Medicare Set-Aside Bill Introduced into U.S. House Again

H.R. 1982, the “Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2013” was introduced into the U.S. House on May 15, 2013 by its sponsors, Rep. David Reicheart (R-WA) and Rep. Mike Thompson (D-CA). They claim in a press release that, “This bill will make sure hard working families medical claims are processed efficiently and quickly, it will reduce bureaucratic headaches for businesses, and it will save taxpayers money”.   Groups that support the bill include the American Insurance Association (AIA), the American Bar Association (ABA), the National Council of Self-Insurers (NCSI), Insurers Association of America (IAA), UWC-Strategic Services (UWC) and the Workers Injury Law Group (WILG). gives the bill a 2% chance getting past committee.  That could be because a previous, almost identical version of this bill, H.R. 5284 did not make it out of committee in the previous session of Congress.

Summary of H.R. 1982


Threshold for MSP Treatment – Section 2(a) amends the Medicare Secondary Payer (MSP) statute to exempt certain workers compensation settlements from the MSP statute if any of the following conditions are met:

  1. The total settlement does not exceed $25,000
  2. The claimant is not eligible for Medicare at settlement date and is unlikely to become eligible for 30 months
  3. No future medical expenses will be paid by the workers’ compensation plan after the date of the settlement.
  4. The settlement agreement does not limit or extinguish the right of the claimant to payment of future medical bills

A Qualified Medicare Set-Aside (QMSA)– Section 2(b) amends the MSP statute to provide that if a workers’ compensation settlement includes a Qualified Medicare Set-Aside 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 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 – Section 2(b) also provides for a 15% (of total settlement) “safe harbor amount” paid directly to Medicare to satisfy any future medical obligations under the MSP statute.  All settling parties must agree in writing and can modify the percentage if necessary to not cause a significant negative impact.

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.

Concluding Thoughts

Although H.R. 1982 attempts to correct some perceived problems in the workers’ compensation MSA program by the groups listed above, it has a very slim chance of passing.

The most impracticable part of this bill is the 15% safe harbor payment to Medicare as an alternative to doing a Medicare Set-Aside.  I see three problems with this, 15% safe harbor part of the bill:

  1. It would be revenue negative to the U.S. Treasury because it would be only be used for only those settlements that it would cost-effective by the settling parties.  For example, if a case had a $100,000 total settlement and a $80,000 MSA, the settling parties would choose to pay a $15,000 payment to Medicare instead of an $80,000 payment to an MSA and this would be detrimental to Medicare.
  2. Any surplus MSA monies at death would not be available to the claimant’s beneficiaries because they were previously paid to Medicare.  This is a big problem for the claimant and the plaintiff attorneys.
  3. The 15% safe harbor forces the claimant to immediately begin paying Medicare deductibles and co-pays, that the Medicare Set-Aside would have otherwise paid, which could be very costly to the claimant.

We believe that there are some positive steps that can be taken in the current MSA program that would make it more efficient for the settling parties, while at the same time, continuing to maintain the goal of the program, which is to protect the Medicare Trust Funds.  We hope to write more about that in a future blog.

To view H.R. 1982 click here.


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