Workers’ Compensation MSP Reform Legislation

A bill seeking reform with respect to MSP compliance in workers’ compensation settlements was recently introduced in the House of Representatives. The bill is titled Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012, also known as H.R. 5284. Proponents for the bill claim to have already garnered large support from insurance industry representatives, attorneys, and a broad based coalition of employers.

This bill is not to be confused with the SMART (Strengthening Medicare and Repaying Taxpayers) Act of 2011, also known as H.R. 1063, which seeks reform of the MSP, but only with respect to Medicare conditional payments and Mandatory Insurer Reporting pursuant to the MMSEA and does not address MSAs. The SMART Act has been pending in Congress since early 2011.

H.R. 5284 seeks to legislatively reform delays and inconsistencies in the WCMSA system, stating that a legislative solution is necessary to correct CMS’ informal WCMSA review process. A likely obstacle that H.R. 5284 will face is that the WCMSA system was created through CMS memoranda and procedure, and not through formal legislation. The MSP as well as the CFR do not specifically address MSAs; therefore, to legislatively fix the system when it is not formally legislated may pose a problem.

Additionally, the bill seeks to exempt workers’ compensation settlements under $25,000 from compliance with the Medicare Secondary Payer Act, which would mean no conditional payment reimbursement, no MSA requirement, and no reporting. Such an exemption would limit Medicare’s potential recoveries and could affect the bill’s scoring. There is also a proposal within the bill which would allow for the WCMSA amount to be paid directly to CMS. Such a proposal would certainly ease the burdens of self-administration of WCMSAs upon claimants. A copy of the bill can be found here. This piece of legislation was previously introduced in 2009; the 2012 version is very similar to the 2009 version and has relatively minor changes. 

PMSI is in favor of any efforts which will further protect the rights of Medicare beneficiaries, the Medicare Trust Fund, and primary payers; however H.R. 5284 will likely face some obstacles from the outset. Additionally, supporters of both the H.R. 5284 as well as the SMART Act will have to be patient during this election year when Congress may be more inactive than in non-election years. Hopefully, both H.R. 5284 as well as the SMART Act will at least raise the attention of Congress to create some reform with respect to the MSP system which has vastly changed the landscape of settlements with Medicare beneficiaries. A recent GAO Study on the MSP system and suggested reforms should also shed some light. To read our prior blog on the GAO Study, click here.

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