Understanding CMS’ WCMSA Review Thresholds & Addressing Non-threshold Cases

It has been over ten years since the Centers for Medicare and Medicaid Services (CMS) released its policy memorandum in July, 2001 (known as the “Patel Memo”)1 formally introducing the Medicare Set-Aside (MSA) arrangement regarding workers’ compensation (WC) settlements. The WCMSA is CMS’ recommended compliance mechanism to protect Medicare’s “future interests” under the Medicare Secondary Payer Statute (MSP).2

The Patel Memo, in part, established two “review thresholds” outlining when review and approval of a WCMSA by CMS is deemed appropriate.3 While not every component of CMS’ WCMSA review thresholds may necessarily be clear, they have at least provided some practical guidance for the industry in determining WCMSA applicability.

However, the issue quickly plunges into murky waters when the focus shifts to determining WCMSA applicability in “non-threshold” cases – that is, those WC settlements which do not meet CMS’ formal WCMSA review thresholds.

On this front, several perplexing questions remain regarding what obligations the parties may have in considering Medicare’s interests in non-threshold cases, and exactly how this should (or could) be accomplished. This unusual and troubling state of affairs is largely the result of incomplete and unclear guidance from CMS.

When the dust settles, the question that continues to haunt the claims industry almost a decade into the WCMSA process is: “What should I do if my case does not meet CMS’ WCMSA review thresholds?”

This question is currently receiving a fresh new look as primary payers and practitioners re-examine their MSP best practices and compliance protocols. At least one jurisdiction, Maryland, has even recently proposed formal regulations that would require parties to take affirmative measures to ensure that Medicare’s interests are considered in non-threshold WC settlements.

In this article, we aim to place the convoluted issue of MSP compliance in non-threshold WC cases into proper and practical perspective. In analyzing this issue, it is important to understand up front that we cannot simply and blindly dive straight into the topic. Rather, the issue first requires an understanding of the WCMSA review thresholds, as determining whether your case first meets the review threshold dictates— or whether or not you will find yourself in the unusual world of non-threshold cases.

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