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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5309 Introduced in House (IH)]

109th CONGRESS
  2d Session
                                H. R. 5309

 To amend section 1862 of the Social Security Act with respect to the 
application of Medicare secondary payer rules to workers' compensation 
  settlement agreements and Medicare set-asides under such agreements.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 4, 2006

Mr. Shaw (for himself, Mr. Tanner, Mr. Hayworth, Mr. Weller, Mr. Foley, 
  Ms. Hart, and Mr. Chocola) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
   Committee on Energy and Commerce, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To amend section 1862 of the Social Security Act with respect to the 
application of Medicare secondary payer rules to workers' compensation 
  settlement agreements and Medicare set-asides under such agreements.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Secondary Payer and 
Workers' Compensation Settlement Agreements Act of 2006''.

SEC. 2. APPLICATION OF MEDICARE SECONDARY PAYER RULES TO CERTAIN 
              WORKERS' COMPENSATION SETTLEMENT AGREEMENTS AND QUALIFIED 
              MEDICARE SET-ASIDE PROVISIONS.

    (a) Exception From Secondary Payer Provisions for Certain 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 (l),'' after ``(ii)''; and
            (2) by adding at the end the following new subsection:
    ``(l) Exception From Secondary Payer Provisions for Certain 
Workers' Compensation Settlement Agreements.--
            ``(1) In general.--A workers' compensation law or plan 
        shall not be treated, for purposes of subsection (b), as a 
        primary plan with respect to an exempt workers' compensation 
        settlement agreement.
            ``(2) Exempt workers' compensation settlement agreement 
        defined.--For purposes of this subsection, an `exempt workers' 
        compensation settlement agreement' means a workers' 
        compensation agreement that is described in any of the 
        following subparagraphs:
                    ``(A) Present value of less than $250,000.--A 
                workers' compensation settlement agreement that has a 
                present value, as determined under paragraph (3)(A), 
                that is less than the greater of the following:
                            ``(i) $250,000.
                            ``(ii) The product (as published under 
                        paragraph (3)(B)) of $250,000 and the ratio 
                        of--
                                    ``(I) the national average wage 
                                index (as defined in section 209(k)(1) 
                                of the Social Security Act) for the 
                                calendar year before the calendar year 
                                in which the workers' compensation 
                                settlement agreement became effective, 
                                to
                                    ``(II) the national average wage 
                                index for 2004,
                        with such product, if not a multiple of $1,000, 
                        being rounded to the next higher multiple of 
                        $1,000.
                    ``(B) Compromise agreement.--A workers' 
                compensation settlement agreement that is a compromise 
                agreement (as defined in paragraph (5)) that has a 
                present value that is not more than 20 percent of the 
                present value of the total amount that could have been 
                payable under the applicable workers' compensation law 
                or similar plan if the claim involved had not been 
                subject to a compromise agreement.
                    ``(C) Likely ineligibility of workers' compensation 
                claimant for medicare benefits.--A workers' 
                compensation settlement agreement the claimant of which 
                is not eligible for benefits under this title as of the 
                effective date of the agreement and, under paragraph 
                (4), is unlikely to become so eligible within 30 months 
                after such effective date.
                    ``(D) No future medical expenses.--A workers' 
                compensation settlement agreement the claimant of which 
                is not eligible for payment of medical expenses 
                incurred after the effective date of such agreement 
                that are available under the workers' compensation law 
                or plan of the jurisdiction in which such agreement 
                will be effective.
                    ``(E) No limitation on future medical expenses.--A 
                workers' compensation settlement agreement that does 
                not limit or extinguish the right of the claimant 
                involved to payment of medical expenses incurred after 
                the effective date of such agreement that are available 
                under the workers' compensation law or plan of the 
                jurisdiction in which such agreement will be effective.
            ``(3) Determination of present value of workers' 
        compensation settlement agreement.--
                    ``(A) By cost of annuity to fund agreement.--
                            ``(i) In general.--Subject to clause (ii), 
                        for purposes of paragraphs (2)(A) and (2)(B) 
                        and subsection (m) and with respect to a work-
                        related injury or illness that is the subject 
                        of a workers' compensation settlement 
                        agreement, the present value of the agreement 
                        is the sum of any of the following amounts that 
                        are used to fund the agreement:
                                    ``(I) The amount of any cash 
                                payment.
                                    ``(II) The amount of the purchase 
                                cost of an annuity (and not the payout 
                                or the projected payout paid during the 
                                term of such annuity).
