS responses for denied claims took a complete 180 degree turn in terms of the WCRC’s review process.  No longer was the carrier’s evidence of complete denial of the claim sufficient to obtain CMS’s approval of a Zero WCMSA.

When questioned regarding its rationale for this drastic change, CMS noted only that there was a ‘NEW‘ procedure being followed by the WCRC, and in order to obtain approval of a Zero WCMSA one of the following would be required:

  1. A court ruling regarding the compensability of the claim; or,
  2. Treatment records (i.e. a letter from the treating physician) which demonstrate/indicate that no further treatment for the alleged industrial condition(s) will be required.

Unfortunately for the industry, there was no advanced notice of the change in procedure, no documentation of the change and no explanation of CMS’s rationale for making such a drastic change.  We, along with everyone else in our industry, basically learned about this through development letters and undesirable dialogue with WCRC & CMS representatives.

Industry Reaction and CMS’s ‘Reset’

As expected, companies reacted immediately, contacting CMS to request answers, and seeking to determine how WCMSAs currently being reviewed would be handled.  Tower clients with cases pending with CMS were advised to wait to see if the case would be developed or if CMS would follow its original policies.  If developed, the case could be withdrawn.

In an effort to further clarify, NAMSAP (National Alliance of MSA Professionals) also intervened on behalf of its constituent members to confirm why the change was made, to ‘demand’ the courtesy of notice, and to offer its expertise to assist CMS in setting future policy to simplify the process rather than creating confusion and chaos.

As a result of the avalanche of questions, concerns and complaints, CMS has now taken a very positive step back, announcing that it will revert to its original, established procedure for reviewing Zero WCMSA for denied claims until such time as it can analyze, define policy, establish review procedures, communicate to the MSP industry and provide ample notice.

What’s Next?

With today’s announcement that the WCRC will revert to its original procedure for reviewing Zero WCMSAs for denied claims, the industry can return to its internal policies for setting settlement strategy with a clear understanding of the review process that will be executed by CMS’s review contractor when evaluating Zero WCMSAs.

As a reasonable next step, NAMSAP has offered to serve as a resource to CMS to provide industry experiences, to identify the perceived impact of the WCRC’s shift in policy, and to open dialogue regarding both our goals and the unintended consequences of CMS’s shift in review practices.  I trust CMS will consider this offer, and will engage in conversations that will lead to a seamless

Stay tuned….


Denied Claim Zero MSAs: Still Available, but Put Through the Wringer by CMS

CMS: Workers’ Compensation Medicare Set Aside Arrangements