Employers settling workers’ compensation claims with Medicare beneficiaries are required to take into consideration Medicare’s potential interest. Settling parties obtain a Medicare Set-Aside (MSA) report that designates a portion of the settlement to be set-aside for future medical treatment. This process is to ensure that The Center for Medicare and Medicaid Services (CMS) is not paying for medical treatment that should have been covered by a workers’ compensation claim.
CMS announced that the rules for reporting workers’ compensation settlements involving beneficiaries are being changed. Effective April 4, 2025, all workers’ compensation claim settlements where the injured worker is, or was, a Medicare beneficiary, and medical treatment and costs associated with the claim are being settled, MUST be reported to CMS.
The new rules require that the following information must be reported to CMS:
- MSA Total Amount
- MSA Period (number of years MSA is expected to cover)
- Funding Choice (lump sum or structured payment)
- Initial Seed Money (if structured payment)
- Annual Deposit Amount (if structured payment)
The new reporting requirement applies to all settlements involving a Medicare beneficiary and includes settlements that:
- Do not meet the CMS requirement for review
- Includes evidence-based MSAs
- Settlements where no money is allocated for future medical treatment
Although settlements with beneficiaries now must be reported to CMS, the criteria for determining when MSAs should be submitted to CMS for approval remains intact.
Failure to comply with CMS’ rules may result in civil money penalties assessed against the employer. Hence, employers should incorporate the new reporting requirements into settlements beginning April 4, 2025.