                                    ``(III) The amount of the sum of 
                                any funds under subclause (I) or (II), 
                                previously paid pursuant to a workers' 
                                compensation settlement agreement 
                                involved in the workers' compensation 
                                claim involved.
                            ``(ii) Costs excluded from present value.--
                        The present value of a workers' compensation 
                        settlement agreement does not include the 
                        following payments made because of the workers' 
                        compensation claim involved:
                                    ``(I) Payments to satisfy previous 
                                unpaid medical expenses.
                                    ``(II) Payments to satisfy third 
                                party claims or liens for amounts 
                                previously paid, such as payments under 
                                this title, payments under the Medicaid 
                                program under title XIX, payments under 
                                a program of the Department of Veterans 
                                Affairs under title 38, United States 
                                Code, payments under an employee 
                                welfare benefit plan (as defined in 
                                section 3(1) of the Employee Retirement 
                                and Income Security Act of 1974), and 
                                other similar third party payments.
                                    ``(III) The attorney fees for the 
                                claimant involved.
                                    ``(IV) Any other procurement costs 
                                incurred by a party to the agreement to 
                                secure the agreement.
                    ``(B) Publication in federal register of amount of 
                present value adjusted for inflation.--Not later than 
                November 15 of each year (beginning with 2006), the 
                Secretary shall determine and provide for publication 
                in the Federal Register of the amount described in 
                paragraph (2)(A)(ii) for the succeeding year.
            ``(4) Determination of likely ineligibility of claimant for 
        medicare benefits.--For purposes of paragraph (2)(C), a 
        workers' compensation claimant shall be deemed unlikely to 
        become eligible for benefits under this title unless, as of the 
        effective date of the agreement, such claimant is insured for 
        disability insurance benefits as determined under subsection 
        (c)(1) of section 223 and meets any of the following 
        requirements:
                    ``(A) Awarded or appealing denial of disability 
                benefits.--The claimant has been awarded disability 
                insurance benefits or is appealing a denial of such 
                benefits under subsection (a) of such section.
                    ``(B) Minimum age.--The claimant is at least 62 
                years and 6 months of age.
                    ``(C) End stage renal disease.--The claimant is 
                medically determined to have end stage renal disease, 
                but does not as of such date qualify for benefits under 
                this title by reason of such disease.
            ``(5) Definitions.--For purposes of this subsection and 
        subsection (m):
                    ``(A) Workers' compensation settlement agreement.--
                The term `workers' compensation settlement agreement' 
                means an agreement, including a commutation agreement 
                or compromise agreement, between a workers' 
                compensation claimant and one or more workers' 
                compensation payers which is intended--
                            ``(i) to foreclose the possibility of 
                        future payment of some or all workers' 
                        compensation benefits involved; and
                            ``(ii)(I) to compensate the claimant for a 
                        work-related injury or illness as provided for 
                        by a workers' compensation law or plan; or
                            ``(II) to eliminate cause for litigation 
                        involving issues in dispute between the 
                        claimant and payer.
                    ``(B) 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.
                    ``(C) Workers' compensation claimant.--The term 
                `workers' compensation claimant' means a worker who--
                            ``(i) is or may be covered under a workers' 
                        compensation law or plan (or similar 
                        compensation plan); and
                            ``(ii) submits a claim or accepts benefits 
                        under such law or plan (or similar compensation 
                        plan) for a work-related injury or illness.
                    ``(D) Workers' compensation law or plan.--
                            ``(i) 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 
                        Employer's Liability Act).
                            ``(ii) 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.
                    ``(E) Compromise agreement.--The term `compromise 
                agreement' means a workers' compensation settlement 
                agreement that--
                            ``(i) 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 (or similar compensation plan) applicable 
                        to the jurisdiction in which the agreement has 
                        been settled; and
                            ``(ii) does not provide for a payment of 
                        the full amount of benefits sought or payable 
                        under the workers' compensation claim.
                    ``(F) Commutation agreement.--The term `commutation 
                agreement' means a workers' compensation settlement 
                agreement to settle all or a portion of a workers' 
                compensation claim, in which--
                            ``(i) liability for past and future 
                        benefits is not disputed; and
                            ``(ii) the parties to the agreement agree 
                        to include payment for future workers' 
                        compensation benefits payable after the date on 
                        which the agreement becomes effective.''.
