With Republicans in Control of Congress, Is New MSP Legislation Coming?

capital-building-front-viewNow that the 2014 mid-term elections are over and the much anticipated Republican takeover of the US Senate has in fact taken place, will there be a significant impact on the Medicare Secondary Payer (MSP) community? Will claimants/plaintiffs, employers/carriers, corporate defendants/insurers, self-insureds/third party administrators see new legislation introduced in the House or Senate proposing to change the course of the MSP program or altering previous proposals to amend the MSP Act?

Introduction

Although most experts are predicting that as soon as the new Congress is sworn in that we will see legislation introduced in both chambers that will affect the Affordable Care Act, and may therefore have an effect on Medicare, which may then have indirect consequences on the MSP program, based on the most current history of legislative proposals introduced in the US House of Representatives and US Senate affecting the MSP Act, there is little evidence to indicate that a Republican lead US Senate will have any effect on new or proposed MSP legislation. As a matter of fact, given the fact that the 113th Congress will end its lame duck session later on this year, the real question for MSP stakeholders is whether HR 1982 and SB 2731, currently pending MSP legislative proposals, will be re-filed in their current forms in 2015 or sometime after the convening of the 114th Congress, or whether new proposals will find their way to both chambers.

Over the last eight years, a lot of individuals, private corporations, and national organizations, have spent a significant amount of time, energy, and resources in trying to improve the Medicare set aside process for employees and employers in the workers’ compensation system without much success. Although there are rumors that more aggressive MSP legislation may be forthcoming, most industry experts speculate that whatever proposals may be coming will be based or derived from the current pending legislative proposals. Consequently, what follows is a review of HR 1982 and SB 2731.

MSP Proposed Legislation in the US House of Representatives

Much like its 2007, 2009, and 2012 predecessors, HR 1982, the Medicare Secondary Payer and Workers Compensation Settlement Agreement Act of 2013, was filed to amend section 1862 of the Social Security Act with respect to the application of Medicare secondary payer rules to workers’ compensation settlement agreements and Medicare set-asides under such agreements. Introduced on May 14, 2013, in the United States House of Representatives’ 113th Congress, 1st Session, by Representative Reichert of Washington and Representative Thompson of California, the bill was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce. Like its predecessors, HR 1982 garnished less than 25 sponsors, which indicated to many in and outside of Congress a lack of interest in the subject matter or less than full support for the substance of the bill.

  1. Exempted Settlements

    In keeping with prior versions, HR 1982 exempted workers’ compensation settlement agreements that did not exceed $25,000, where the claimant is not a Medicare beneficiary as of the effective date of the agreement, and settlement agreements that did not exceed $250,000, where the claimant is unlikely to become so eligible within 30 months after such effective date, settlements where the claimant is not eligible for payment of medical expenses and settlements that do not limit or extinguish the right to payment of medical expenses.
  1. Qualified Medicare Set Asides

    HR 1982 allowed for a Qualified Medicare set-aside to satisfy any obligation with respect to present or future payment reimbursement. Qualified Medicare set asides included set asides that took into consideration the age and life expectancy of the claimant involved, the reasonableness of and necessity for future medical expenses for treatment of the illness or injury involved, as well as the duration of and limitation on benefits payable under the workers’ compensation law or plan involved.
  1. Compromise Settlement Agreements and Reduced MSAs

    In the case of a compromise settlement agreements, HR 1982 allowed Qualified Medicare set asides to be calculated by applying a percentage reduction to the Medicare set-aside amount for the total settlement amount that could have been payable under the applicable workers’ compensation law had the denied or contested portion of the claim not been subject to a compromise agreement.
  1. 15 Percent of Settlement as Safe Harbor Qualified MSA

    HR 1982 also allowed for Qualified Medicare set asides to include a safe harbor amount, 15 percent of the total settlement amount of the agreement excluding repayment of conditional payments and previously settled portions of the claim involved. However, the bill indicated that a Medicare set-aside could not be treated as a Qualified set-aside unless an election was made to transfer to the Secretary of Health and Human Services a direct payment of such set-aside.
  1. Current MSA Approval System Still Available and Voluntary

    HR 1982 also allowed for the presently used approval system. In other words, a party to a workers’ compensation settlement agreement that included a Medicare set-aside could still submit to the Secretary the set-aside for approval as a Qualified Medicare set-aside. When such a process was selected, the Secretary had 60 days to notify the parties to the workers’ compensation settlement agreement of the determination of approval or disapproval. If any of the parties were dissatisfied with the Secretary’s determination, the parties could request reconsideration, attend a hearing before an administrative law judge, and ultimately seek judicial review in federal district court.

