How Medicare Set-Asides Affect Spinal Cord Stimulator Settlements in California
Key Takeaways: No California statute requires a Medicare Set-Aside in every spinal cord stimulator settlement, but federal Medicare rules often make one a practical necessity when a Compromise and Release closes future medical care for a worker who receives Medicare or expects to soon. A stimulator brings ongoing costs such as programming, battery or generator replacement, and revision surgery. CMS generally reviews proposals when a Medicare beneficiary settles for more than $25,000, or when a worker reasonably expects Medicare within 30 months and settles for more than $250,000. These are review thresholds, not a safe harbor. CMS’s WCMSA Reference Guide 3.5 discourages non-submit and evidence-based MSAs, raising the risk of underfunding device care. A Stipulated Findings and Award usually keeps medical care open and lowers MSA concerns. Because the WCAB must approve a Compromise and Release and closed medical care generally cannot be reopened, workers should carefully evaluate their options before settling.
Whether you need a Medicare Set-Aside (MSA) for a spinal cord stimulator settlement generally depends on how your case settles, whether you receive Medicare or are likely to soon, and how much lifetime medical value is being closed out. MSA questions often arise when an injured worker agrees to a Compromise and Release that ends the employer’s duty to pay for future care. A spinal cord stimulator is not a one-time expense. It often requires implant surgery, ongoing programming, battery or generator replacement, and sometimes revision surgery. If Medicare’s interests are not properly considered when you close that care, Medicare may refuse to pay for injury-related treatment and you could end up paying for it yourself.
If a serious back or spinal injury has left you relying on a spinal cord stimulator, the choices you make at settlement can affect your medical care for decades. Kampf, Schiavone & Associates represents injured workers in San Bernardino and across the Inland Empire. Call (909) 885-1522 or contact us now to talk through your settlement options before you sign anything.
Why Spinal Cord Stimulators Raise the Stakes in a Workers’ Comp Case
A spinal cord stimulator usually signals a severe, long-term injury. California law generally treats the device and its upkeep as medical care your employer may have to provide when it is reasonably required. Under Labor Code § 4600(a), employers must provide medical and surgical treatment, supplies, and apparatuses, including orthotic and prosthetic devices, when reasonably required to cure or relieve the effects of a work injury. That is judged under the Medical Treatment Utilization Schedule (MTUS) and utilization review.
The Real Lifetime Cost of a Stimulator
The cost of a stimulator goes well beyond the first surgery. Over a lifetime, expenses may include:
- A trial period to test whether the device relieves pain
- Surgery to implant the permanent system
- Regular programming and follow-up visits
- Battery or generator replacement procedures
- Revision surgery if leads move or hardware fails
- Medications and imaging related to the device
These expenses often make up much of the future medical value of a claim, a major factor in deciding whether an MSA is needed and how large it should be.
When the Insurer Refuses to Pay
Under Labor Code § 4600(a), if the employer neglects or refuses to provide reasonable treatment, it may be liable for the reasonable expense incurred by or on behalf of the worker in getting that care. Disputes over medical necessity, however, generally must go through utilization review and Independent Medical Review (IMR), and an unchallenged denial can become binding.
Stipulated Award or Compromise and Release: Where MSA Issues Arise
California workers’ compensation claims generally resolve in one of two ways, and the choice can affect whether an MSA becomes a serious concern. Labor Code § 4061(h)(2) references both a Stipulated Findings and Award under Labor Code § 5702 and a Compromise and Release under Labor Code §§ 5000 and following.
| Settlement Type | Future Medical Care | MSA Concern |
|---|---|---|
| Stipulated Findings and Award (Lab. Code § 5702) | Usually stays open; insurer keeps paying for reasonable care | Generally lower, since the insurer remains responsible |
| Compromise and Release (Lab. Code §§ 5000 et seq.) | Usually closed in exchange for a lump sum | Higher, especially when stimulator maintenance and replacement are being closed |
With a Compromise and Release that closes future medical care, you generally become responsible for paying for future stimulator care out of your settlement. If you are on Medicare or expect to be, Medicare expects the part of the settlement meant for injury-related care to be used before it pays. An MSA is the tool parties often use to set aside those funds. For more on the tradeoffs, read our guide on settling a spinal injury claim for future medical care.
💡 Pro Tip: Before you agree to close future medical care, ask your treating physician to document the expected replacement schedule for your stimulator’s battery or generator. Specific timelines can make future cost estimates harder to dispute.
Do You Need an MSA in a Spinal Cord Stimulator Workers Comp Settlement?
No California statute requires every spinal cord stimulator workers comp settlement to include an MSA. Federal law also does not require one or require CMS submission, but federal Medicare rules can make one a practical necessity in many cases. Under the Medicare Secondary Payer Act, Medicare is not supposed to pay for care that a workers’ compensation settlement was meant to cover. The Centers for Medicare & Medicaid Services (CMS) will review a proposed set-aside when the worker is already a Medicare beneficiary and the total settlement is more than $25,000, or when the worker reasonably expects Medicare entitlement within 30 months and the total settlement is more than $250,000. These numbers only decide when CMS will review a proposal. They are not a safe harbor.
CMS Is Cracking Down on "Non-Submit" MSAs
CMS has signaled that skipping formal review carries more risk than before. The agency’s updated WCMSA Reference Guide 3.5 specifically discourages "non-submit" MSAs, where parties set aside money for future care without submitting the allocation to CMS. It also targets Evidence-Based MSAs (EBMSAs), which calculate amounts using clinical evidence or treatment guidelines rather than CMS’s own methodology.