    (b) Satisfaction of Secondary Payer Requirements Through Use of 
Qualified Medicare Set-Asides Under Workers' Compensation Settlement 
Agreements.--Section 1862 of the Social Security Act (42 U.S.C. 1395y), 
as amended by subsection (a), is further amended by adding at the end 
the following new subsection:
    ``(m) Treatment of Qualified Medicare Set-Asides Under Workers' 
Compensation Settlement Agreements.--
            ``(1) Satisfaction of secondary payer requirements through 
        use of qualified medicare set-asides.--
                    ``(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 qualified Medicare set-aside, such 
                        set-aside shall satisfy any obligation with 
                        respect to the present or future payment 
                        reimbursement under subsection (b)(2), with 
                        respect to such claim. The Secretary shall have 
                        no further recourse, directly or indirectly, 
                        upon a workers' compensation claimant or 
                        workers' compensation payer who is a party to 
                        such agreement.
                            ``(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, 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 
                        likely to receive under the applicable workers' 
                        compensation law and for which payment would be 
                        made under this title, but for subsection 
                        (b)(2)(A).
                            ``(ii) Medicare set-aside amount.--The term 
                        `Medicare set-aside amount' means, with respect 
                        to a Medicare set-aside, the amount described 
                        in clause (i).
            ``(2) Qualified medicare set-aside.--
                    ``(A) Requirements of qualified medicare set-
                aside.--For purposes of this subsection, the term 
                `qualified Medicare set-aside' is a Medicare set-aside 
                in which the Medicare set-aside amount reasonably takes 
                into account the full payment obligation described in 
                paragraph (1)(A), consistent with subparagraphs (B) and 
                (C) and giving due consideration to 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.
                    ``(B) Items and services included.--The Medicare 
                set-aside--
                            ``(i) shall include payment for items and 
                        services that are authorized for payment under 
                        this title as of the effective date of the 
                        workers' compensation settlement agreement 
                        involved and that are covered by the workers' 
                        compensation law or plan involved; 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 use of workers' compensation 
                        fee schedule.--
                                    ``(I) In general.--Except in the 
                                cases of a deep discount compromise 
                                agreement defined in clause (iii)(II), 
                                a Medicare set-aside deemed a qualified 
                                Medicare set-aside under paragraph 
                                (4)(A), or an optional direct payment 
                                of a Medicare set-aside made under 
                                paragraph (6)(A), the set-aside amount 
                                shall be based upon the payment amount 
                                for items and services under the 
                                workers' compensation fee schedule 
                                (effective as of the date of the 
                                agreement) applicable to the workers' 
                                compensation law or plan involved.
                                    ``(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) Required payment adjustment for 
                        certain fees.--The Medicare set-aside amount 
                        otherwise computed shall be reduced by--
                                    ``(I) the amount of the direct 
                                costs and expenses incurred in 
                                establishing, administering, or 
                                securing approval for the Medicare set-
                                aside; and
                                    ``(II) the proportional share of 
                                other costs and expenses (including 
                                fees for attorneys, third-party 
                                vendors, and administrators) incurred 
                                by the claimant or payer in entering 
                                into the workers' compensation 
                                settlement agreement involved.
                            ``(iii) Optional adjustment for deep 
                        discount compromise agreements.--
                                    ``(I) In general.--Notwithstanding 
                                clause (i), in the case of a deep 
                                discount compromise agreement, a 
                                workers' compensation claimant or 
                                workers' compensation payer who is 
                                party to the agreement may elect (but 
                                is not required) to calculate the 
                                Medicare set-aside amount of the 
                                agreement by applying the denied or 
                                contested percentage described in 
                                subclause (II) to the unadjusted 
                                Medicare set-aside amount for the 
                                denied or contested portion of the 
                                claim otherwise calculated before the 
                                application of clause (ii). Such 
                                election may be made by a party to the 
                                agreement only with the written consent 
                                of the other party to the agreement.
                                    ``(II) Deep discount compromise 
                                agreement.--For purposes of this 
                                subsection, the term `deep discount 
                                compromise agreement' means a 
                                compromise agreement in which the 
                                present value of the amount included in 
                                the agreement for the portion of the 
                                worker's compensation claim involved 
                                that was denied or contested by the 
                                workers' compensation payer involved is 
                                a percentage of more than 20 percent, 
                                and less than 90 percent, of the amount 
                                that could be the present value of the 
                                denied or contested portion of the 
                                claim if the agreement provided for the 
                                total amount that could have been 
                                payable under the applicable workers' 
                                compensation law or plan involved had 
                                the denied or contested portion of the 
                                claim not been subject to a compromise 
                                agreement.
                                    ``(III) Application.--If the 
                                workers' compensation claimant or 
                                worker's compensation payer elects to 
                                calculate the Medicare set-aside amount 
                                under this clause, the Medicare set-
                                aside shall be deemed a qualified 
                                Medicare set-aside under paragraph 
                                (4)(A) if the amount of the set-aside 
                                after such calculation satisfies the 
                                requirement of such paragraph.
