Voluntary testing for TPOC/WCMSA reporting starts October 7, 2024

An important reminder for Section 111 Non-Group Health Plan Responsible Reporting Entities (NGHP RREs): CMS's voluntary testing for its new TPOC/WCMSA reporting process starts October 7, 2024.

This article outlines the importance of this date, what it means, and provides links to helpful Verisk resources, as follows:

Key Date - October 7, 2024

October 7, 2024 is the date that voluntary NGHP RRE testing for CMS's new TPOC/WCMSA reporting process starts. CMS has instructed NGHP RREs interested in testing to coordinate testing with their assigned BCRC EDI Representative and that test files should be submitted utilizing the same submission method which the RRE utilizes to submit their production Section 111 files.^[1] Further, per CMS, NGHP RREs may utilize the test beneficiary data which is available for download via the Section 111 COB Secure Website (NGHP RREs must be logged into the website in order to access this data).^[2]All test files submitted as of October 7, 2024 will be subject to the new WCMSA related error codes outlined below.^[3]

As part of this new process, NGHP RREs will be required to submit the WCMSA amount, WCMSA funding method (lump sum or annuity), initial deposit amount, anniversary (annual deposit amount), and the WCMSA period.^[4]The WCMSA case control number and professional administer EIN will be optional fields.[5] Click here to view these data fields and CMS's instructions in more detail as outlined in CMS's Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter V, Appendix A. CMS has also introduced new Section 111 error codes as part of this new process referenced at CMS's Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter V, Appendix G.^[6]

General TPOC/WCMSA Refresher

Under CMS's new TPOC/WCMSA reporting requirements NGHP RREs will need to report certain WCMSA data points for all settlements involving Medicare beneficiaries as part of Section 111 TPOC reporting.^[7] This new reporting requirement starts April 4, 2025 and is prospective in nature, meaning that the reportable WCMSA data points are only required for coverage reports with TPOC dates of April 4, 2025, or later.^[8]As noted above, voluntary RRE testing for this process starts October 7, 2024.^[9]

In terms of the data reported as noted above, CMS has indicated that it will mark the Medicare "Common Working File" (CWF) with a WCMSA MSP record if the TPOC includes a WCMSA. If a WCMSA MSP record exists, CMS notes that this represents that WCMSA funds are available to pay primary and Medicare may appropriately deny payment for treatment related to the workers' compensation injury and settlement until the funds are exhausted. ^[10]

The scope of CMS's new policy is significant as RREs will be required to report WCMSA data in a variety of different contexts where WCMSAs are utilized concerning settlements involving Medicare beneficiaries. Specifically, RREs will be required to report WCMSA data points regarding WC settlements involving Medicare beneficiaries that include a WCMSA that has been submitted to, and approved by, CMS as part of the agency's voluntary $25k WCMSA review threshold.^[11]

In addition, and importantly, RREs will also need to report non-submit MSAs, evidence based MSAs (EBMSAs), and similar arrangements involving settlements with Medicare beneficiaries that are not submitted to CMS for approval.^[12]Further, WCMSAs included in settlements with Medicare beneficiaries that do not meet CMS's WCMSA $25k review threshold (a "non-threshold MSA") must also be reported, as well as situations where ongoing responsibility for medicals (ORM) continues for some injuries associated to the claim but not others.^[13]Reporting will also be required regardless of the WCMSA amount.^[14] While CMS will accept TPOC data with the MSA Amount reported as $0, it reserves the right to review and audit the data if it suspects cost shifting to Medicare may have occurred.^[15]CMS has also noted that it reserves all potential recourses in instances of non-compliance, including possible False Claims Act actions.^[16]

In the big picture, it appears that the CMS's general objective behind its new TPOC/WCMSA reporting is preserving CMS's secondary payer status. On this point, CMS states, in part, that "[c]ollection of [this] information is necessary to assist Medicare in making appropriate determinations concerning coordination of benefits under U.S.C. 1395y(b)(8)(ii), since Medicare should not be a primary payer for future medical services related to a WC injury as specified in the WC settlement as per 42 CFR 411.46."^[17]

Toward this objective, CMS 's new TPOC/WCMSA reporting process will give CMS unprecedented visibility into the use (and non-use) of WCMSA arrangements as part of WC settlements and will give CMS the key elements it needs to evaluate WCMSA funding and compliance at its fingertips - which up until this point, it has lacked.

