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Recap of H.R. 5284 – The Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2012

The Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act of 2012, H.R. 5284, was filed in the U.S. House of Representatives by Rep. Dave Reichert (R-WA) on April 27, 2012.  The Government Printing Office released the text of the bill today.  Rep. Reichert claims that this bill “improves the Medicare set-aside process for workers compensation claims” and “provides clear and consistent standards for an administrative process that provides reasonable protections for injured workers and Medicare”.

Threshold for MSP Treatment

H.R. 5284 amends the Medicare Secondary Payer (MSP) statute to provide an exemption from the Medicare Secondary Payer (MSP) statute for workers’ compensation settlements where any of the following occur:

  • The total settlement is $25,000 or less
  • The claimant is not eligible for Medicare at settlement date and is unlikely to become eligible for within 30 months
  • The claimant is not eligible for payments of future medical bill under the settlement
  • The settlement agreement does not limit or extinguish the right of the claimant to payment of future medical bills

A “Qualified Medicare Set-Aside”

In addition, this proposed legislation amends the MSP statute to provide that if a workers’ compensation settlement includes a “qualified Medicare set-aside” (QMSA) then that settlement will satisfy any obligation, with respect to present or future payment reimbursement obligation under Section 1395y(b)(2) of the MSP statute.

A (QMSA) is defined in H.R. 5284 as a Medicare set-aside that reasonably takes into account the full payment obligation for present and future medical payments.  It must give due consideration to: the illness or injury, age and life expectancy, the reasonableness of and necessity for future medical expenses, the duration of and limitations on benefits payable under the workers’ compensation law or plan and the relevant State workers’ compensation regulations and case law.  A QMSA must include payment for items and services that are covered by the workers’ compensation law or plan involved.  The QMSA must be based on the applicable workers’ compensation State fee schedule.  A QMSA can be calculated using a proportional adjustment for compromised settlements that reduces the QMSA by the same proportion that the total settlement was reduced.

15% Safe harbor payment

Medicare set-asides of $250,000 or less are deemed QMSAs, only upon written consent of all parties to the settlement agreement, and if a “safe harbor amount” is paid directly to Medicare.  The safe harbor amount is defined as 15% of the total settlement, excluding repayment of conditional payments and previously settled portions of the claim.  The bill gives the Secretary the authority to modify the safe harbor percentage if it is determined that the 15% rate causes significant negative impact.

Approval of Qualified Medicare Set-Asides

H.R. 5284 maintains the current optional CMS review process however it makes some significant changes.  It gives the Secretary 60 days to review the QMSA and failure to meet that 60-day deadline deems the QMSA to be approved.  The Secretary must include specific reasons for any denial.   An appeals process is established, with specific time deadlines, that entitles the dissatisfied party the right to a reconsideration by the Secretary, a hearing before an administrative law judge, and a judicial review.

90 Day Requirement for Conditional Payment Request

If the Secretary fails to provide conditional payment information within 90 days, then neither the claimant nor the payer is liable for any reimbursement to Medicare with respect to the conditional payment information being requested.

QMSA payment greater than payment under workers’ compensation law

No one shall be liable for any payment amount established under a Medicare set-aside for an item or service provided to the claimant that is greater than the related workers’ compensation fee schedule amount.  In addition, a provider may not bill a Medicare set-aside more than the payment rate used in the Medicare set-aside or the Secretary may apply sanctions.

Treatment of state workers’ compensation law

If a workers’ compensation settlement agreement is accepted in accordance with the workers’ compensation law of a jurisdiction, then that acceptance shall be deemed conclusive.  That includes determination of reasonableness of the settlement value, any allocation of funds, the projection of future indemnity or medical benefits that may be payable under State workers’ compensation law.

To view the text of H.R. 5248, click here.

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