[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Extensions of Remarks]
[Pages 27958-27959]
[From the U.S. Government Publishing Office, www.gpo.gov]



            AMENDING TITLE XVIII OF THE SOCIAL SECURITY ACT

                                 ______
                                 

                          HON. GEORGE W. GEKAS

                            of pennsylvania

                    in the house of representatives

                      Wednesday, December 19, 2001

  Mr. GEKAS. Mr. Speaker, until the early 1980s, Medicare was always 
the primary payor in all situations to employer health plans for both 
disabled and retired employees. However, effective with the Omnibus 
Budget Reconciliation Act of 1981 (``OBRA''), for the first time 
Medicare became the secondary payor for one group of American employees 
who were specifically singled out--the ``working aged''. The ``working 
aged'' were defined as American employees over the age of 65 who were 
provided both Medicare and employer health plan coverage and continued 
to actively work. As a result of this legislative change, Medicare 
would now only provide secondary coverage to the ``working aged'' after 
their employer health plan. But once the ``working aged'' stopped 
working and contributing to our society, Medicare would again become 
the primary insurance and payor of claims for these good people.
  Then in 1986 the Congress again acted by passing the Omnibus Budget 
and Reconciliation Act of 1986 which singled out yet another group of 
American workers--this group of individuals was identified as 
``disabled active individuals''. A ``disabled active individual'' was 
defined in the statute as an ``employee (as may be defined in 
regulations)''. The OBRA Amendments of 1986 also mandated that Medicare 
become secondary insurance coverage to the employer health plans for 
the ``disabled active individual''. The Health Care Financing 
Administration (HCFA), the responsible federal government agency 
charged with implementing the 1986 OBRA Amendments, crafted a 
definition of employee by Agency directive--a policy which was never 
subjected to the rigors of the Administrative Procedure Act and which 
was never promulgated into a regulation published in the Federal 
Register.
  This ad hoc policy judgment made by the Administrator of HCFA 
contradicted the very definition of employee already existing within 
the body of the Social Security Act and the Internal Revenue Code. 
HCFA's definition effectively said that if an employer continued to 
carry a disabled employee on their books in ``employee status'' after a 
disability began (which all employers did for employee benefit 
purposes), the employer health plan, not Medicare, would become the 
primary payor for that employee if he or she was unfortunate enough to 
be classified as ``the disabled active individual.'' According to the 
new HCFA policy, which remains the policy of the Agency, the fact that 
the disabled employee was not actually working was irrelevant. However, 
the common law definition of employee used by Social Security and the 
IRS states that an individual has to be actively working and performing 
services for remuneration in order to be considered an employee. This 
ad hoc action by HCFA has already directly and negatively affected 
numerous companies throughout Pennsylvania, Illinois and other states 
involving employees that work for these companies.
  Due to HCFA's departure from the commonly accepted definition of 
employee, and existing definitions within federal law, many employer 
health plans reacted to this unjustified policy making of HCFA by 
simply taking the easiest course of action--terminating health coverage 
for their disabled employees. In effect, HCFA's policy forced employers 
to begin discriminating against their disabled employees.
  While HCFA stated that an employer would be primary payor to Medicare 
for their ``working aged'', as soon as these individuals quit working, 
Medicare would become primary payor. However, to these same employers, 
HCFA said that for your disabled employees you will be the primary 
payor to Medicare regardless of whether these individuals are working 
or not.
  Due to this contradicting treatment between retirees and disabled 
employees, clarifying language was finally introduced and passed by the 
Congress with passage of the Omnibus Budget and Reconciliation Act of 
1993 to treat both of these groups in the same and equal manner. As a 
result, Medicare today now pays primary to employer health plans for 
disabled employees that are not actually actively working. However, 
even though HCFA agrees prospectively to be the primary payor once 
Medicare's ``payment status'' has been changed to primary, most 
retroactive Medicare claims submitted for treatment received since 
August 10, 1993 (effective date of statutory change) are denied. The 
reason for this from HCFA is that because these claims when submitted 
were considered to have not been ``timely filed'' in conjunction with 
Medicare regulations. These

[[Page 27959]]

claims could not have been timely filed previously because they were 
for disabled employees whose former employers continued to pay as 
primary.
  These employers acted honorably by continuing to pay claims from 
these employees as the primary payor because they were not made aware 
of clarifying language enacted by the Congress by OBRA in 1993, a 
change that HCFA did not care to publicize. Even though the Congress in 
1993 directed HCFA by clarifying the statute that Medicare is to act as 
the primary payor for insurance claims for ``disabled active 
individuals,'' many American employers still have not been able to be 
fully and lawfully reimbursed and fully benefit from the legislative 
change intended by the Congress by passage of OBRA in 1993.
  As a result, the Congress should once again act to direct the 
Administrator of HCFA to fully rectify what was originally intended by 
the Congress in 1993, namely to direct HCFA not to subject this unique 
and special class of American employees and their respective Medicare 
claims to the standard Medicare timely filing regulations. These claims 
are not in any way similar to normal Medicare claims because they could 
never have been submitted previously or in a timely fashion due to the 
problems I have illuminated in these remarks. Medicare claims are 
normally submitted immediately upon or shortly after medical treatment. 
Though Medicare regulations allow for an exception to their timely 
filing guidelines if there is an error on the party of the Secretary, 
HCFA has refused to apply this exception to the special situation we 
have before us. Even more startling to this Chamber should be the fact 
that this very HCFA policy was determined to be illegal, unlawful and 
invalid as a matter of federal administrative law by a U.S. District 
Court in the District of Columbia in 1999 because of HCFA's failure to 
promulgate a valid federal regulation to support the Agency's policy 
determination, in the case SUNTRUST BANKS. INC. v. Donna Shalala, 
Secretary of Health and Human Services, CA. No. 96

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