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WCMSA – Workers Compensation Claims Premiums Federalized 1980


WCMSA – How Workers Compensation Became Federalized

The WCMSA rules by The Center For Medicare/Medicaid services (CMS) have been in place for years.

I received a large number of questions on the subject of Workers Comp Medical Set Asides (MSA’s). The previous article on MSA’s was the most popular article since I started this blog. I thought I would cover them again and include some of the rules and regulations from the CMS. The blog readers have spoken. This is one to print and keep for your records.

Picture of medicare Claims and Premiums WCMSA Workers Comp
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The US Department of Health and Human Services – Centers for Medicaid and Medicare (CMS) has issued a ruling many years ago. The ruling did and does not allow a Workers Compensation settlement to just dump all future benefit needs into the Social Security system to keep settlement values low. I will post more on this next time as this is a very long one to read – but it is critical to your Workers Compensation program.

As they say – this is straight from the horse’s mouth.

All parties in a Workers’ Compensation (WC) case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving WC cases that include future medical expenses. The recommended method to protect Medicare’s interests is a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA), which allocates a portion of the WC settlement for future medical expenses. The amount of the set aside is determined on a case-by-case basis and should be reviewed by CMS, when appropriate. Once the CMS determined set aside amount is exhausted and accurately accounted for to CMS, Medicare will agree to pay primary for future Medicare covered expenses related to the WC injury.

Settlements Entered Into Prior to the July 23, 2001 ARA Letter Concerning WC Commutation of Future Benefits

(Ref: 7/23/01 Memo)

Picture of Doctor Touch Cross Icon on Screen Claims and Premiums WC Commutation
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The CMS will treat WC cases that were settled prior to the issuance of the July 23, 2001 ARA letter concerning WC Commutation of Future Benefits in the same manner as those settled after the review threshold guidelines were established. This will be done regardless of when the settlement actually occurred. However, a reopening of claims (see 42 C.F.R. 405.750 and 405.841) that Medicare previously denied for these individuals will not be granted, nor will the CMS change any decisions already made with respect to settlements which pre-date July 23, 2001.

Additional Information: When the CMS issued the July 23, 2001 ARA letter, it established review thresholds for WC cases settled by injured individuals who are not yet Medicare beneficiaries. This was done in order to organize and prioritize workloads for its Regional Offices (RO’s) and to convey to its ROs that it is not in Medicare’s best interests to review WC settlements that do not meet the review thresholds.


CMS Review Threshold

Female Doctor Claims and Premiums Writing In Patient Chart

It is not in Medicare’s best interest to review every WC settlement nationwide in order to protect Medicare’s interests per 42 CFR 411.46. (Ref: 7/23/01 Memo Q1(c)) A WCMSA is not necessary when resolution of the WC claim leaves the medical aspects of the claim open.

A Worrkers Compensation Medicare/Medicaid Set Aside  (WCMSA) may be submitted to CMS for review in the following situations:

  • The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000;OR
  • The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

Next up – How To Monitor Your MSA claims

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Is Social Security Disability Affected by WC?

Social Security Disability and Workers Comp Study Does Workers Compensation have an effect on Social Security Disability?  More precisely, do Social Security Disability applications increase

James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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