In almost all Workers’ Compensation (WC) cases, the Medicare Set-Aside account (MSA) includes a certain percentage of funding to cover the pharmaceutical expenses that are involved in many recovery protocols. MSAs related to more significant injuries such as loss of limbs or temporary or permanent disabilities often reserve the highest financial value specifically for drugs prescribed due to the injury. Recent statistics and trends in CMS practices and the healthcare community indicate that those drug costs are going to rise even higher than they already are and that CMS is anticipating those escalating costs when reviewing MSA submissions for approval.
Medications assist in the recovery of injuries by preventing infections, reducing pain, and improving functioning. For more than one-third of all WC-related MSA submissions (37%), drugs are a relatively small aspect of the overall amount established to provide recovery care, comprising ten percent or less of the entire fund. In those cases, hospital and doctor visits costs, as well as other interventions such as surgeries and specialized therapies, make up the bulk of recovery healthcare services.
In the remaining 63 percent of WCMSA cases, however, the role of pharmaceuticals in the healing process becomes increasingly more significant. A recent report by the National Council on Compensation Insurance reveals the data that explains the critical role that pharmaceuticals play in the recovery process of workplace injuries.
Another fact revealed by the report is a widening gap between submitted MSA proposals and approved CMS settlements for prescription drug coverage. Over the course of the NCCI study (2009-2015), the gap between submitted and approved values is relatively stable when it comes to Medicare Parts A and B (hospital and insurance costs, respectively), which reflects that those costs have remain relatively unchanged over those years.
However, when it comes to Medicare Part D, which covers prescription drugs, the gap between the "submitted" amount and the eventual approved amount is growing, with CMS asking claimants to increase their anticipated Part D values before signing off on the final settlement. The reason for the growing concern is probably two-fold:
Across the whole healthcare spectrum, pharmaceutical costs are rising and becoming an ever-increasing share of overall healthcare costs:
Drug costs rise for two primary reasons:
In response to the escalation of price for brand-name prescriptions, many drug makers are now developing generic versions, offering consumers and their doctors more reasonably priced options.
CMS is apparently aware of this trend in prescription drug costs and is seeking increases in MSA medication values to ensure that the appropriate party absorbs that expense over the life of the MSA account. Participants in the WCMSA process will be wise to consider the long-term cost of prescription medications when developing the values to be included in those accounts.