On Jan. 17, 2025, the Centers for Medicare & Medicaid Services (“CMS”) published an update to the Workers Compensation Medicare Set-Aside Arrangement (“WCMSA”) Reference Guide that significantly changes this practice.
Beginning July 17, 2025, CMS will no longer review MSA proposals with a zero-dollar allocation. Here’s what you need to know.
What is a Zero-Dollar MSA?
When a claimant enters a workers’ compensation settlement, the parties must take into account Medicare’s interest when a claimant is a Medicare beneficiary or a claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months of the settlement.
The reason for this is to ensure that Medicare is not burdened with medical charges paid at the program’s expense that should be borne by an employer or carrier under the applicable workers’ compensation scheme.
To adequately protect Medicare’s interest, the CMS recommends that an MSA arrangement be submitted and approved when a claim involves Medicare beneficiaries or soon to be Medicare beneficiaries.
An MSA is a financial agreement allocating a portion of a workers’ compensation settlement amount towards future medical services related to the workers’ compensation injury that would otherwise be covered by Medicare. Only certain costs fall under the agreement: doctors’ visits, prescriptions, surgeries, and other relevant medical costs related to the work injury.
Some workers’ compensation claims don’t implicate any post-settlement medical services.
In some claims, medical causation, which is a factor in determining whether an MSA is necessary, is disputed or the responsibility for future medical treatment is contested. In those claims, parties may decide to forgo funding a traditional MSA and instead obtain a written determination that no funds should be set aside. This is commonly referred to as a “zero-dollar MSA.”
The new CMS zero-dollar policy
CMS has provided a list of criteria for when a zero-dollar MSA protects Medicare’s interest. Previously, this criteria list was never published in the WCMSA Reference Guide. Instead, MSA submitters knew the criteria based on their knowledge of the submission process. When submitters received the approval of the zero-dollar MSA, this protected the parties from a future denial of benefits from Medicare related to the work injury.
This new announcement of policy by CMS will allow parties to proceed with settlement without the need for CMS review if one of the following criteria is established:
Download a PDF of the article >