Parties to a workers’ compensation claim must protect the interests of Medicare when settling any claim. As the law itself is somewhat vague on how that is to be accomplished, the Centers for Medicare & Medicaid Services (CMS) routinely publish notices and guidelines with advice and recommendations.

This year, CMS has updated its Guidelines in several key areas, signifying increased scrutiny of settlements. As in the past, CMS will review certain settlements in advance to decide whether the settlement adequately protects the interests of Medicare. Typically, protection comes in the form of a Workers’ Compensation Medicare Set-Aside (WCMSA). Such submissions remain voluntary and limited to settlements that meet the CMS review thresholds. However, the parties should note that even those settlements that are ineligible for review by CMS must protect the interests of Medicare. In other words, all settlements must ensure that the burden of paying for treatment related to a workers’ compensation claim is not shifted to Medicare.

The latest version of the WCMSA Reference Guide offers some insight as to what would be considered to adequately protect Medicare. The Guide asserts that a WCMSA is not required when the facts of the case establish that the settlement is compensating the Claimant for services furnished in the past and there is no evidence that the parties are trying to maximize the disability portion of the settlement to the detriment of Medicare.  The Guide suggests that these facts can be demonstrated by an opinion from the treating provider that no future treatment will be necessary, or the claim is denied and no medical benefits have been paid (other than within the statutorily allowed timeframe to pay without prejudice), or a court ruling determines that no future medical benefits are owed and there is no allocation for same in the settlement. The Guide also notes that a WCMSA would not be needed where the medical obligation is left open. The Guide does not say that this list is exhaustive or the only way to prove Medicare’s protection.

The review thresholds stay the same for 2025 with the exception that, as of 7/17/2025, CMS will no longer review zero-dollar WCMSAs even if the settlement otherwise meets the review thresholds. The Guide recommends consideration of the factors outlined above for compliance with the requirements of protecting Medicare.

The latest version of the Guide cautions that use of “Non CMS Approved Products” such as “evidence based MSAs” could be considered a potential attempt to shift the burden of future medical care to Medicare and as such, CMS may, at its sole discretion, deny payment of medical services related to the workers’ compensation injury, requiring attestation of appropriate exhaustion of the total settlement (rather than the MSA amount) before CMS will resume payment unless it is shown that the initial MSA funding was sufficient and utilization of the funds was appropriate.

CMS has announced that, effective 4/7/2025, parties will no longer have to wait one year for submission of an Amended Review request.

Earlier this year, CMS announced that effective 4/4/2025, ALL workers’ compensation settlements (including zero-dollar WCMSAs, non-approved MSAs or Evidence Based MSAs) MUST be reported to CMS via the Section 111 Reporting Process.

All workers’ compensation cases that involve a Medicare beneficiary should be reported to Medicare per Section 111. Failure to report a required claim within one year can now result in a penalty of $357 or more per day with a maximum of $365,000.