NCCI Publishes Medicare Set Aside and Workers Compensation Study

The National Council on Compensation Insurance (NCCI) is an insurance rating and data collection bureau specializing in workers’ compensation. It is headquartered in Boca Raton, Florida with regional offices throughout the United States. The current president and CEO is Stephen J. Klingel. A board of directors composed of representatives of affiliated insurers and outside organizations oversees its activities.

Owned by its member insurers, NCCI collects data covering more than four million workers compensation claims and two million policies. NCCI uses this information to provide ongoing analysis of industry trends in workers’ compensation costs, workers compensation insurance rate and loss cost recommendations, cost analysis of proposed legislation regarding workers’ compensation regulations and benefits, and analysis of judicial and regulatory decisions on workers’ compensation. NCCI is considered the country’s authority on these issues.

NCCI produces a number of manuals that govern the details of how workers compensation insurance premiums are calculated in many (but not all) states. Among these manuals are the Basic Manual (which sets out rules on the classification code system, payroll amounts used to compute premiums, and changes in classifications and premiums); Experience Rating Manual (which details how experience modification factors are computed and used in workers compensation insurance premiums); and the Scopes Manual (which details how NCCI intends the various classification codes to be assigned to various kinds of employment).

NCCI hosts an Annual Issues Symposium in May of every year, at the Cypress Hyatt Regency in Orlando, Florida. It normally delivers national trends, statistics, and analysis of recent or pending legislative and regulatory proposals affecting workers compensation rates and costs. During this year’s AIS, NCCI delivered the results of its long anticipated review and analysis of Medicare set aside data. The program was presented on Friday afternoon on May 9, 2014 by Barry Lipton, Practice Leader and Senior Actuary at NCCI. The power point presentation delivered by Mr. Lipton can be found at

Mr. Lipton indicated that a sample of approximately 2,200 completed MSAs dating between September 2009 and November 2013 were used. The sample included proposed total settlement, proposed MSA, and final MSA approved by CMS, which included a breakdown of Medicare Parts A & B expenditures (hospital and physician related services) and Part D expenditures (prescription drugs).

Mr. Lipton indicated that almost all MSAs (94%) in the sample were for claimants who were Medicare entitled at the time of settlement. Only 6% were not yet entitled to Medicare, but likely eligible within 30 months of settlement. Of those that were currently entitled to Medicare, 29% were eligible due to age, while 65% were eligible due to entitlement to SSD benefits.

Mr. Lipton reported that in 20% of the MSAs reviewed by CMS, the claimant was younger than 50 years old, 34% were between ages 50 and 59, 37% were between the ages 60 to 69, and 8% were older than age 70. He also reported that 41% of the MSAs reviewed were for settlements less than $100,000, 30% for settlements between $100,000 and $200,000, and 29% for settlements over $200,000.

Mr. Lipton also discussed the amounts of MSAs in the sample. He found that 45% of the MSAs reviewed by CMS had MSA amounts under $25,000, 16% were between $25,000 and $50,000, 18% were between $50,000 and $100,000, 12% were between $100,000 and $200,000, and 8% were over $200,000. Based on this information, Mr. Lipton reported that MSAs are about 40% of proposed total settlements.

Mr. Lipton also provided information of CMS processing time periods. He indicated that after a period of dramatic lengthening (average processing time increasing from 68 days on 1st quarter of 2010 to 274 days on 4th quarter of 2012), CMS’ MSA processing time dropped to 104 days average processing time and 41 days median processing time by the 4th quarter of 2013. The median MSA approved amount however has remained stable since 2010, averaging between $32,349 and $48,634.

Mr. Lipton also informed the audience that the gap between proposed and approved MSAs has been shrinking over the last 3 to 4 years. Since the average proposed MSA has increased from $66,801 to $78,776 from 2010 to 2013, and the average proposed MSA has decreased from $107,082 to $86,397 from 2010 to 2013, the ratio of overall approved to proposed MSAs has declined over the same time period from 1.60 to 1.10.

Mr. Lipton concluded that based on the sampling, the majority of MSAs are for claimants who are Medicare entitled due to disability, not age. He also concluded that MSAs are about 40% of the total settlement amount, with prescription drugs about half of same. He also concluded that MSA processing time has recently declined, and so has the differences between proposed and approved MSAs.

At the end of his presentation, Mr. Lipton indicated NCCI would publish a formal study of these findings in late summer or early fall of 2014. On September 15, 2014, NCCI published its Research Brief on Medicare Set Asides and Workers Compensation. The study can be found at

Rafael Gonzalez is Vice President of Strategic Solutions at HELIOS in Tampa, Fl. HELIOS is a national leader in MSP settlement solutions, including Mandatory Insurer Reporting, Conditional Payment Resolution, and Medicare Set Asides. You may contact Rafael at, or at 813.612.5592 to speak with him about HELIOS settlement solutions products and services designed specifically for the challenges of today’s industry as well as the individual needs of each client.


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