In this regard, insurers should keep in mind that CMS's WCMSA review thresholds are not safe harbors and CMS will now have visibility into the parties' inclusion (or non-inclusion) of WCMSAs in this context.^[18]

From another angle, the fact that non-submit MSAs and EBMSAs must also be reported raises important considerations regarding whether CMS will use this new reporting process to scrutinize these arrangements per Section 4.3 of CMS's WCMSA Reference Guide. On this point, in Section 4.3 CMS states, in part, that it views "the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement."^[19]In addition, CMS states that it "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 as defined in Section 10.5.3 of this reference guide, less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses, unless it is shown, at the time of exhaustion of the MSA funds, that both the initial funding of the MSA was sufficient, and utilization of MSA funds was appropriate."^[20]

Up until this point, CMS has lacked the ability to identify or track non-CMS approved MSAs or Evidence based MSAs - however, CMS will now "know" about these arrangements as part of its TPOC/WCMSA reporting process. For insurers currently using non-submit approaches (or for those considering non-submission), the above consideration points should be kept in mind going forward, especially if the non-submit/EBMSA funds are regularly exhausting earlier than anticipated.

Verisk Resources

Please see our recent article which outlines important considerations regarding the WCMSA aspect of this process and information on how Verisk's services can help.

Questions?

Please do not hesitate to contact the authors if you have any questions regarding the above or how Verisk can help you address Section 111 CMPs and CMS's new TPOC/WCMSA reporting process.

[1] CMS's TPOC/WCMSA Webinar, April 16, 2024.

[2] Id.

[3] Id.

[4] Id. Of note, upon receipt of a Section 111 submission containing WCMSA data, CMS will post a WCMSA record to their Common Working File (CWF) database which will prevent Medicare from making primary payments in relation to any ICD codes connected to the WCMSA.[iv] CMS also reiterated that, upon creation of the CWF WCMSA record, it would send notification to the associated beneficiary indicating the process for attestation and exhaustion.

[5] CMS's TPOC/WCMSA Webinar, April 16, 2024.

[6] As part of CMS's TPOC/WCMSA webinar held on April 16, 2024, CMS provided information regarding which error codes are considered "hard errors" versus "soft errors."Specifically, CMS stated that all new WCMSA related error codes (CW01 - CW12) will be treated as "hard errors" resulting in a rejection of the coverage record submission with one exception. The one exception will be the error code correlating with the Professional Administrator EIN field (Field 43 - Error Code CW09) which will be treated as a "soft error." In other words, receipt of a CW09 error will not result in an outright rejection of the RRE's coverage report. However, all other WCMSA related error codes will result in a rejection of the submitted coverage report. This was particularly notable as CMS had not previously specified, via their prior webinar or their subsequent published documentation, whether the newly introduced WCMSA related error codes would be classified as "hard errors" vs "soft errors."

As part of this webinar, CMS also discussed potential for assessment of Section 111 civil money penalties (CMPs) in relation to its new TPOC/WCMSA reporting process. In this regard, CMS indicated that there would be no CMPs directly related to the reporting of the WCMSA data elements. However, they highlighted the fact that a rejection of an RRE's TPOC filing due to WCMSA related errors could potentially impact CMPs if that rejection prevented the RRE's coverage record submission from being reported within the one (1) year timely filing deadline outlined via the agency's CMPs final rule regulations. Additionally, CMS indicated, as also outlined within the agency's CMPs final rule regulations, that any untimely TPOC reports resulting from a rejection due to WCMSA related errors would not result in the assessment of a CMP for two full reporting quarters subsequent to April 4, 2025 effective date of the new requirements.

