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The Takeaway

Those who settle personal injury claims with Medicare beneficiaries will benefit by checking out our summary of updates that the Centers for Medicare & Medicaid Services (CMS) has made to its Medicare Secondary Payer requirements, including:

• when CMS will/will not impose Civil Money Penalties (CMP) for not reporting settlements
• additional reporting requirements for Workers Compensation Medicare Set Aside Arrangements (WCMSA)

CMS Acknowledges Unspecified Exclusions to MMSEA §111 Reporting Requirements

In October 2023, CMS published its Final Rule detailing circumstances when it will impose civil money penalties (CMP) for not reporting settlements, judgments, awards, or other payments that resolve injury claims by Medicare beneficiaries (settlements). (See our blog post of March 26, 2024 for an analysis of the protocols established in that Final Rule). The Final Rule contains important recognition that CMS may create additional exclusions that negate the need to report otherwise reportable settlements. CMS included similar language in its Non-Group Health Plan MMSEA §111 User Guide (User Guide), which was published shortly after the Final Rule and has been included in all subsequent versions.

In the preamble to the Final Rule, CMS details the thought process that underlies the provisions. It also provides guidelines for when it would not impose penalties for failing to report. One of those guidelines states: “A CMP is not imposed in the following situations: … An NGHP [Non-Group Health Plan] applicable plan complies with any reporting thresholds or any other reporting exclusions.” [emphasis added].

In January 2024, CMS issued version 7.4 of its User Guide. This version adds new guidance that further illustrates CMS’ position on this issue. The new language states:

“Note: There are certain specific circumstances under which CMS may grant extensions, exemptions, or otherwise alter the Section 111 reporting obligations. These situations are always at the discretion of CMS. The alternative reporting processes addressed by these extensions, exemptions, or alterations are considered by CMS to satisfy the S111 reporting requirements described within this user guide, where applicable.”

Almost a decade ago, CMS recognized the Garretson Resolution Group Asbestos Malignancy Alternative Resolution Process (AMP) (now managed by Epiq) as a vehicle to resolve its Medicare Secondary Payer reimbursement claims arising from alleged asbestos exposure injuries. Many involved in asbestos exposure injury cases are waiting to see if CMS will designate the resolution of asbestos injury claims through the AMP as one of the exclusions to the MMSEA §111 reporting requirements. (HeplerBroom is monitoring this topic and will issue updates on any relevant developments.)

Additional Resources to Help Navigate the Civil Money Penalty Landscape

CMS has added a new tab—“NGHP Civil Money Penalties”[1]—to its “Mandatory Insurer Reporting (NGHP)” webpage. This new tab includes an overview of the process as well as links to download both the Final Rule (as published in the Federal Register) and a flowchart illustrating the various steps in determining whether a CMP will be assessed. CMS also added a new section—“Civil Money Penalties”[2]—to its User Guide. This section further explains Civil Money Penalty rules.

Those who resolve injury claims could find using these resources helpful in avoiding costly mistakes.

CMS Issues Several New Versions of MMSEA §111 NGHP User Guide

In a flurry of publishing activity last year and early this year, CMS issued six updated versions of its MMSEA §111 Non-Group Health Plan User Guide.

Version 7.4, which acknowledges the possibility of CMS recognizing reporting extensions, exemptions, or alterations, was discussed above. The sections of Version 7.5 (issued in April 2024) that add information pertaining to the upcoming mandatory reporting of certain additional information about Workers Compensation Medicare Set Aside Arrangements will be discussed later in this post.

Version 7.5 also gave notice that for 2024, CMS would leave its minimum dollar reporting threshold for liability, no fault, and workers compensation settlements at $750 for settlements of injury claims based on physical trauma. The User Guide further indicates that settlements of injury claims based on non-physical trauma (e.g., ingestion, implantation, and exposure cases) will continue to have no minimum dollar threshold. All settlements of these types of claims involving Medicare beneficiaries should be reported.

In version 7.6 (issued in July 2024), CMS provides an “expanded and specific definition” of a cumulative injury for the MMSEA §111 reporting analysis.

Important guidance on a reporting exclusion was introduced in version 7.7 (issued in October 2024). In this version, CMS clarifies that settlement of claims brought “entirely under the wrongful death theory of liability, which do not claim and release medicals, or have the effect of releasing medicals, are not required to be reported because Medicare would have no recovery claim against such a payment.” This clarification resolved a lingering question many entities had about the reportability of this type of settlement.