            ``(3) Process for approval of qualified 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 set-aside, including appropriate 
                supporting documentation specified by the Secretary, 
                for approval of the set-aside as a qualified Medicare 
                set-aside. The set-aside shall be submitted in 
                accordance with a procedure specified by the Secretary.
                    ``(B) Automatic approval unless disapproved.--A 
                Medicare set-aside submitted under subparagraph (A) 
                shall be deemed a qualified Medicare set-aside unless 
                the Secretary determines and provides notice under 
                subparagraph (C) that the Medicare set-aside does not 
                satisfy the requirements of paragraph (2)(A) because 
                the amount of the proposed Medicare set-aside is based 
                on a substantial material error and is not supported by 
                the documentation submitted under subparagraph (A).
                    ``(C) Notice of determination of disapproval.--Not 
                later than 60 days after the date on which the 
                Secretary receives a submission under subparagraph (A), 
                the Secretary shall notify in writing the parties to 
                the workers' compensation settlement agreement of the 
                determination under subparagraph (B). If the 
                determination disapproves such submission the Secretary 
                shall include with such notification the specific 
                reasons for the disapproval. A determination that 
                disapproves a submission is not valid if the 
                determination does not include a specific explanation 
                of each deficiency of the submission.
            ``(4) Safe harbor for certain medicare set-asides.--
                    ``(A) In general.--A Medicare set-aside of a 
                workers' compensation settlement agreement shall be 
                deemed a qualified Medicare set-aside if the Medicare 
                set-aside amount is the safe harbor amount for the 
                agreement.
                    ``(B) Safe harbor amount defined.--For purposes of 
                this paragraph, the term `safe harbor amount' means, 
                for a workers' compensation settlement agreement, the 
                greater of--
                            ``(i) the amount that is 10 percent of the 
                        present value of the agreement (as determined 
                        under subsection (l)(3)); or
                            ``(ii) the amount that is 15 percent of the 
                        payments provided by the agreement for medical 
                        expenses, including payments for both items and 
                        services that are covered under this title and 
                        that are not covered under this title.
                    ``(C) Rule of construction.--In the case of a 
                workers' compensation settlement agreement with a 
                Medicare set-aside that is deemed a qualified Medicare 
                set-aside under subparagraph (A), the fact that the 
                workers' compensation claimant or workers' compensation 
                payer involved may elect direct payment under paragraph 
                (6)(A) or an adjustment under paragraph (2)(C)(iii) 
                shall not be construed as prohibiting such claimant or 
                payer from basing the set-aside amount on the safe 
                harbor amount for such agreement.
            ``(5) 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 
                        judge thereon; and
                            ``(iii) judicial review of the Secretary's 
                        final determination after such hearing.
                    ``(B) Deadlines for decisions.--
                            ``(i) Reconsiderations.--
                                    ``(I) In general.--The Secretary 
                                shall conduct and conclude a 
                                reconsideration of a determination 
                                under paragraph (3)(B) and mail the 
                                notice of the decision of such 
                                reconsideration by not later than the 
                                last day of the 30-day period beginning 
                                on the date that a request for such 
                                reconsideration has been timely filed.
                                    ``(II) Appeals of 
                                reconsiderations.--If a party to the 
                                workers' compensation settlement 
                                involved is dissatisfied with the 
                                Secretary's decision under subclause 
                                (I), that party may file an appeal 
                                within the 30-day period after the date 
                                of receipt of the notice of the 
                                decision under such subclause and 
                                request a hearing before an 
                                administrative law judge.
                                    ``(III) Failure by secretary to 
                                provide notice.--In the case of a 
                                failure by the Secretary to mail the 
                                notice of the decision under subclause 
                                (I) by the last day of the period 
                                described in such subclause, the party 
                                requesting the reconsideration may 
                                request a hearing before an 
                                administrative law judge, 
                                notwithstanding any requirements for a 
                                reconsideration of a determination for 
                                purposes of the party's right to such 
                                hearing.
                            ``(ii) Hearings.--
                                    ``(I) In general.--An 
                                administrative law judge shall conduct 
                                and conclude a hearing on a decision of 
                                the Secretary under clause (i) and 
                                render a decision on such hearing by 
                                not later than the last day of the 90-
                                day period beginning on the date that a 
                                request for such hearing has been 
                                timely filed.
