Workers’ Compensation Medicare Set-Aside Reform Introduced in Congress


On June 4, 2015, workers' compensation Medicare Set-Aside (WCMSA) legislation was introduced in both the House and Senate. In identical bills, the House, the bill (HR 4269) was introduced by Representative Dave Reichert (R-WA) with lead co-sponsor Representative Mike Thompson (D-CA). In the Senate the bill (S 1514) was introduced by Senator Rob Portman (R-OH) with lead co-sponsor Senator Bill Nelson (D-FL). The legislation has been previously introduced into Congress over the past several years, in very similar iterations but has failed to gain traction previously. However, this is the first time that we have simultaneous submission by both Congressional Chambers.  Given the momentum, this may be finally the year after almost a decade of attempts to pass this legislation.

The legislation is designed to accomplish the following:

  • Establish a threshold for settlements that are $25,000 or less wherein the workers' compensation law or plan will not be considered a primary plan for Medicare Secondary payer (MSP) purposes.  The $25,000 total settlement amount calculation is how CMS typically calculates the total settlement amount for WCMSA CMS submission purposes, which includes past wage replacement benefits, past settlements, payment for annuity, payment for conditional payments, attorney's fees, costs and future medical expenses. 

Commentary: Based on what is included in the calculation, very few cases would likely qualify for this threshold; however, as these settlements would be exempt from the MSP and considered secondary to Medicare, this provision of the legislation may score as a loss to the Medicare Trust Fund.

  • Establish that other settlements would not require a WCMSA:  1) Likely ineligibility for Medicare benefits within 30 months of the settlement; 2) No future medical expenses; and 3) medical remains open.

Commentary: Currently, a WCMSA is not required in either of the foregoing three scenarios pursuant to the WCMSA Reference Guide; therefore, this legislation would not currently change current settlement practices.

  • Establishes the “Qualified Medicare Set Aside” (QMSA) as a way to protect Medicare's interest: As stated within the legislation, a QMSA is created by taking into account the illness or injury involved, the age and life of the claimant, the reasonableness of and necessity for future medicals, the duration of and limitation of benefits payable, and the regulations and case law relevant to the State workers' compensation law or plan involved. 

Commentary: While the QMSA option provided within the legislation seems to offer some certainty to the WCMSA process, many questions/issues remain that may need to be addressed before finalizing the legislation:

  1.  The legislation requires that QMSAs have to be based on workers' compensation fee schedule. Currently, submitters of MSAs are also allowed to be price WCMSAs “usual and customary” as well. The legislation eliminates this pricing option for payers.
  2. As for the prescription Part D component of the MSA, the legislation does not state how that should be priced due to the fact that many states do not address pricing for pharmaceuticals in their workers' compensation fee schedules; therefore, this issue is unaddressed.
  3. The legislation does not address whether a MSA can still be submitted to CMS that does not meet the criteria of a QMSA (MSAs as they exist today); i.e., the way a current WCMSA is submitted to CMS today. Therefore, one might question what the incentive is to submit a QMSA to CMS for approval. Will CMS' approval of a QMSA offer a safe harbor to the workers' compensation carrier or plan? 
  • The legislation additionally allows for the workers' compensation plan or claimant to make an optional direct payment of the QMSA to Medicare. 

Commentary: There does not seem to be any enabling authority within the legislation for what Medicare would do with the QMSA funds. Additionally, we question what would happen if the parties cannot agree on whether they want to submit the QMSA funds to Medicare or not. Would this potentially stall the settlement?

  • If the parties do not elect to make an optional direct payment of the QMSA amount to Medicare, the parties may still opt to use self or professional administration of the QMSA.
  • The legislation additionally formally provides the right to formally seek reconsideration and appeal by an administrative law judge if the parties are unsatisfied with CMS' determination of the QMSA.

Commentary: Currently, there is no formal appeals process for WCMSA determinations. This component of the legislation would be favorable for the industry as it would allow for due process for those parties unsatisfied with CMS' determination on the amount required to protect Medicare's future interests.

The legislation was immediately referred to Energy & Commerce Committee and the Ways & Means Committee in the House.  Both committees share jurisdiction over Medicare which increases the difficulty of passing such legislation.  In the Senate, the bill was referred to the Finance Committee.  Each side will need to deliberate the bill.  To move it along, your support is necessary.  Call your representatives in the Senate and House to voice your position on this important legislation.

I will be following this legislation. The final bill can be found here

About the Author

Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP

Heather Schwartz Sanderson, Esq., MSCC, CHPE, CLMP, CMSP

Heather is Chief Legal Officer for Franco Signor LLC, the nation's compliance authority for Medicare Secondary Payer (MSP) matters. She has lectured on MSP compliance to the workers' compensation and liability insurance communities at conferences, associations, and individual offices nationwide. She is a regularly published author on court decisions and legislative reforms involving Medicare Set-Asides, conditional payments, and Mandatory Insurer Reporting issues. Understanding that compliance with the Medicare Secondary Payer Act can be at times complex and frustrating for those that handle claims with Medicare beneficiaries, Heather's goal is to speak and write with the primary goal being simple and understandable solutions to compliance. 

Heather can be reached at
Franco Signor's Blog can be found at:

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