No More CMS Review of Zero WMSAs: What It Means for Settling Claims
by B. Smith
As of July 17, 2025, the Centers for Medicare & Medicaid Services (CMS) will no longer review zero-dollar Workers’ Compensation Medicare Set-Asides (WCMSAs) as part of the voluntary CMS review process. Although this change will impact some organizations more than others, it does not mean the end of zero-dollar WCMSAs. Understanding CMS guidelines and past approval practices is imperative to help prevent risk and exposure when settling claims with no monies put aside for future medical care.
CMS Zero-Dollar WCMSA Guidelines
Those of you who submitted zero-dollar WCMSAs to CMS for voluntary review know the strict scrutiny they were put under and the lack of guidance from CMS on these types of submissions. IMPAXX had over a 96% success rate when submitting Zero WCMSAs by understanding what was required for approval as well as what could prevent it. CMS has issued guidance in Section 4.2 of the Workers’ Compensation Medicare Set Aside (WCMSA) Reference Guide outlining when their interest would be protected and zero monies could be set aside for future injury-related care.
In Section 4.2, CMS states that a WCMSA is not necessary when:
a) 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
b) 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.
CMS then provides specific conditions that would demonstrate how the above criteria is satisfied, which includes treating physician reports of no further treatment, a full denial of benefits with no payments made on the claim and settlement documents that do not include such things as allocations for future care (this does not include payments made within a state statutory period where payment without prejudice is allowed under state law i.e., California), and court orders based upon a decision on the merits of the case.
CMS also adds that if a settlement leaves the medical open, a WCMSA is not necessary. Of note, CMS goes on to state that in addition to considering the above, entities should maintain documentation to support the allocation.
Zero-Dollar WCMSA Considerations
Although the guidance provided by CMS may seem fairly straightforward, there are nuances and every case is different. The specific language of Section 4.2 should be scrutinized and past practices of CMS understood before determining whether a zero-dollar WCMSA is applicable. Treating physician opinions in medical records must be clear and unambiguous and conform to the language noted by CMS above. Keep in mind that Medical legal exams do not meet this requirement. In addition, decisions from a court of competent jurisdiction cannot be based on the stipulation of the parties and must truly be a decision based on the merits of the case.
Denied claims can be much more involved, from detailed review of payment screens and consistent language in the settlement documents to supporting documentation and explanations. Looking at all elements together is important when determining if a zero-dollar WCMSA is the right option for your claim(s).
In addition, if the claimant is a Medicare beneficiary, there is a potential Section 111 Reporting obligation that should be considered as well. As of April 4, 2025, workers’ compensation insurers and self-insureds need to report the WCMSA amount when there is a settlement with a Medicare beneficiary that includes medicals, and the reporting threshold is met. The WCMSA amount needs to be reported even if the amount is zero. We know that CMS will be looking at this information and, as such, it is important that zero-dollar allocations are not only warranted but documented in the event CMS questions this lack of allocation.
Finally, keep in mind that submission of a WCMSA is never required and the new obligation of reporting WCMSA amounts as part of settlement did not in any way change the voluntary submission process. Many entities put aside zero dollars as part of settlement with (and without) submission of a WCMSA to CMS. The fact that submission of a zero-dollar WCMSA is no longer applicable does not mean that zero allocations are no longer appropriate. Each claim must be evaluated independently to determine if it meets the zero-dollar WCMSA requirements.
If you have any questions about recent changes from CMS regarding zero-dollar WCMSAs or would like to learn more about IMPAXX’s Zero-Dollar WCMSA solutions, please contact the IMPAXX Settlement Consulting team at [email protected].