CMS Gets Tough on Unapproved MSAs– Until They Don’t

In January, 2022, CMS created an uproar when it published Version 3.5 of its Workers Compensation Medicare Set-Aside Reference Guide stating that it would essentially ignore “non-submit” or “evidence-based” Medicare Set-Aside allocations:

Unless an MSA is submitted and approved, CMS cannot be certain that Medicare’s interests are adequately protected. Therefore, CMS will treat any non-CMS-approved product as a potential attempt to improperly shift financial burden by denying payment for medical services related to the WC injuries or illness until the claimant demonstrates complete exhaustion of the entire settlement amount, less fees and costs, rather than a CMS-approved WCMSA amount.

CMS approval of an MSA was never required. Ten years ago, the LexisNexis Legal Newsroom for Workers Compensation Law published my article “Four Reasons To Avoid The CMS Approval Process For MSAs.” You can find an abstract of that article on this blog.

Then, the MSA industry created products known as “non-submit” or “evidence-based” MSAs. Since approval has never been required of any MSA, the purpose of this new version seemed to be to low-ball the MSA. CMS took notice.

If your MSA was priced correctly, they now say, it will be adequate to cover the injured worker’s medical expenses, and this will never be an issue. One problem with this approach is that injured workers do routinely exhaust their approved MSAs. Since MSA allocations do not account for inflation, they are likely to be depleted early; the younger the injured worker, the more likely the fund will be depleted.

CMS also took the position that if the MSA was paid via a structured settlement, Medicare wouldn’t pay a dime until every structured payment had been made. If the structure was set to pay for the life of the injured worker, that would never happen.

And Then They Backed Down

On March 15, 2022, CMS revised the relevant section to say:

CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement … less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses. . .

Administratively, CMS can more easily simply ignore unapproved MSA allocations rather than spend time reviewing them in order to exercise discretion. Line by line review takes time.

CMS has sent a message that it intends to crack down on settlements designed to avoid CMS review. We may see sterner pronouncements in future revisions.

How to Proceed

Think twice before choosing to forego the approval process when it is available. Don’t rely on an MSA allocation designed to short-change CMS.

Re-think your settlement agreements. If approval was not available or not pursued, consider including a what-if clause., This would provide that if CMS denies payment of a claim-related Medicare-eligible expense, the employer will provide counsel to defend the MSA allocation. In the short term, the employer would be responsible for the medical expense of the injured worker’s immediate needs, perhaps subject to a ceiling.

One can imagine that disputes could arise about what constitutes a claim-related Medicare-eligible short-term need. Include an agreement for alternative dispute resolution. But, holy-moly, nobody wants to keep litigating long after everyone thought the claim was fully and finally settled.

These dilemmas will probably force people to seek approval whenever it is available.

Which is just what the folks at CMS want.

Playing Devil’s Advocate

The litigation section of the California Lawyers Association recently published this bon mot:

“Mediators are expected to play the role of ‘Devil’s advocate,’ questioning the strength or viability of the various legal arguments being asserted by parties and/or their counsel. In this context, mediators may dive deeply into the law applicable to the underlying dispute (and defenses). The parties may provide sophisticated though conflicting analysis of that law in the mediation briefing and during the session.”

Maybe parties don’t want me to be the devil, but I was actually asked by one attorney to “knock heads together.”

If you are serious about settling your case, please contact me. We’ll come up with some ways to make it happen– perhaps devilish, perhaps angelic .


COVID-19 changed our lives in oh-so-many ways. Courthouses and government buildings shut, and we were forced to suddenly embrace virtual platforms like Zoom, GoToMeeting, WebEx and Microsoft Teams.

Now that restrictions are lifting, many of us don’t want to go back to our pre-pandemic business model. We want to keep working from home, at least some of the time.

And we want mediations to stay remote.

Efficient and Effective
Remote mediation relieved attorneys and claim professionals from coping with stressful and unproductive traffic jams. Decision-makers could call in from anywhere, avoiding the obstacle of the real decision-maker not being present at the mediation. Participants with a history of vitriolic interaction particularly liked the absence of close personal contact.The Secret Benefit of Remote Mediation
Shhh! What lawyers and adjusters really want to keep secret is that they like not sitting with their clients in caucus throughout the mediation.

In traditional mediation, the parties usually break into separate caucus rooms. The mediator acts as a shuttle diplomat, walking between the rooms to confidentially discuss offers and demands and to convey information in a way to facilitate settlement. When the mediator is not in the caucus room, lawyers, adjusters and clients can review what has happened and plan their next move.

And then they sit.

They make small talk. The lawyers, especially, try to charm their clients in a way likely to encourage further referrals.

Sometimes, contrary to instruction, clients bring children to the mediation. Lawyers and adjusters find themselves literally and figuratively baby-sitting their clients during periods which can stretch on for what feels like forever while the mediator talks to the people in the other room.

In contrast, in remote mediation, the mediator electronically moves participants who physically remain in their own offices or homes into virtual, separate caucus rooms. When not talking with the mediator or their own team, participants are free to engage in other activities so long as they remain fully available for the mediation. Suddenly, adjusters and lawyers found that they could attend to other (perhaps billable) work. Clients can work or attend to other obligations.

Will We Go Back?
Some negotiators maintain that being able to physically look one’s opponent in the eye and assess body language are critical. Research shows that we are all actually poor in correctly evaluating these supposed indicators.

Most mediation veterans want to keep things virtual and productive.