WCMSA Trends: Key takeaways from FY2023 to FY2024
On November 25th, 2024, The Centers for Medicare & Medicaid Services (CMS) published their “Workers’ Compensation Medicare Set-Aside (WCMSA) Fiscal Year Statistics 2024” report. This report provides certain WCMSA data for Fiscal Years 2020-2024 and can be found here. This recently released report provides critical insights into settlement trends and allocations, offering a detailed breakdown of data.
Understanding the Data
The fiscal year (FY) statistics are presented across two key tables that provide insights into WCMSA proposals and approvals.
- Table 1 highlights the metrics related to WCMSA submissions, including the total numbers of cases reviewed, aggregate and average settlement amounted, and the proposed WCMSA values submitted by payers before CMS review.
- Table 2 focuses on the WRC’s recommendations, approved medical amounts for medical and prescription costs, average allocations, and the percentage difference between proposed and approved values.
Here are the key highlights & takeaways from this year’s report:
Analyzing the Data
- Reviewed submissions are down 6% FY2024 compared to FY2023
- Total settlement amount decreased by 10% FY2024 compared to FY2023
- The average proposed WCMSA amount remained virtually unchanged between FY2023 and FY2024
Prescription Costs Down, Provider Value Up
One of the most notable trends from FY 2023 to FY2024 is the steady decline in prescription costs, there was an 11% decrease in the Rx average allocation and a 15.6% drop in prescription, in aggregate prescription allocations (recommended).
This prompts the question; Are fewer high-cost drugs being allocated, or are prescriptions being reduced overall? Efforts to reduce overprescription, promote generics, and better regulate pharmaceutical costs play a pivotal role in the decreasing YOY prescription allocation metrics.
At the same time, there was a marginal increase in medical provider value, with average medical costs rising from $66,527.86 in FY2023 to $68,120.78 in FY2024. This could suggest the reallocation of resources from prescription medications to direct care, driven by regulatory oversight and cost-saving measures. Understanding the underlying drivers of these trends will be critical for stakeholders.
Section 111 and Future Reporting
It is important to note that this data set only evaluates proposed settlements with a WCMSA and does not report total settlements for each year. With the April 2025 change to Section 111 requirements for Medicare, Medicaid, and SCHIP Extension Act of 2007, there will likely be an increase in data reporting requirements. Section 111 mandates insurances to report settlements, judgments, and claims-related information to CMS, potentially leading to an influx of new data. While we anxiously await more detailed WCMSA insights from CMS post-April 2025, an important question remains: How will CMS address non-submitted proposals? This new update could provide additional transparency-or raise new challenges- for stakeholders.
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The WCMSA program continues to evolve, with trends from FY2023 to FY2024 demonstrating CMS’s focus on transparency, cost containment, and data driven decisions. The decline in prescription costs, modest increases in medical allocations, and rigorous CMS review processes point to a system that is adapting to the needs of both Medicare and stakeholders in workers’ compensation.
With the expected surge in submissions before year-end and additional data coming from Section 111 in 2025, stakeholders must stay educated in understanding and adapting to these changes. It is becoming increasingly clear through these updates that professional administration is essential as billions of dollars are submitted, settled, and tracked by CMS each year.
Stay tuned for more updates and insights as we continue to track the WCMSA trends and their impact on the workers compensation industry.
