Application of Medicare secondary payer rules to certain workers' compensation settlement agreements

(a)

Secondary payer provisions for workers' compensation settlement agreements

Section 1862 of the Social Security Act (42 U.S.C. 1395y) is amended—(1)in subsection (b)(2)(A)(ii), by inserting subject to subsection (p), after (ii); and(2)by adding at the end the following new subsection:

(p)

Definitions

For purposes of this subsection and subsection (q):(1)

Compromise agreement

The term compromise agreement means a workers' compensation settlement agreement that—(A)applies to a workers' compensation claim that is 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; and(B)does not provide for a payment of the full amount of benefits sought or that may be payable under the workers' compensation claim.(2)

Workers' compensation claimant

The term workers' compensation claimant means a worker who—(A)is or may be covered under a workers' compensation law or plan; and(B)submits a claim or accepts benefits under such law or plan for a work-related injury or illness.(3)

Workers' compensation law or plan

(A)

In general

The term workers' compensation law or plan means a law or program administered by a State or the United States to provide compensation to workers for a work-related injury or illness (or for disability or death caused by such an injury or illness), including the Longshore and Harbor Workers' Compensation Act (33 U.S.C. 901–944, 948–950), chapter 81 of title 5, United States Code (known as the Federal Employees Compensation Act), the Black Lung Benefits Act (30 U.S.C. 931 et seq.), and part C of title 4 of the Federal Coal Mine and Safety Act (30 U.S.C. 901 et seq.), but not including the Act of April 22, 1908 (45 U.S.C. 51 et seq.) (popularly referred to as the Federal Employers' Liability Act).(B)

Inclusion of similar compensation plan

Such term includes a similar compensation plan established by an employer that is funded by such employer or the insurance carrier of such employer to provide compensation to a worker of such employer for a work-related injury or illness.(4)

Workers' compensation payer

The term workers' compensation payer means, with respect to a workers' compensation law or plan, a workers' compensation insurer, self-insurer, employer, individual, or any other entity that is or may be liable for the payment of benefits to a workers' compensation claimant pursuant to the workers' compensation law or plan.(5)

Workers' compensation settlement agreement

The term workers' compensation settlement agreement means an agreement between a claimant and one or more workers' compensation payers that—(A)forecloses the possibility of future payment of some or all workers' compensation benefits involved; and(B)(i)compensates the claimant for a work-related injury or illness as provided for by a workers' compensation law or plan; or(ii)eliminates cause for litigation involving issues in dispute between the claimant and payer.

(b)

Satisfaction of secondary payer obligations

Section 1862 of the Social Security Act (42 U.S.C. 1395y), as amended by subsection (a), is amended by adding at the end the following new subsection:

(q)

Treatment of Medicare set-Asides under workers' compensation settlement agreements

(1)

Satisfaction of secondary payer obligations

(A)

Full satisfaction of claim obligations

(i)

In general

If a workers' compensation settlement agreement, related to a claim of a workers' compensation claimant, includes a Medicare set-aside (as defined in subparagraph (B)(i)), such set-aside shall satisfy any obligation with respect to payments reasonably expected to be made under subsection (b)(2)(A)(ii) with respect to such claim.(ii)

Rule of construction

Nothing in this section shall be construed as requiring the submission of a Medicare set-aside to the Secretary.(B)

Medicare set-aside and Medicare set-aside amount defined

For purposes of this subsection:(i)

Medicare set-aside

The term Medicare set-aside means, with respect to a workers' compensation settlement agreement, a provision in the agreement that provides for a payment of a lump sum, an annuity, a combination of a lump sum and an annuity, or other amount that is in full satisfaction of the obligation described in subparagraph (A) for items and services that the workers' compensation claimant under the agreement received or is reasonably expected to receive under the applicable workers' compensation law.(ii)

Medicare set-aside amount

The term Medicare set-aside amount means, with respect to a Medicare set-aside, the actual dollar amount provided for in clause (i).(2)

Medicare set-aside

(A)

Satisfaction of Medicare set-aside

For purposes of this subsection, a Medicare set-aside meets Medicare secondary payer obligations if the Medicare set-aside amount reasonably takes into account the full payment obligation described in paragraph (1)(A), while meeting the requirements of subparagraphs (B) and (C) and is determined based on the following:(i)The illness or injury giving rise to the workers' compensation claim involved.(ii)The age and life expectancy of the claimant involved.(iii)The reasonableness of, and necessity for, future medical expenses for treatment of the illness or injury involved.(iv)The duration of and limitation on benefits payable under the workers' compensation law or plan involved.(v)The regulations and case law relevant to the State workers' compensation law or plan involved.(B)

Items and services included

A Medicare set-aside—(i)shall include payment for items and services that are covered and otherwise payable under this title as of the effective date of the workers' compensation settlement agreement and that are covered by the workers' compensation law or plan; and(ii)is not required to provide for payment for items and services that are not described in clause (i).(C)

Payment requirements

(i)

Required application of workers' compensation law and fee schedule

(I)

