On January 10, 2022, Medicare published the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide, Version 3.5. Included in the Reference Guide is a new section, Section 4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care.

Section 4.3 addresses the use of products, commonly referred to as “evidence-based” or “non-submit” workers’ compensation allocations, that are not submitted to Medicare for review and approval but are intended to indemnify insurance carriers and the Centers for Medicare & Medicaid Services (CMS) beneficiaries against future recovery for conditional payments made by CMS for settled injuries.

Prior versions of the WCMSA Reference Guide did not specifically address the use of Evidence Based MSAs (EBMSAs) and similar products. Therefore, these products became a method to consider Medicare’s interests and provide what was viewed as a good faith allocation for future medical treatment in a settlement without awaiting Medicare approval of a set-aside.

Section 4.3 does not prohibit the use of EBMSAs or similar products and does not mandate Medicare review of a set-aside trust arrangement if the review thresholds are met. However, it does clarify that Medicare will view the EBMSA and similar products as an effort to shift the burden of future care to Medicare. Therefore, Medicare will not accept the allocation and will require documentation that the entire settlement amount was spent on treatment before paying for any treatment related to the work injury.

Comment: Based upon this clarification of Medicare’s position on the use of EBMSAs and similar products, it remains a “Best Practice” to obtain Medicare approval of a set aside in those settlements where the review thresholds are met.