June 5, 2007 -- Protocols^® strongly supports proposed legislation creating new standards regarding Medicare set-asides (“MSAs”) in the context of workers’ compensation settlements. H.R. 2549 (the “Bill”), sponsored by Rep. John Tanner (D-TN), Rep. Phil English (R-PA), Rep. Thomas M. Reynolds (R-NY), and Rep. Chris Van Hollen (D-MD), aims to create consistent standards for MSAs and achieve a more efficient review process.

The current review process poses a burden on injured workers, states and workers’ compensation payers. The current review process is also subject to judicial attacks concerning its legality.

Protocols^® strongly and unequivocally supports any legislative effort to bring efficient, clear and consistent standards to the workers’ compensation settlement process with regard to the consideration of Medicare’s interests.

The Medicare Secondary Payer Act (“MSP”) was implemented in 1981 as a coordination of benefits statute. Its primary purpose is to ensure that Medicare is the payer of last resort for Medicare beneficiaries. If another source is available to pay for a Medicare beneficiary’s medical expenses, e.g. workers’ compensation or private health insurance, Medicare should not make payment. The law provides that settlement proceeds are another source of payment primary to Medicare. The MSA process has evolved as a common means of complying with the MSP through the settlement.

For over 10 years the workers’ compensation settlement process has been increasingly hindered by a lengthy, cumbersome and unpredictable process of complying with the MSP. The current process of developing an MSA and obtaining approval from the Centers for Medicare and Medicaid Services (“CMS”) substantially delays many workers’ compensation settlements resulting in increased costs to insurance carriers and employers, and anxiety and confusion for the beneficiary. Current administrative guidance from CMS arguably does not comply with the MSP, plus CMS continually changes its guidance leading to retroactive applications and unpredictable outcomes. While many have tried to reason with CMS for a more timely and predicable process that complies with the MSP, all have failed. Without legislative change or judicial intervention, the MSA process will likely continue in a slow, unpredictable manner.

While the proposed legislation may not resolve all issues for everyone in its current form, it will bring the topic to a head and to the attention of those that can fix the process -- Congress. With bi-partisan support and participation from the affected industry participants, the Bill will certainly result in a more efficient, predicable MSA process. Protocols^® supports this effort.

As the Bill moves through the legislative process, there is one significant area where the legislation could be improved, and support for the Bill broadened, and that is in regard to non-workers’ compensation primary payers. The MSP does not just apply to workers’ compensation claims. In fact, the MSP is implicated in all third-party liability cases as well.

Under the Medicare Modernization Act of 2003, the definition of “primary plan” was clarified. Under the prior law, the MSP seemed to only be implicated when a primary “insurance” plan was involved. Now, any defendant/tortfeasor is deemed to be a primary plan of insurance if it carries its own risk (whether by failure to obtain insurance, or otherwise) in whole or in part.

The law was further clarified to provide that a primary plan’s responsibility for making a payment is demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, or a waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured or by other means.

As a result, the newly amended MSP clearly provides that it is implicated in all third-party liability cases regardless of whether insurance is available. Therefore, it seems appropriate for any legislative effort to address liability claims too. Otherwise, we may be facing the same lengthy, cumbersome and unpredictable process of complying with the MSP in non-workers’ compensation claims 10 years from now.

To check the latest status of the bill, click here.