The End of Below Threshold Letters

Medicare Set-Aside Blog on October 18, 2011
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CMS representative Frank Johnson has indicated that CMS will no longer be issuing “below threshold” letters on WCMSA submissions that do not meet the review criteria. Rationale for this move is that submitters should be well aware of the review criteria and issuing these letters has become a burden to the WCMSA review process. Fair enough.

 Now CMS has always said they will not issue verification letters per the ancient policy memo below:


DATE:  MAY 23, 2003

TO: All Regional Administrators

FROM: Director Center for Medicare Management

SUBJECT: Medicare Secondary Payer — Workers’ Compensation (WC) Additional Frequently Asked Questions – Questions raised are paraphrased below. This memorandum will be posted on the Centers for Medicare & Medicaid Services’ (CMS) website.

1.) What are the review thresholds set by the July 23, 2001 All Associate Regional Administrators (ARA) letter concerning WC Commutation of Future Benefits?

Answer: They state that to the extent a WC settlement meets both of the criteria (i.e., the settlement is greater than $250,000 AND the claimant is reasonably expected to become a Medicare beneficiary within 30 months of the settlement date), then a CMS-approved Medicare set-aside arrangement is appropriate. However, if a WC settlement is $250,000 or less OR where the claimant of that settlement is not reasonably expected to become a Medicare beneficiary within 30 months of the settlement date, then a CMS-approved Medicare set-aside arrangement is unnecessary.

Additional Information: Please note that the current review thresholds are subject to adjustment. The CMS reserves the right to modify or eliminate its review criteria if it determines that Medicare’s interests are not being protected.

2.) When an injured individual’s WC settlement does not meet the current review thresholds, will the Regional Offices (RO) provide the settling parties with “verification” letters confirming that approval of a Medicare set-aside arrangement is unnecessary?

Answer: No, the ROs will not provide “verification” letters. However, the CMS will honor threshold levels that are in effect as of the date of a WC settlement. (See the July 23, 2001 ARA letter concerning WC Commutation of Future Benefits.)

However, by issuing below threshold letters, CMS has effectively countermanded their May 23, 2003 statement becasue the letter does in fact verify that the settlement was not reviewable. According to Frank Johnson, no more. Note that CMS will not communicate on submissions made in error, so we recommend aggressive follow up on all cases to make sure nothing falls through the cracks.

Clients that want a piece of paper, ANY piece of paper from CMS, will have to be placated by a written statement from their MSA/MSP compliance providers. I smell a new cottage industry ready to spring up. Have Microsoft Word and a familiarity with the use of mathematical symbols? You too can be part of the exciting world of MSP compliance.