Workers’ Compensation Review Contractor (WCRC) Missing the Mark in Enforcement of CMS Directives Regarding Zero Allocations
Heather Sanderson
September 26, 2017

Back in November of 2016, we blogged regarding the Workers’ Compensation Review Contractor (WCRC) introducing more stringent requirements for CMS approval of a zero Workers’ Compensation Medicare Set-Aside (WCMSA).

For a short period of time, the WCRC was requiring either a court order or treating physician statement to approve a zero MSA allocation. However, the WCRC retracted this policy just a few weeks later. At the time we blogged about this matter in November 2016, Franco Signor reiterated its position that the CMS MSA review process was always only intended for commutation cases, and not compromise cases where no settlement dollars are being provided for future medical expenses. For our prior blog, click here.

Just a few months ago, CMS issued an updated WCMSA Reference Guide on July 31, 2017 which included multiple changes to WCMSA reviews. Our prior blog on the updated WCMSA Reference Guide can be found here. We noted within our blog that the new Reference Guide seemed to indicate that CMS would now be requiring more stringent documentation, particularly requiring a court order issued after a hearing on the merits of the case to approve a zero allocation for a denied claim. Since the issuance of the Reference Guide, Franco Signor has observed that CMS has been implementing its stringent requirements laid out in the Reference Guide for zero allocations.

There are two scenarios wherein a zero WCMSA allocation would be appropriate: 1) The workers’ compensation claim is denied with no payments made; or 2) The treating physician determines that no future care is warranted.  But the User Guide essentially notes that the WCRC is unable to differentiate between what is accepted and what is denied in a claim; Because the CMS prices based upon what is claimed, released, or released in effect, the CMS must have documentation as to why disputed cases settle future medical costs for less than the recommended pricing.” 

One would conclude that legally binding documents under state law such as an Independent Medical Review decision (IMR), a UR that was not appealed, or a release from medical care from the treating physician would obviously meet the test outlined above, however, the foregoing binding decisions under state law is not universally accepted by the WCRC.  This predicament is leaving many submissions to be forced to a Re-Review request back to the same entity that failed to understand the binding nature of the documentation in the first place.

In one of our recent zero allocation submissions, the treating physician had issued a statement that no future care was required. However, CMS denied the zero allocation stating that because indemnity payments were issued, that the employer/carrier had accepted compensability for the workers’ compensation claim and issued a counter-higher.  It seems that the reviewer was confused as the reason for a zero allocation was never one of compensability- the employer/carrier had accepted the claim but no MSA was warranted as no future care was needed as documented in writing by the treating physician.

Another recent zero allocation submission clearly documented the denial of the workers’ compensation claim by the employer/carrier. In this zero MSA submission, the claim was fully denied with no payments ever made by the carrier/employer, however CMS denied the zero because the parties entered into a settlement agreement. In other words, because no “court order after a hearing on the merits of the case” was obtained, CMS denied the zero allocation request and issued a counter-higher. A common thread of frustration in the industry is that obtaining a court order is not always feasible, and even if it is feasible, it would vastly increase litigation costs and time to settle a claim.

We continue to maintain our position that the CMS approval process was not intended for zero allocations. Further, considering CMS’ recent document requests, confusion when reviewing zero allocations, and hiring of a new WCRC contractor, submission of denied compromise settlements with zero allocation amounts to CMS is not recommended as a best practice in the foreseeable future. Other defensible methods are available to protect Medicare’s interests in claims where a zero allocation is appropriate. Contact us to learn more at