In general

Except in the case of an optional direct payment of a Medicare set-aside made under paragraph (5)(A), the set-aside amount shall be based upon the payment amount for items and services under the workers' compensation law or plan and applicable fee schedule (effective as of the date of the agreement).(II)

Workers' compensation fee schedule defined

For purposes of this subsection, the term workers' compensation fee schedule means, with respect to a workers' compensation law or plan of a State or a similar plan applicable in a State, the schedule of payment amounts the State has established to pay providers for items and services furnished to workers who incur a work-related injury or illness as defined under such law or plan (or in the absence of such a schedule, the applicable medical reimbursement rate under such law or plan).(ii)

Optional proportional adjustment for compromise settlement agreements

In the case of a compromise settlement agreement, a claimant or workers' compensation payer who is party to the agreement may elect to calculate the Medicare set-aside amount of the agreement 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 or similar plan involved had the denied, disputed, or contested portion of the claim not been subject to a compromise agreement. The percentage reduction shall be equal to the denied, disputed, or contested percentage of such total settlement. Such election may be made by a party to the agreement only with the written consent of the other party or parties to the agreement.(3)

Optional process for approval of Medicare set-asides

(A)

Optional prior approval by Secretary

A party to a workers' compensation settlement agreement that includes a Medicare set-aside may submit to the Secretary the Medicare set-aside amount for approval.(B)

Notice of determination of approval or disapproval

Not later than 60 days after the date on which the Secretary receives a submission under subparagraph (A), the Secretary shall notify the parties to the workers' compensation settlement agreement in writing of the determination of approval or disapproval. If the determination disapproves such submission, the Secretary shall include with such notification the specific reasons for the disapproval.(4)

Appeals

(A)

In general

A party to a workers' compensation settlement agreement that is dissatisfied with a determination under paragraph (3)(B), upon filing a request for reconsideration with the Secretary not later than 60 days after the date of notice of such determination, shall be entitled to—(i)reconsideration of the determination by the Secretary (with respect to such determination);(ii)a hearing before an administrative law judge thereon after such reconsideration; and(iii)judicial review of the Secretary's final determination after such hearing.(5)

Administration of Medicare set-aside provisions

(A)

Optional direct payment of Medicare set-aside amount

(i)

Election for direct payment of Medicare set-aside amount

Effective 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 parties involved may calculate the Medicare set-aside amount of such set-aside using any of the following methods:(I)In the case of any Medicare set-aside of a compromise settlement agreement under paragraph (2)(C)(ii), the amount calculated in accordance with such paragraph.(II)In the case of any Medicare set-aside, the amount based upon the payment amount for items and services under the workers' compensation law or plan and fee schedule (effective as of the date of the agreement) in accordance with paragraph (2)(C)(i)(I).(III)In the case of any Medicare set-aside, the payment amount applicable to the items and services under this title as in effect on the effective date of the agreement.

Such transfer shall be made only upon written consent of the other party or parties to the agreement.

(ii)

Election satisfying liability

An election made under clause (i), with respect to a qualified Medicare set-aside, shall satisfy any payment, in relation to the underlying claim of the related workers' compensation settlement agreement, required under subsection (b)(2) to be made by the claimant or payer to the Secretary.(B)

Election of professional or beneficiary self-administration of Medicare set-aside payments

Nothing in this subsection or subsection (p) prohibits an individual from electing to utilize professional administration services or to self-administer payments of their Medicare set-aside in accordance with existing law.(6)

Treatment of State workers' compensation law

For purposes of this subsection and subsection (p), if a workers' compensation settlement agreement is accepted, reviewed, approved, or otherwise finalized in accordance with the workers' compensation law of the jurisdiction in which such agreement will be effective, such acceptance, review, approval, or other finalization shall be deemed final and conclusive as to any and all matters within the jurisdiction of the workers' compensation law, including—(A)the determination of reasonableness of the settlement value;(B)any allocations of settlement funds;(C)the projection of future indemnity or medical benefits that may be reasonably expected to be paid under the State workers' compensation law; and(D)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 in accordance with paragraph (2)(C)(ii).

(c)

Conforming amendments

Section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) is amended—(1)in paragraph (2)(B)(ii), by striking paragraph (9) and inserting paragraph (9) and subsections (p) and (q);(2)in paragraph (2)(B)(iii)—(A)in the first sentence, by striking In order to recover payment and inserting Subject to subsection (q), in order to recover payment; and(B)in the third sentence, by striking In addition and inserting Subject to subsection (q), in addition; and(3)in paragraph (3)(A), by striking There is established a private cause of action and inserting Subject to subsection (q), there is established a private cause of action.(d)

Modernizing terminology for purposes of Medicare secondary payer provisions

Section 1862(b)(2)(A) of the Social Security Act (42 U.S.C. 1395y(b)(2)(A)) is amended by striking workmen's compensation law or plan and inserting workers' compensation law or plan each place it appears.(e)

Limitation on liability

The parties to a workers' compensation settlement agreement which met the provisions of section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) on the effective date of settlement shall 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.(f)

Effective date

The amendments made by this section, unless otherwise specified, shall apply to a workers' compensation settlement agreement with an effective date on or after January 1, 2022.