MSP Proposed Legislation in the US Senate

Senate Bill 2731 was filed on July 31, 2014 by Senators Nelson and Portman in the 113th Congress, 2d Session in the Senate of the United States to amend title XVIII of the Social Security Act to provide for the application of Medicare secondary payer rules to certain workers’ compensation settlement agreements and qualified Medicare set-aside provisions. The bill was read twice and referred to the Committee on Finance, where it has remained since its introduction. With support from industry trade organizations and system stakeholders, the bill was seen as an improvement on the proposals previously filed in the House. However, just like HB 1982, SB 2731 has never enjoyed bi-cameral wide support. As a result, there has not been a great deal of attention paid to it by those outside of the workers compensation and MSP industry.

  1. Exempted Settlements

    SB 2731 proposed that any workers’ compensation settlement agreement that did not exceed $25,000 or such greater amount as the Secretary may specify in regulations would be exempt from having to take Medicare’s future interests into consideration.
  2. Qualified Medicare Set Asides

    SB 2731 further amended Section 1862 of the Social Security Act (42 U.S.C. 1395y), by adding a method to satisfy the Secondary Payer requirements through the use of a Qualified Medicare set aside. The bill made it clear that submission of a Qualified Medicare set-aside to the Secretary is not required, but would remain a voluntary choice of the settling parties.

    The bill indicated that a Medicare set-aside would be deemed to be a Qualified Medicare set-aside if the Medicare set-aside amount reasonably took into account the full payment obligation of the settling payer, based on the illness or injury giving rise to the workers’ compensation claim involved, the age and life expectancy of the claimant involved, the reasonableness of and necessity for future medical expenses for treatment of the illness or injury involved, the duration of and limitation on benefits payable under the workers’ compensation law or plan involved, and the regulations and case law relevant to the State workers’ compensation law or plan involved.

    A Qualified Medicare set-aside would include payment for items and services that were covered and otherwise payable under the Medicare system as of the effective date of the workers’ compensation settlement agreement and that were covered by the workers’ compensation law or plan. The Qualified set-aside amount would be based upon the payment amount for items and services under the workers’ compensation fee schedule (effective as of the date of the agreement) applicable to the workers’ compensation law or plan involved.

  1. Compromise Settlements and Reduced MSAs

    In the case of a compromise settlement agreement, defined in the bill as a workers’ compensation settlement agreement in which the workers’ compensation claim has been denied or contested, in whole or in part, by a workers’ compensation payer involved under the workers’ compensation law or plan applicable to the jurisdiction in which the agreement has been settled that does not provide for a payment of the full amount of benefits sought or that may be payable under the workers’ compensation claim, SB 2731 proposed that a claimant or workers’ compensation payer who was party to the agreement could elect to calculate the Medicare set-aside amount by applying a percentage reduction to the Medicare set-aside amount.

    Such percentage reduction would be used with the total settlement amount that could have been payable under the applicable workers’ compensation law or similar plan involved had the denied, disputed, or contested portion of the claim, not been subject to a compromise agreement. The percentage reduction would be equal to the denied, disputed, or contested percentage of such total settlement. However, such election could be made only with the written consent of the other party to the agreement. If the claimant or workers’ compensation payer elected to calculate the Medicare set-aside amount under this percentage reduction formula, the Medicare set-aside would be deemed a Qualified Medicare set-aside.

  1. Voluntary Submission Process and Appeals Process

    SB 2731 also provided that a party to a workers’ compensation settlement agreement that included a Medicare set-aside could still submit to the Secretary the Medicare set-aside amount for approval of the set-aside as a Qualified Medicare set-aside. If in fact parties sought such approval, the bill indicated that not later than 60 days after the date on which the Secretary received a submission, the Secretary would notify in writing the parties to the workers’ compensation settlement agreement of the determination of approval or disapproval. If the determination disapproved such submission, the Secretary had to include the specific reasons for the disapproval. In the case of a failure by the Secretary to mail or deliver the notice of the determination within 60 days, the party involved could file an appeal directly to an administrative law judge within 30 days after such failure.

  1. MSA Formal Appeals Process

    SB 2731 also proposed that a party to a workers’ compensation settlement agreement that was dissatisfied with a determination could file a request for reconsideration with the Secretary not later than 60 days after the date of notice of such determination. The Secretary shall then conduct and conclude such reconsideration within 30 days from the date that the request for such reconsideration was filed. If a party to the workers’ compensation settlement agreement was dissatisfied with the Secretary’s reconsideration, that party could then file an appeal within 30 days of date of receipt of the notice of the decision and request a hearing before an administrative law judge. In the case of a failure by the Secretary to mail or deliver the notice of the decision within 30 days, the party involved may file an appeal directly to an administrative law judge not later than 30 days after such failure.

