Understanding MSA trends – and the CMS review process – can assist workers compensation carriers and administrators as they identify cost drivers. This NCCI 2018 research update builds on a September 2014 study that NCCI conducted on MSAs and is based on data from approximately 11,500 MSAs submitted to CMS between September 2009 and December 2015.
CMS’s processing times have declined since 2012 and more recently hit their lowest level since 2010. In 2015, the average MSA processing time was about 70 days, which is the lowest average processing time between 2010 and 2015. This is in sharp contrast to 2011 and 2012, when average processing times were much longer. Median processing times appear to be longer for the largest MSA submissions than for smaller MSA submissions.
Estimated future drug costs are the main reason for CMS requiring increases of MSA amounts. CMS generally requires larger percentage increases to MSAs when the submission amounts are smaller. For example, CMS has requested an average 51% increase when the submitted MSA is under $25,000, while it has only requested an average 6% increase when the submitted MSA exceeds $200,000. Across all sizes of submitted MSAs, estimates of future prescription drug costs for injured workers are the main reason that CMS requires increases.
The gap between approved and submitted MSAs appears steady between 2013 and 2015 mainly because of the decrease between approved and submitted prescription drug amounts. While the gap between approved and submitted amounts for Medicare Parts A and B amounts (covering hospital stays, office visits, and related services) appears stable between 2010 and 2015, the same could not be said for Part D amounts (covering prescription drug services). The gap between prescription drugs approved and submitted MSA amounts was rather large between 2010 and 2012, but has significantly decreased since then and appears to be stable since 2013. This stabilization is the main contributor to the steadiness in the overall MSA amounts between 2013 and 2015.
The larger the MSA, the larger the share of drug costs. Prescription drug shares typically increase as the MSA gets larger. MSA settlements above $100,000 are typically associated with more serious injuries, such as back injuries, limb or finger amputations, burns, or head trauma. Many of these claimants are experiencing chronic pain or depression, so it is not surprising that the majority of MSA settlement costs are for prescription drugs.
Most MSAs are for claimants who are Medicare-eligible at time of settlement. About 64% of claimants are eligible for Medicare, not because of age but because they have been on Social Security Disability for at least two years. Another 29% of claimants are eligible due to age, and about 7% are likely to become eligible within 30 months.
The largest percentage of MSA submissions occur four years after the work-related accident. Submissions gradually decrease after that, but it is not uncommon to have a submission 20 or 25 years after an accident. Very few MSAs are submitted in the same year as the accident.
Overall, MSAs represent more than 40% of total submitted workers compensation settlement costs. On average, 22% of the total settlement is for the portion of the MSA covering Medicare Part D (prescription drugs) and 20% is for the portion of the MSA covering Medicare Parts A and B (hospital stays, office visits, and related services). About 58% of the submitted total workers compensation settlement is for costs other than MSAs, typically including indemnity coverage, medical costs not covered by Medicare, and other expenses such as attorney fees.
More than half of MSA submissions involve an attorney. About 54% of the time, MSA claimants seek assistance from an outside attorney when establishing their MSA arrangements. About 46% do not. The involvement of outside legal counsel does not vary much based on whether the total submitted settlement amount is large or small.