Compromise or Percentage Medicare Set Aside?

Not according to Medicare.

As we have all come to learn, 42 C.F.R. §411.46(b) (2) of the Code of Federal Regulations provides that Medicare’s interest must be considered in the settlement of a workers’ compensation claim because “if a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized.”


42 C.F.R. § 411.47 addresses “apportionment of a lump-sum compromise settlement of a workers’ compensation claim” and “determining amount of compromise settlement considered as a payment for medical expenses.”

These two sections of the Code also delineate if/when Medicare may assume primary payment status and how/when Medicare can recover conditional (past) payments.  Certainly, Medicare can and routinely does assume primary payer status after a workers’ compensation settlement when a Medicare Set Aside (WCMSA) is established – provided it can be documented that the WCMSA funds were appropriately exhausted.

Some continue to espouse that a “compromise” or “percentage approach” to constructing and funding a Medicare Set Aside is appropriate based on interpretation of language found in these sections of the Code.

HOWEVER, here is what CMS has to say on the matter in their most recent WCMSA Reference Guide (V 2.9, January 2019):

15.2.1 Compromise of Future Medical Expenses

“CMS does not compromise or reduce future medical expenses related to a WC injury. Some submitters have argued that 42 C.F.R. § 411.47 justifies reduction to the amount of a WCMSA. The compromise language in this regulation only addresses conditional (past) Medicare payments. The CMS does not allow the compromise of future medical expenses related to a WC injury…”

A link to the WCMSA Reference Guide V 2.9 January 2019 can be found below:

WCMSA Reference Guide V 2.9 January 2019

Rather than an ill-conceived compromise or percentage WCMSA, a better approach to adequately consider and protect Medicare’s interests is to work with defense counsel, your vendor partners and all stakeholders to address and – when & where appropriate – reduce WCMSA cost-drivers.

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