    SB 2731 proposed that an administrative law judge would conduct and conclude a hearing on a decision of the Secretary or a determination with respect to which the Secretary failed to render a timely decision within 90 days, beginning on the date that a request for such hearing was timely filed. A decision by an administrative law judge would constitute a final agency action and would be subject to judicial review. In the case of a failure by an administrative law judge to render a decision within 90 days, the party requesting the hearing would be entitled to judicial review of the decision.

  1. Optional Direct Payment of MSA to CMS

    SB 2731 proposed that, effective January 1, 2015, with respect to a claim for which a workers’ compensation settlement agreement is or has been established, a claimant or workers’ compensation payer who was a party to the agreement could elect, but is not required, to transfer to the Secretary a direct payment of the Qualified Medicare set-aside.

    Pursuant to the proposed bill, there would be three permissible methods of calculating the Qualified Medicare set-side when directly making such payment to the Secretary. First, in the case of any Medicare set-aside in a compromise settlement agreement, the parties could use the percentage reduction formula to calculate the amount of the Qualified Medicare set-aside. Second, in the case of any Medicare set-aside, the amount based upon the payment amount for items and services under the workers’ compensation fee schedule (effective as of the date of the agreement) applicable to the workers’ compensation law or plan involved. And third, in the case of any Medicare set-aside, the payment amount applicable to the items and services under the Medicare system as in effect on the effective date of the agreement. Such transfer could be made only upon written consent of the other party to the agreement.

  1. Optional Professional Administration Also Available

    If the parties do not choose to make such direct payment to the Secretary, then SB 2731 indicated that nothing prohibited an individual from electing to utilize professional administration services or to self-administer payments of their Medicare Set-Aside in accordance with existing law.

  2. State Workers’ Compensation Law is Final and Conclusive

    SB 2731 also proposed that if a workers’ compensation settlement agreement was accepted, reviewed, approved, or otherwise finalized in accordance with the workers’ compensation law of the jurisdiction in which such agreement would be effective, such acceptance, review, approval, or other finalization was to be deemed final and conclusive as to any and all matters within the jurisdiction of the workers’ compensation law, including the determination of reasonableness of the settlement value; any allocations of settlement funds; the projection of future indemnity or medical benefits that may be reasonably expected to be paid under the State workers’ compensation law; and, in the case of a compromise agreement, the total amount that could have been payable for a claim which is the subject of such agreement’.

  1. Meeting Requirements of the Law

    SB 2731 also proposed that if the parties to a workers’ compensation settlement agreement met the provisions of section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) on the effective date of settlement, it would be accepted as meeting the requirements of such section notwithstanding changes in law, regulations, or administrative interpretation of such provisions after the effective date of such settlement. The bill indicated that amendments made by the bill, unless otherwise specifically specified, would apply to workers’ compensation settlement agreements with an effective date on or after October 1, 2015.

Conclusion

So, with expectations that both HB 1982 and SB 2731 will die at the end of this lame duck session, the question everyone involved in MSP and workers compensation is pondering is whether there will be new legislation filed in 2015? If so, who will introduce it? Will Representative Reichert continue to lead efforts in the House to amend the MSP Act? If not, will there be a new congressional leader on MSP issues in the House? If there is new legislation forthcoming in the House, will it take the same philosophy and therefore be similar to those previously filed? Or will a new theory and ideology emerge? In the Senate, will Senator Nelson re-introduce the same bill? Or will we see a Republican Senator take the lead on MSP issues? Will any new legislation in the Senate further advance the ideas that have been already proposed? If so, considering CMS’ slow progress on liability protocols, will we see liability MSA language included in any new legislation? As the new Congress convenes and leadership is elected, we will begin to be able to answer some, if not all of these questions. Until then however, Helios will continue to monitor and report on such activity.

29106aeAbout Rafael Gonzalez

Rafael Gonzalez is Vice President of Strategic Solutions at Helios. With over 25 years of experience in the workers compensation, liability, Medicare and Medicaid industry, Rafael serves as thought leader on all aspects of Medicare and Medicaid compliance, including mandatory reporting, conditional payments, and set asides. You may contact Rafael at rafael.gonzalez@helioscomp.com or 813.612.5592.

About Helios

Helios is the new name for Progressive Medical and PMSI. Whether pharmacy, critical care, or settlement solutions, including mandatory reporting, conditional payments, or set aside allocations, approval, and administration, to learn how our creative and innovative tools, expertise, and industry leadership can help your business shine, visit www.firstfilltosettlement.com or call 800.777.3574.

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