[7] "TPOC" is the abbreviation for "total payment obligation to the claimant." Very generally, under CMS's TPOC reporting trigger, reporting is required upon claim resolution (or partial resolution) through a settlement, judgment, award, or other payment for cases in which the claimant is/was a Medicare beneficiary as of the TPOC date and where medicals were claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals. Under CMS's current thresholds, physical trauma based liability, no-fault and workers' compensation settlements greater than $750 are required to be reported under the Section 111 reporting process. The $750 threshold does not apply to settlements involving exposure, ingestion, or implantation cases. See generally, CMS's Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter III and IV, Section 6.4.4.

[8] See, CMS's Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter III, Section 6.5.1.1. As part of this section, CMS states, in pertinent part, "For workers' compensation records submitted on a production file with a TPOC date on or after April 4, 2025, Workers' Compensation Medicare Set-Aside Arrangements (WCMSAs) must be reported." Id. See also, CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSES) of 2007, Technical Change Alert: Change to Workers' Compensation Reporting. See, CMS's February 23, 2024 Alert.

[9] CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSES) of 2007, Technical Change Alert: Change to Workers' Compensation Reporting.

[10] CMS's Question and Answer Session (April 25, 2024). In addition, CMS has stated that once the WCMSA funds are exhausted and Medicare is made aware, the marker may be removed along with the associated restrictions on Medicare payments. Additionally, CMS has indicated that it plans to develop specific guidelines for reviewing situations where the MSA Amount is reported as $0 which, per CMS, will likely be prompted by what it termed as "a clear indication" that a lack of funding for future medicals appeared to be inappropriate. Id. CMS also suggested that, in this situation, it could decide to pursue recovery and apply a WCMSA ("W") record to CWF upon that further review. Id. Further, CMS stated that it reserves the right to review/audit these types of submissions and suggested that it might identify scenarios where it feels there is an inappropriate lack of consideration/funding for future medicals as part of a WCMSA. Id.

[11] CMS's TPOC/WCMSA Webinar (November 13, 2023). Regarding CMS's "$25k WCMSA review threshold," CMS states as follows in its WCMSA Reference Guide: "CMS will review a proposed WCMSA amount when the following workload review thresholds are met: The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00." CMS's WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1 (CMS's emphasis). In terms of what constitutes the "total settlement amount," CMS directs the reader to Section10.1: Section 05 - Cover Letter (E. Settlement Details) which can be viewed here.

[12] CMS's TPOC/WCMSA Webinar (November 13, 2023). See also, CMS's Section 111 NGHP User Guide (Version 7.5, April 1, 2024), Chapter III, Section 6.5.1.1, Chapter IV, Sections 6.1 and 6.4.4, and Chapter V, Appendices A and G.

[13] Id.

[14] Id.

[15] CMS's TPOC/WCMSA Question and Answer Session, April 25, 2024.

[16] CMS's TPOC/WCMSA Webinar (April 16, 2024).

[17] CMS Alert (February 23, 2024), Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007, Technical Change Alert: Change to Workers' Compensation Reporting.

[18] On this point, CMS has long stated that its "[review] thresholds are created based on CMS' workload, and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare's interests in all WC cases and ensure that Medicare pays secondary to WC in such cases." CMS's WCMSA Reference Guide (Version 4.0, April 1, 2024), Section 8.1. Along these lines, CMS further references its review thresholds as "workload management tool[s] and not … substantive dollar or 'safe harbor' threshold[s]."Id. To illustrate this point, CMS actually includes an example in its Reference Guide involving a settlement with a Medicare beneficiary that does not meet its $25k WCMSA review threshold, noting in that example that the parties "must consider CMS's future interests" even though the settlement does not meet its review threshold. On this point, CMS provides the following example: "A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim[ant] is offered [a] settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS' future interests even though the case would not be eligible for review.Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement ($17,000.00)." (authors' emphasis). Id.

[19] CMS's WCMSA Reference Guide, Version 4.0 (April 1, 2024), Section 4.3.

[20] Id. While CMS did clarify that it may consider and accept evidence that an EBMSA or a Non-Submit MSA funding was sufficient, it has not provided any metrics or guidance regarding how that is evaluated.

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