Medicare Secondary Payer and Workers’ Compensation Settlement Agreement Act: 30 Days and Counting…. Can it Succeed?

June 18, 2012

Introduced into the US House of Representatives on April 27, 2012, the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012 (HR 5284) aims to streamline the settlement of workers’ compensation agreements by creating an exception to Medicare secondary payer requirements. The bill also provides language that could ease the path toward satisfying these requirements by using qualified Medicare set-aside arrangement (MSA) under these agreements.

Designed to apply to certain workers’ compensation settlements agreements, the bill proposes changes if any of the following criteria is present:

  1. The total settlement is $25,000 or under;
  2. The claimant is not eligible for Medicare at settlement date and is not expected to be eligible within 30 months;
  3. The settlement agreement does not limit or eliminate the claimant’s right to payment of future medical bills;
  4. The claimant is not eligible for future medical bill payments under the settlement.

US representative David Reichert (WA-8) introduced the bill in an attempt to improve the set-aside process for workers’ compensation claims. Current settlements that overlap with Medicare coverage create a lengthy review period on what constitutes the set-aside coverage amounts.

Currently, HR 5284 has been referred to the Subcommittee on Health for review. The bill has gained heavy support from industry organizations, including American Insurance Association (AIA), American Association for Justice (AAJ), American Bar Association (ABA), National Council of Self Insurers (NCSI), Property Casualty Insurers Association of America (PCI), UWC – Strategic Services on Unemployment & Workers’ Compensation (UWC), Washington Self-Insurers Association (WSIA), and Workers Injury Law and Advocacy Group (WILG).

Part of the problem may be that the legislation tries fixing what isn’t governed. There is a lack of any real definition of MSA from a regulatory sense. Would wrapping laws around an undefined practice work?

Also, industry buzz suggests that legislators are treating workers’ compensation issues much like they would group health issues. Also, detractors of the bill believe there is little to address the calculation of allocation amounts and too little consistency in understanding and applying CMS policies.

The success of H.R. 5284 will depend largely on how well the legislation understands the MSA environment. While the idea may be a good one, the actual practice may fall short of its intended goal.