Representative Clay Shaw (R) of Florida proposed major changes to the Medicare Secondary Payer Act (“MSP”) on May 4, 2006 by introducing H.R. 5309, the “Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2006.”  The changes are backed by the insurance industry, but other interests may strongly oppose reductions in Medicare funding  that could result from the proposed changes.  Only time will decide the outcome of the bill, details of which are described below.

Certain Settlements Need Not Consider Medicare’s Interests

The bill carves out exceptions from the MSP, whereby certain settlements need not consider Medicare’s interests in the settlement of workers’ compensation claims. Settlements exempt from considering Medicare’s interests include:

1. Settlements with a present value of less than $250,000.00;

2. Compromise agreements that have a present value of no more than 20% of the total amount that would be payable under the workers’ compensation law if the claim had not been subject to a compromise agreement (compromise agreements are those that involve claims that are denied or contested, in whole or in part, that do not provide for payment of the full amount of benefits sought or payable under the workers’ compensation claim);

3. Settlements involving claimants who are not eligible for Medicare benefits as of the effective date of the agreement and who are unlikely to become eligible for Medicare within 30 months after the date of the agreement (claimants are unlikely to become eligible for Medicare unless they have “insured status” for Social Security Disability benefits and have been awarded or are appealing the denial of disability benefits, they are at least 62 years and 6 months, or they have end stage renal disease);

4. Settlements in which the claimant is not eligible for payment of medical expenses incurred after the effective date of the agreement; and

5. Settlements that do not limit or extinguish the claimant’s right to payment of future medical expenses (e.g., those that settle indemnity, but not future medical).

Automatic Approval of “Qualified” Set-Asides Unless Timely Disapproval by CMS

The bill also creates a class of “qualified” Medicare set-asides that protect the claimant and workers’ compensation payer from any recourse by the Centers for Medicare & Medicaid Services. Such set-aside amounts generally must be based upon the workers’ compensation fee schedule. Qualified set-asides submitted for CMS approval will automatically be approved, unless disapproved within 60 days after the date received by CMS, with a specific explanation of each deficiency of the submission.

Administrative Appeals Process Created to Challenge Adverse Decisions by CMS

As you may know, Protocols, LLC is already challenging CMS' illegal and unconstitutional appeals process. If our challenge is successful, an appeals process that allows meaningful appeals of adverse determinations could be in place for all.  Regarding the proposed changes, the bill creates an administrative process for appealing adverse actions by CMS, including the right to file a request for reconsideration within 60 days after the notice of the adverse determination. The administrative review includes reconsideration of the decision and thereafter, the right to a hearing before an administrative law judge, after which judicial review of the final agency decision may be had. The bill requires issuance of the notice of decision 30 days following the request for reconsideration. Likewise, administrative hearings must be held and decisions rendered within 90 days from the date of a request for hearing.

CMS May Administer Set-Asides

The bill allows CMS to serve as an administrator of qualified set-asides. Claimants or workers compensation payers may transfer payment of a qualified set-aside or annuity purchased to fund the set-aside to CMS for administration.

Claimants with Improved Conditions May Request Reduction or Termination of Set-Asides

The bill establishes a means by which claimants can obtain a modification or termination of the set-aside upon a showing of “substantial medical improvement, with respect to the injury or illness involved, or of changed circumstances of the claimant that justify a reduction of the funds in the Medicare set-aside…by at least 25 percent” at any time more than five years from the date of a Medicare set-aside.

Please contact Kara Martin or Robert Sagrillo for further information.

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Everybody at Protocols^® offers their most sincere farewell to Geraldine Dauby, who recently left the firm in pursuit of a career change.  Ms. Dauby offered her legal expertise as an attorney for more than three years and we wish her the best of luck in her future endeavors.

Please contact Eddie Phillips for further information.

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Our Staff Spotlight intends to help our clients get to know the people behind Protocols.  This month's spotlight focuses on Jan Wilson, Case Manger. Jan brings with her more than four decades' experience providing case management with Denver-based law firms.  Outside the office, she is an active member of the Arvada Center Chorale and has participated in three European musical tours with the Chorale.  She also attends musical and theater productions and spends time with her friends and family, including six grandchildren.

Please contact Jan Wilson for further information.

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