The Center for Medicare & Medicaid Services (CMS) released Workers' Compensation Medicare Set-Aside (WCMSA) data for the fiscal year 2025, which examines tendencies and developments in WCMSA submissions over the past rolling five years. ExamWorks Compliance Solutions (ECS) wrote about the 2024 trends here. This comes in the wake of the industry being fully focused on Civil Money Penalties, mandatory WCMSA reporting, and an updated NGHP User Guide (version 8.2).
Despite an increase in the average settlement amount, CMS recorded a slight decline in total submissions from FY 2024 to FY 2025. This marks the third consecutive year of reduced WCRC recommendations completed, falling from 15,743 determinations in FY 2023, to 14,862 determinations in FY 2024, and then13,884 determinations in FY 2025. Possible contributors include but are not limited to CMS declining to review zero-dollar allocations, increased reliance of Evidence-Based reports, and carriers refining internal protocols to submit only highly complex claims.
Settlement and Allocation Amount Trends
While the total settlement amount average increased from $152,487.15 in FY 2024 to $161,251.19 in FY 2025, the total proposed WCMSA amount dipped slightly from $70,775.58 in FY 2024 to $69,627.64 in FY 2025. This is the lowest proposed WCMSA amount average since $70,439.43 in FY 2021. Despite these shifts, the WCMSA amount variance over the years is minimal, showing the industry’s consistency in allocating funds.
Approved vs. Proposed Variance
On average, the CMS-approved WCMSA amount for FY 2025 is $16,540.93 higher than the proposed WCMSA amount. This represents a 24% increase in the amount of the approved WCMSA, which is up 3% over the previous fiscal year and represents the highest percentage change in allocation amounts in the past 5 years. This widening gap underscores Medicare’s conservative approach to future care projections.
Prescription Allocations
As ECS highlighted last year, the ratio between the amount for prescription drugs has continued its steady decline. While the average medication allocation amount was $20,915.51 in FY 2021, the average medication allocation in FY 2025 was $17,500.78. This continued prescription allocation decrease demonstrates that Parts A & B medical treatment continues to rise. FY 2021 saw a recommended medical amount average of $59,825.43, which increased each of the subsequent years to $68,667.79 in FY 2025.
Bottom Line
While the industry has remained consistent in their approach to WCMSA amounts, Medicare’s increased WCMSA decision amounts underscores the importance of keeping up with treatment trends. Pharmacy programs have done a good job in driving prescription drug costs down and now the industry needs to address the escalating costs of healthcare and higher medical expenses.
ExamWorks Compliance Solutions continuously monitors regulatory and legislative developments in the Medicare Secondary Payer space. For further information about this Report or if you have any questions, contact Lou Porrazzo at Louis.Porrazzo@examworkscompliance.com.