H.R. 5284 – ‘‘Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012’’

Uncategorized on June 29, 2012
Posted by Louis Jordan

The most recent version of the Medicare Secondary Payer bill was just released last month. It is almost identical to bill H.R. 2641 which failed to pass in 2011. As with the previous bill, this bill attempts to legislate CMS policies and provide legal standing for the decisions that they have made in the past.

Changes from the previous bill include:

  1. The calculation of total settlement amount for purposes of review.
  2. Elimination of any procurement cost reduction provisions.
  3. Removal of section on authority to modify or terminate an MSA.
  4. An increase in the safe harbor provision from 10% to 15% of any settlement under $250,000.*
  5. The safe harbor amount must be deposited into Medicare Trust fund.
  6. Approval or disapproval must be provided by the Secretary within 60 days, as opposed to automatic approval if disapproval has not been provided within 60 days.
  7. Reconsideration requests must be answered by the Secretary within 30 days of the request or the submission will be considered to be approved.
  8. The severability clause was deleted from the Limitation on Liability section.
  9. There would be no additional liability imposed provided the parties met their MSP obligations by the effective date of settlement, except in the case of fraud.

Despite the changes, the bill still contains many flaws. It does not address the fundamental issue of the unrealistic medical cost projections determined by CMS, such as the fact that no one pays average wholesale price for prescriptions and narcotics are prescribed for life despite issues with continued efficacy and addiction. Nor does it even discuss or address non-workers’ compensation settlements. Additionally, it adds complexity to the post-settlement administration, requiring providers to accept the amount established the MSA, regardless of whether the service price has changed due to inflation or change in jurisdiction of the claimant.

From Medicare’s perspective, this bill is likely to increase costs while decreasing income as cases settled at $25,000 and below will no longer require any MSP obligations and payers will be motivated to settle cases with expensive medical obligations for $249,999 or less.

In our opinion, this bill has no more chance of passing than any of the previous versions. It was introduced with bipartisan support and Congressman David Reichert (R-Washington) is a member of the Trade and Health Subcommittee of Ways and Means, but it is an election year. The bills, in all previous versions, were introduced around this same time of year and never obtained more than 22 sponsors. The probability that the bill will get the necessary support prior to the election is slim, so we don’t expect any progress until the 113th Congress starts in 2013. Additionally, many of the sponsors of the previous bills did not survive re-election and given the mood of the country, the Congress may be in for another shake up, so any progress made this summer may prove futile anyway.

* For purposes of this calculation, repayment of conditional payments and previously settled claims are not considered part of the settlement, although they are included when calculating the total for purposes of meeting the review threshold.


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