June 01, 2015

Medicare Secondary Payer

The ABA supports the introduction June 4 of House and Senate bipartisan legislation to reform the administration of the Medicare secondary payer provisions in cases involving workers’ compensation settlements. Congress passed the Medicare Secondary Payer Act 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. A system put in place in 2001 by the Centers for Medicare and Medicaid Services (CMS) was intended to handle workers’ compensation settlements but instead has created confusion and undue administrative expenses. According to an ABA statement, the legislation − S. 1514, introduced by Sens. Bill Nelson (D-Fla.) and Rob Portman (R-Ohio), and H.R. 2649, introduced by Reps. Dave Reichert (R-Wash.) and Mike Thompson (D-Calif.) – would provide for improved administration of Medicare in conjunction with settlements in these cases and determine the appropriate amount to be set aside and/or paid to Medicare. ABA policy adopted on the issue in 2005 and reaffirmed in 2011 urges Congress to enact legislation incorporating certain principles, including establishing clear criteria for when a set-aside may be reviewed by CMS and putting an appeal procedure in place.

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