NCCI Examines Medicare Set-Asides (MSAs) and Workers Compensation

Posted Date: September 15, 2014

Industry InformationResearch

Some workers compensation claimants are eligible for Medicare benefits, or will become eligible in the near future. By law, Medicare is a secondary payer for work-related injuries—workers compensation should pay for medical services for such injuries. Workers compensation insurers (including self-insureds) are therefore required to protect Medicare’s interests when settling claims.

In 2013, the Centers for Medicare & Medicaid Services (CMS) approved $1.8 billion of workers compensation Medicare Set-Asides (MSAs). (An MSA is a fund established to pay future work-related-injury medical costs that might otherwise be paid by Medicare.)

Using a sample of proposed workers compensation settlements whose MSAs have been reviewed by CMS, this NCCI research report looks at:

  • Demographics related to MSAs, such as:
    • The distributions of amounts of MSAs and total settlements that include MSAs
    • The distributions of ages of claimants
  • Aspects of the CMS review process, such as:
    • The length of time from submission to CMS approval
    • The relation between submitted and CMS-approved MSA amounts

Key Findings

  • After a period of dramatic lengthening, CMS’s processing time for MSAs has recently declined
  • The ratio of CMS-approved MSA amounts to submitted MSA amounts has declined over time
  • The differences between proposed and approved MSA settlements have been largely due to prescription drug costs
  • Most MSAs are for claimants who are Medicare-eligible at the time of settlement
    • Most of these claimants are Medicare-eligible because they have been on Social Security Disability for at least two years
  • MSAs make up about 40% of total proposed settlements
    • Of this 40%, prescription drugs make up half