Potential Medicare Legislation and its Impact on The Medicare Approval Process

The path from submission of a Medicare Set-Aside (MSA) to final approval can be riddled with many twists, turns and roadblocks along the way. Legislation has been introduced in the last several years to reform this process, but has failed to gain necessary momentum in both the House and Senate for passage. On June 18, 2018, a revised version of this legislation was introduced in the Senate by prior sponsors, Senators Portman (R-OH) and Nelson (D-FL). Senate Bill 3079, Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2018, amends title XVIII of the Social Security Act to include Medicare Set-Aside provisions and guidance for the Medicare approval process.

Bill Highlights

The revised version of this legislation contains many key provisions that would impact Workers’ Compensation Medicare Set-Asides. Some highlights of this Bill are as follows:

• The Bill allows for an optional proportional adjustment to the MSA in certain circumstances. Specifically, a party to the settlement may elect to calculate a percentage reduction in the MSA “for the total settlement amount that could have been payable under the applicable workers’ compensation law…had the denied… portion of the claim not been subject to a compromised agreement.” Calculation of the MSA reduction is equal to the denied percentage of the settlement. It is unclear how this would actually be argued and implemented to reduce the MSA. Further, this option is only available if the party requesting this reduction has written consent to do so from the other party to the settlement.
• Submission of a formal MSA proposal is still a voluntary process. In the event of submission, the Secretary of Health and Human Services has sixty (60) days from receipt of the submission to issue a decision approving or denying the MSA. If the MSA amount is denied, the reasons for denial must be clearly outlined in the denial letter.
• The Bill also offers a formalized appeal process with the potential for judicial intervention. Specifically, subsequent to a request for reconsideration, the parties can request a hearing before an administrative law judge and judicial review of the Secretary’s final determination after the hearing.
• Rather than self administer or have the MSA professionally administered the MSA fund can be sent directly to CMS. This is an option that could help relieve the financial stress which is currently on the Medicare Trust Fund. All parties must agree to elect this option. The legislation is silent on what would happen if the MSA funds were not depleted by the claimant.
• In addition, the legislation provides that State Workers’ Compensation Laws should be final and conclusive as to any and all matters within the jurisdiction of the State in determining the reasonableness of settlement value; allocation of settlement funds; the projection of future indemnity or medical benefits expected to be paid under the State Workers’ Compensation Law; and the total amount that could have been payable for a claim in the event of a compromised agreement.

If passed, this legislation would become effective on January 1, 2019. Currently the legislation has been referred to the Committee on Finance.

Follow Up Thoughts:

The legislation is a step forward in defining and implementing a more consistent and clearer Medicare approval process. There are still issues however that remain outstanding including transparency in how the exact amount of the MSA should be calculated, how to create a more realistic approach to controlling prescription drug costs in Medicare Set-Aside allocations, and how these provisions will actually be implemented by CMS. This legislation is an attempt to formalize a more defined MSA process and may make the path to Medicare Set-Aside approval much less thorny and in the end, hopefully, much more rosy.