Version 7.8 was published in December 2024. It adds a section describing Workers Compensation Medicare Set-Aside Arrangements (WCMSA). This new part indicates that a WCMSA can be used to allocate a portion of a settlement for the cost of future injury-related medical expenses. It also states that the WCMSA must be fully exhausted before CMS will resume paying for a beneficiary’s medical care related to the injury that was the subject of the settlement.

In version 7.9 (issued in January 2025), CMS reiterates that the minimum dollar reporting threshold for 2025 will remain unchanged from the 2024 amounts. This threshold remains at $750 for trauma-based injury settlements. Settlements of this type of injury claim that are below this dollar threshold do not need to be reported. However, as in years past, settlements involving non-trauma-based injury settlements (i.e., ingestion, implantation, and exposure) have no minimum dollar threshold. Any settlement with a Medicare beneficiary involving this type of claim should be reported, regardless of the amount.

(These updated versions of the User Guide contain other additions or revisions outlined at the beginning of each Chapter of each subsequent version. Please refer to those summaries and the applicable sections for further information about changes published in each version of the User Guide.)

Recent Developments in Workers’ Compensation Medicare Set-Aside Arrangements

WCMSA Reporting. An important change is looming in this area. In October 2024, a voluntary testing program began for reporting additional information when a WCMSA is utilized to pay for a claimant’s future injury-related medical care. Starting April 4, 2025, reporting this extra information will become mandatory.

Those who report will be required to include seven new data elements (in addition to the other information that already was to be reported). The new items to be reported are:

1. the MSA amount
2. number of years it will be in effect
3. whether funded in a lump sum or through periodic payments
4. amount of the initial deposit
5. future anniversary deposit amounts
6. CMS’ case number for MSAs that were previously submitted under its preapproval process
7. the EIN of any professional administrator who will oversee the MSA

Those who expect to report workers’ compensation settlements on or after April 4, 2025, are encouraged to avail themselves of CMS’ training resources and testing opportunities.

Pre-Approved WCMSAs. Some time ago, CMS established a voluntary program where those settling claims with Medicare beneficiaries could submit to CMS a proposed MSA for preapproval before settlement. Under this program, CMS reviews MSAs created under a variety of claim types, including workers’ compensation claims.

CMS published Version 4.2 of its Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide (Reference Guide) in January 2025. This latest version introduces several significant developments.

First, CMS announced that effective July 17, 2025, it will no longer review so-called Zero Dollar MSAs (those where none of the settlement proceeds is needed or allocated for future medical expenses). Since CMS will no longer review this type of MSA, it’s no longer necessary to submit them to CMS.

Second, Section 4.2 of the Reference Guide (“Indications That Medicare’s Interests Are Protected”) also provides valuable guidance to those deciding whether to fund an MSA. This Section gives insight into the circumstances where CMS considers its secondary payer interests protected. It states that:

A [sic] WCMSA is not necessary under the following conditions because when they are true, they indicate that Medicare’s interests are already protected:

1. The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement); and
2. There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment.

These conditions may be demonstrated through one of the following:

• • The individual's treating physician documents in medical records that to a reasonable degree of medical certainty the individual will no longer require any treatments or medications related to the settling WC injury or illness; or
  • The workers’ compensation insurer or self-insured employer denied responsibility for benefits under the state workers’ compensation law and the insurer or self-insured employer has made no payments for medical treatment or indemnity (except for investigational purposes) prior to settlement, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future or past medical or pharmacy services as a condition of settlement; or
  • A Court/Commission/Board of competent jurisdiction has determined, by a ruling on the merits, that the workers’ compensation insurer or self-insured employer does not owe any additional medical or indemnity benefits, medical and indemnity benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services; or
  • The workers’ compensation claim was denied by the insurer/self-insured employer within the state statutory timeframe allowed to pay without prejudice (if allowed in that state) during investigation period, benefits are not actively being paid, and the settlement agreement does not allocate certain amounts for specific future medical services.

In addition, if a settlement leaves WC carriers with responsibility for ongoing medical and prescription coverage once the settlement funds are fully spent, then a WCMSA is not necessary.

[1] https://www.cms.gov/medicare/coordination-benefits-recovery/mandatory-insurer-reporting-nghp/nghp-civil-money-penalties

[2] See Chapter 5.1 in Chapter III on Policy Guidance:  https://www.cms.gov/files/document/mmsea-111-january-6-2025-nghp-user-guide-version-79-chapter-iii-policy-guidance.pdf