Zero-Dollar MSA Submission Update
In the latest version of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, published on January 17, 2025, a new section (4.2 titled “Indications That Medicare’s Interests Are Protected”) notes that although submitting a MSA proposed amount for review is never required, WC claimants must always protect Medicare’s interests, even if the parties agree that no monies out of the settlement should be allocated for future medical related to the claim. This is actually “old news” and CMS has made it clear in the past and is once again emphasizing that MSAs are not necessary under the following conditions:
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
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.
CMS has previously indicated that these conditions are satisfied if any of the following applies:
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.
In short, if any of the above conditions apply, a zero-dollar MSA is appropriate. In the past, parties have had the option of seeking CMS approval of zero dollar MSAs. However, effective July 17, 2025, CMS will no longer accept or review WCMSA proposals with a zero-dollar ($0) allocation. Instead, CMS now indicates that the parties should consider the above conditions in determining whether a zero-dollar MSA allocation is appropriate.
Practically speaking, the most common zero-dollar MSA scenario will be cases in which primary liability is denied and no payments have been issued. If there is a denial of liability and no benefits paid, the parties can proceed with a non-submission zero-dollar MSA. Savings language nullifying the medical closeout in the event of a Medicare “objection” is still recommended in order to ensure protection of Medicare’s future interest. The updated reference guide does not affect cases involving admitted injury cases. With admitted injuries, savings language is still recommended for non-submission, funded MSAs. The only time savings language is not required is when Medicare is not in the picture (not a current beneficiary and no reasonable expectation) or when CMS has approved a proposed MSA.
In the updated guide, CMS has also reiterated that review and approval of a funded MSA is the only way to “guarantee” that Medicare’s future interest is protected:
In instances where the above conditions are not met, CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.
It is worth noting that the updated guide was issued prior to the change in administration. It will be important to monitor how the Trump Administration handles Medicare compliance in workers compensation cases going forward.
Summary prepared by Attorney Joseph Mitchell