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How is a Medicare Set Aside calculated?

In a Workers’ Compensation Medicare Set Aside (WCMSA) allocations are prepared on a case-by-case basis. In a WCMSA, only items and services related to the workers’ compensation injury otherwise covered by Medicare are included. Post-settlement treatment, prescription drugs, and items are calculated based upon a number of different sources and factors, including:

  • Applicable workers’ compensation fee schedules
  • Usual and customary charges
  • Actual charges (by reviewing claims payment and prescription drug payment histories)
  • Last two years of treatment records
  • Medical bills
  • Facility / provider fees

CMS also indicates that, “medical pricing may vary based on injury, age, location, and other factors. Each submission is reviewed independently of other submissions for claimants with the same injury and age. This accounts for any differences in WCMSA amount determination.” See WCMSA Reference Guide, v.3.1, sec 9.4.3.

Specifically, with respect to prescription drugs:

“The WCRC continues to price Part D drug products based on AWP and further based on brand or generic drug pricing. AWP pricing is pulled from a proprietary source, Truven Health Analytics’ Red Book database. The WCRC uses a program for drug pricing that uses Red Book flat files that are updated monthly.”

See WCMSA Reference Guide, v.3.1, sec 9.4.6.

For further and more detailed information on how WCMSAs are priced and allocated, please refer to the WCMSA Reference Guide.

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