This matters for stimulator cases because device-related care is expensive and easy to undervalue. An EBMSA might argue that a battery replacement or revision is unlikely, shrinking the set-aside. If CMS later decides the set-aside was too small, Medicare may refuse to pay for injury-related care until the worker has spent settlement funds on that care. Submitting the set-aside to CMS may help protect Medicare coverage.
When a Set-Aside May Not Be Needed
Some workers may not need a formal MSA, depending on the facts. If future medical care stays open under a Stipulated Award, the insurer generally remains responsible for stimulator care. Workers with no reasonable expectation of Medicare within 30 months may also face fewer MSA concerns. Each case should still be reviewed individually.
How Treatment Disputes Shape the Value of Your Settlement
Whether your stimulator has been approved can directly affect how it is counted in future medical costs and in any MSA. If utilization review denies a trial or permanent implant, you may appeal through IMR. Strict deadlines apply, generally 30 days from service of the denial. Under Labor Code § 139.5(d)(5), neither the reviewing physician nor the independent review organization may have any material professional, familial, or financial affiliation with the employer, insurer, requesting physician, treating institution, or the developer or manufacturer of the proposed treatment.
Challenging an improper denial can matter long before settlement talks begin. A denied stimulator may be left out of cost projections, lowering both your settlement value and any MSA allocation. A strong medical record, with clear documentation of failed conservative care, may help support approval.
The Insurer’s Reserve Can Offer Clues
Insurers set reserves that estimate what a claim may cost, and those numbers can reflect projected device expenses. Under Labor Code § 3761(c), an insurer must give the employer, upon request, a written report of the reserve amount, including an itemization of estimated expenses. This right belongs to the employer, not the injured worker. In high-cost implant cases, the reserve may account for lifetime device care, which can help show whether an offer is fair.
Judicial Oversight Protects Injured Workers
A Compromise and Release in California is not just a private agreement. It must be approved by the Workers’ Compensation Appeals Board (WCAB). Before approving it, the WCAB decides whether the agreement is adequate (Lab. Code § 5002). Under Labor Code § 4061(h)(2), the appeals board must first decide whether the agreement is in the best interests of the employee and whether proper procedures were followed in determining the permanent disability rating. For a worker with a stimulator, that review may include whether the money for future care, including any MSA allocation, is enough to cover expected device care.
Additional procedural protections apply in certain situations. Under Labor Code § 3761(b)(1), when an employer has notified its insurer in writing that no compensation is owed, the appeals board may approve a Compromise and Release only if the employer received notice of the hearing at least 15 days before board action. Labor Code § 4061(h)(2) also directs the Administrative Director to provide a form explaining each settlement option, its potential advantages and disadvantages, and how to dispute the rating.
💡 Pro Tip: Read the settlement options notice carefully and write down questions before your hearing. Once a Compromise and Release is approved, reopening closed medical care is generally very difficult.
Protecting Your Future When You Live With a Spinal Injury
Workers who rely on stimulators often face permanent limits on their ability to work, and settlement must account for that reality. Losing both earning capacity and lifetime medical coverage in one settlement can be devastating if the numbers are wrong. A spinal cord stimulator workers comp settlement lawyer can help evaluate future costs, MSA exposure, and whether keeping medical care open makes more sense.
Frequently Asked Questions
1. Is a Medicare Set-Aside legally required in California?
No California statute or federal statute specifically requires an MSA in every case. However, federal Medicare Secondary Payer rules may make an MSA advisable when a Medicare beneficiary, or someone reasonably expected to become one, closes future medical care.
2. Can I keep my stimulator care open instead of closing it?
In many cases, yes. A Stipulated Findings and Award generally keeps future medical care open, so the insurer generally remains responsible for reasonable stimulator treatment, subject to utilization review.
3. What happens if my MSA runs out?
If the MSA was properly funded and spent only on Medicare-covered, injury-related care, Medicare should generally begin covering those expenses once the account is properly exhausted. Keep records of how the money was spent. Misused funds can lead Medicare to deny coverage until the misused amount is replaced.
4. Why does CMS dislike non-submit MSAs?
CMS’s Reference Guide version 3.5 discourages non-submit and evidence-based MSAs because they bypass its formal review. Without CMS approval, Medicare is not bound by the parties’ allocation and may later decide that not enough money was set aside.
5. Does a denied stimulator still count in my settlement?
It may, depending on the circumstances. Successfully challenging a denial through IMR may make it easier to include the stimulator’s full cost in settlement and MSA calculations.
Making the Right Call Before Closing Future Care
Settling a claim involving a spinal cord stimulator requires a clear view of lifetime device costs, Medicare’s interests, and California’s settlement rules. A Compromise and Release can provide a lump sum, but it may also shift the burden of battery changes, revisions, and programming onto you.
You should not have to face these decisions alone while managing chronic pain and an uncertain future. The team at Kampf, Schiavone & Associates is ready to help injured workers with serious spinal injuries protect their long-term medical care and financial recovery. Call (909) 885-1522 today or schedule your consultation to get answers before you settle.
Disclaimer: This content is for informational purposes only and is not legal advice. Every case is unique, and results may vary. Consult an attorney about your specific circumstances.