Senate Bill 3079, Legislation to Band-Aid the Medicare Set-Aside Process Has Been Introduced

Legislation, Medicare Set-Asides, MSP News on June 21, 2018
Posted by Jean S. Goldstein, JD, CMSP

You may recall in 2014, Senators Portman and Nelson introduced a Senate Bill, “[t]o 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.”  However, the legislation failed and never made it out of the Committee on Finance.  Earlier this week, the Senators once again introduced a new and revised version of the 2014 bill known as Senate Bill 3079.  

In reviewing the legislation, two main goals can be identified:

  1. To establish the adequacy and application of state provisions and state fee schedules for Medicare Set-Asides (MSAs); and
  2. To establish a formal appeal process for the Medicare Set-Aside review process.

The recognition of state provisions and state laws by the Centers for Medicare & Medicaid Services (CMS) is something that many of us in the industry have been and continue to advocate for diligently.  In July 2017, we were hopeful that CMS’ expansion and recognition of state laws as provided in a CMS issued reference guide would result in the recognition of relevant state law provisions and law.    However, since that time we have found that many of the limitations in applying state provisions continue to exist.  In addition, the review of MSAs completed by CMS’ independent contractor are inconsistent, and despite the intention of the process to be objective, it is nonetheless a subjective process, with CMS determining the adequacy of each MSA.

The legislation is clear that CMS submission is voluntary, but proposes a formal appeal process for those cases where a party is dissatisfied with the determination.  Currently, the established informal appeal process is extremely limited.  The proposed process as outlined would require the following steps: (1) Reconsideration of the Determination (2) A Hearing before an Administrative Law Judge and (3) Judicial Review. 

Interestingly, the legislation also allows for an “optional direct payment of [a] Medicare Set-Aside amount.” The bill reads,

“[e]ffective 30 days after the date of enactment of this subsection, with respect to a claim for which a workers’ compensation settlement agreement is or has been established, a claimant or workers’ compensation payer who is party to the agreement may elect, but is not required, to transfer to the Secretary a direct payment of the Medicare set-aside amount.” 

The likely intention of this provision is to alleviate the administrative burdens of managing an MSA.  Currently, once an MSA (whether reviewed/approved by CMS or not) is established, the total WCMSA amount must be placed into an interest-bearing account, separate from any other personal accounts.  From this account, an injured worker must pay for all Medicare-covered services and treatment related to the work injury, and provide CMS with a yearly reporting of these expenditures.  This proposed provision would relieve some of the administrative burdens associated with managing an MSA, through the deposit of the MSA funds directly to CMS.

Commentary on this new legislation, as introduced in it’s current state:

On its face, the legislation appears to fix some of the inherent procedural problems associated with submitting an MSA to CMS for review.  However, the proposed legislation does not address or overcome the subjective process of an MSA evaluation.  Moreover, once again as per the previous legislation introduced, the bill does not include or address prescription drugs.  This is noteworthy, because the mandated requirement of utilizing average wholesale pricing for MSAs submitted to CMS for review is one of the most significant cost-drivers. Essentially, choosing to bypass the voluntary submission and review process, overcomes many of the issues with CMS choosing to disregard certain state provisions and many of the inherent costs associated with the process.  However, any improvement to CMS’ review process is certainly welcome; even if it is just a band-aid. 

The legislation has been referred to the Committee on Finance, and can be monitored here.