MEDICARE SECONDARY PAYER WORKERS’ COMPENSATION SETTLEMENT AGREEMENT ACT

By Rudman Winchell Attorney Virginia K. Putnam

In an effort to streamline and simplify the bureaucratic procedures for workers’ compensation settlements involving Medicare, U.S. Representatives Dave Reichert (R-WA) and Mike Thompson (D-CA) introduced the Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2013, H.R. 1982, into the House of Representatives on May 15, 2013. This bill, which amends Title XIII of the Social Security Act, seeks to 1) create an exception to Medicare Secondary Payer requirements for certain workers’ compensation settlement agreements and 2) provide for the satisfaction of such requirements through use of qualified Medicare set-asides under workers’ compensation settlement agreements. This bill arose out of efforts to simplify the process for settlement when an injured worker, eligible for workers’ compensation benefits, may also be or become eligible for Medicare. Generally workers eligible for Medicare have reached age 65 or have a disability which qualifies them for Social Security Disability Insurance (SSDI) benefits. In a workers’ compensation case, insurers are required to repay the Centers for Medicare and Medicaid Services (CMS) for a worker’s medical treatment under Medicare’s secondary payer regulations. When a settlement occurs, a projection of the future injury-related medical costs covered by Medicare is calculated. This is the Medicare Set-Aside (MSA). The MSA is Medicare’s preferred method of setting aside funds. As part of the settlement process, the CMS reviews the medical records to determine an appropriate MSA. Under the current system, the reviews are not done under consistent standards, often involve lengthy delays for the parties involved, and there is no avenue for appeal of the CMS determination.

The proposed bill defines and narrows the threshold for settlements eligible for consideration. In the following cases a settlement is under threshold for consideration as a primary plan subject to the Medicare Secondary Payer (MSP) Act: a) where the total settlement is less than $25,000, b) where the worker is either not eligible for Medicare on the date of the agreement or is unlikely to become eligible within 30 months of the effective date of the agreement, c) where the worker is not eligible for payment of medical expenses after the effective date of the agreement under the law of the jurisdiction, or d) where the settlement does not extinguish the employer’s responsibility for payment of medical expenses after the effective date of the agreement. In addition, the proposed bill provides definitions and guidance as to when a set-aside is “qualified,” and what “safe harbor amount” means for the purposes of a workers’ compensation settlement. Under the proposed bill, when a settlement is submitted to CMS for consideration, the Secretary of HHS must approve or disapprove a submission within 60 days after receipt of the submission and explain the deficiencies of the submission in the case of a denial. Another key element to this bill is that the decision by Medicare may be appealed by filing a request for reconsideration within sixty (60) days after the notice of determination. Further appeal is to an administrative law judge and then to a federal district court judge. The hope by advocates of injured workers, insurers and employers is that this bill will allow medical claims to be processed efficiently and quickly and bureaucratic procedures will be decreased, resulting in a savings for businesses and taxpayers. The bill has garnered widespread support from groups such as the American Insurance Association, the American Bar Association, the National Council of Self-Insurers, Property Casualty Insurers Association of America, UWC-Strategic Services and the Workers Injury Law and Advocacy Group. As of May 17, 2013, H.R. 1982 had been referred for consideration by committee.