September 01, 2014

Medicare secondary payer bill would protect injured workers

The ABA commended Sens. Bill Nelson (D-Fla.) and Rob Portman (R-Ohio) this month for introducing S. 2731, a bill to reform the administration of Medicare secondary payer provisions in federal law in cases involving workers’ compensation settlements.

The bill, according to ABA Governmental Affairs Director Thomas M. Susman in a letter to Nelson and Portman, would establish “a predictable and efficient set-aside approval process that also provides reasonable protection of injured workers and Medicare.” Susman thanked the senators for their leadership in creating a “good bipartisan, bicameral agreement.”

Congress passed the Medicare Secondary Payer Act (MSP) in 1980 as a way to control the expanding costs of the Medicare program by identifying specific conditions under which Medicare is a secondary payer when another source of funds for medical treatment is available. If an individual who is or likely to become a Medicare beneficiary is injured and receives damages covering expenses that will be incurred over time, some of that award must be set aside to cover future medical expenses that would otherwise be covered by Medicare.

In 2001, the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare programs, created a system where parties to workers’ compensation settlements may seek review and approval of “set-aside arrangements” designed to protect Medicare’s interests. These reviews, however, are being conducted with inconsistent application of state and/or federal workers’ compensation laws, creating confusion and undue administrative expense. In addition, claims closed by settlement in the past are subject to substantial uncertainty because of potential future action by CMS.

The ABA adopted policy in February 2005 urging Congress to enact legislation incorporating certain principles to address this uncertainty, and several of the principles are key components of the legislation. These include establishing clear criteria for when a set-aside may be reviewed by CMS, establishing an appeal procedure if the parties dispute the CMS ruling regarding the allocation of settlement proceeds, and providing an optional direct payment of set-aside amounts to Medicare.

Susman offered the ABA’s assistance in moving the legislation forward.  

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