Earlier this year, the Centers for Medicare & Medicaid Services (CMS) issued an alert announcing changes to the reporting requirement of workers’ compensation settlements that will become effective as of April 2025.

Medicare has always required that parties “protect their interests” when entering into settlements. Generally speaking, the parties are required to ensure that no medical bill gets submitted to Medicare that is the responsibility of the employer as part of a workers’ compensation claim. This includes future medical bills when a claim is settled. Traditionally this is accomplished by securing a Workers’ Compensation Medicare Set-Aside (WCMSA) to cover the costs of any future medical bills related to the workers’ compensation claim. CMS will continue to review WCMSAs that meet their review thresholds for approval. However, CMS will now require that all MSA funding for workers’ compensation settlements is reported to CMS.

CMS stated that they will begin capturing settlement information via the Section 111 (S111) reporting process. S111 is part of the Medicare Secondary Payer (MSP) provision that protects Medicare funds by ensuring that workers’ compensation is the primary payer for work-related injuries. This process already requires quarterly reporting about employees who are Medicare beneficiaries. The existing S111 reporting process will be expanded to capture information on all workers’ compensation claims involving Medicare beneficiaries who receive a settlement. The reporting will include the MSA amount, coverage years or life expectancy of the claimant, and whether the MSA was funded through a lump-sum payment or structured annuity.

The CMS MSA approval review thresholds for WCMSAs will remain at $25,000, and   submission remains voluntary. However, parties will be required to utilize the S111 process to report the settlement even if the settlement is submitted to CMS for approval. Moreover, data collection will be done regardless of whether the workers’ compensation settlement was based on a WCMSA, a non-approved MSA, an Evidenced-Based MSA (Medical Cost Projection), or even where medicals remain open.

CMS has also announced a maximum fine for those who fail to make a timely report of ongoing responsibility for medicals (ORM) and Total Payment Obligation to the Claimant (TPOC). Failure to report within one year of the date of acceptance of ORM can result in a penalty of $357 or more per day but is now subject to a maximum fine of $365,000.

The new requirements would seem to signal an increased interest by CMS in enforcement of the requirement that the parties protect the interests of Medicare when entering into a settlement. It has been reported that CMS will randomly select 1,000 claims to audit per year for compliance.

If you have questions related to the information in this article, please reach out to Larry Giambelluca at lgiambelluca@semmes.com.

(Note: This article was written with the assistance of summer associate Kamryn Washington.)