                                    ``(II) Judicial review.--A decision 
                                under subclause (I) by an 
                                administrative law judge constitutes a 
                                final agency action and is subject to 
                                judicial review.
                                    ``(III) Failure by administrative 
                                law judge to render timely decision.--
                                In the case of a failure by an 
                                administrative law judge to render a 
                                decision under subclause (I) by the 
                                last day of the period described in 
                                such subclause, the party requesting 
                                the hearing may seek judicial review of 
                                the decision under clause (i), 
                                notwithstanding any requirements for a 
                                hearing for purposes of the party's 
                                right to such judicial review.
            ``(6) Administration of medicare set-aside provisions; 
        protection from certain liability.--
                    ``(A) Optional direct payment of medicare set-aside 
                amount.--
                            ``(i) Election for direct payment of 
                        medicare set-aside.--With respect to a claim 
                        for which a workers' compensation settlement 
                        agreement is established, a workers' 
                        compensation 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 qualified 
                        Medicare set-aside or an annuity purchased to 
                        directly fund the set-aside amount. With 
                        respect to a qualified Medicare set-aside paid 
                        directly to the Secretary, 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 deemed a qualified Medicare 
                                set-aside under paragraph (4)(A), the 
                                amount calculated in accordance with 
                                such paragraph.
                                    ``(II) In the case of any Medicare 
                                set-aside of a deep discount compromise 
                                agreement under paragraph (2)(C)(iii), 
                                the amount calculated in accordance 
                                with such paragraph.
                                    ``(III) In the case of any Medicare 
                                set-aside, the amount based upon the 
                                payment amount for items and services 
                                under the workers' compensation fee 
                                schedule (effective as of the date of 
                                the agreement) applicable to the 
                                workers' compensation law or plan 
                                involved, in accordance with paragraph 
                                (2)(C)(i)(I).
                                    ``(IV) 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 in accordance with a 
                        procedure established by the Secretary and 
                        shall be made only upon written consent of the 
                        other party 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. The Secretary shall have no 
                        further recourse, directly or indirectly, upon 
                        a workers' compensation claimant or workers' 
                        compensation payer to the agreement.
                    ``(B) Requirement for timely notice of medicare 
                repayments owed by workers' compensation claimant or 
                payer to secretary.--
                            ``(i) In general.--Not later than 60 days 
                        after the date on which the Secretary receives 
                        a request from a workers' compensation claimant 
                        or workers' compensation payer for 
                        documentation of any conditional payment made 
                        under subsection (b)(2)(B)(i) on behalf of the 
                        claimant, the Secretary shall provide to the 
                        claimant or payer such documentation. Such 
                        documentation shall be sufficient for the 
                        claimant or payer to make a reasonable 
                        determination whether such a payment was for an 
                        item or service furnished in connection with 
                        the claimant's work related injury or illness 
                        involved. The claimant or payer may rely on the 
                        documentation provided under this clause in 
                        making such determination. Payment of the 
                        amount of the conditional payment, after 
                        deducting from such amount any procurement 
                        costs involved and any costs for unrelated and 
                        inappropriate items or services, shall 
                        discharge further liability with respect to the 
                        conditional payment.
                            ``(ii) Liability for reimbursements related 
                        to requested information.--If the Secretary 
                        fails to provide information in accordance with 
                        clause (i), then neither the claimant or the 
                        payer described in such clause shall be liable 
                        for any reimbursement under subsection 
                        (b)(2)(B) with respect to the conditional 
                        payment for which information was requested 
                        under such clause.
                    ``(C) Protection from certain liability.--
                            ``(i) Liability for medicare set-aside 
                        payment greater than payment under workers' 
                        compensation law.--No workers' compensation 
                        claimant, workers' compensation payer, 
                        employer, administrator of the Medicare set-
                        aside, legal representative of the claimant, 
                        payer, employer, or administrator, or any other 
                        party related to the claimant, payer, employer, 
                        or administrator shall be liable for any 
                        payment amount established under a Medicare 
                        set-aside for an item or service provided to 
                        the claimant that is greater than the payment 
                        amount for the item or service established 
                        under the workers' compensation fee schedule 
                        (or in the absence of such schedule, the 
                        medical reimbursement rate) under the 
                        compensation law or plan of the jurisdiction 
                        where the agreement will be effective.
                            ``(ii) Liability for provider charges 
                        greater than payment under workers' 
                        compensation agreement.--With respect to a 
                        workers' compensation settlement agreement, a 
                        provider may not bill (or collect any amount 
                        from) the workers' compensation claimant, 
                        workers' compensation payer, employer, 
                        administrator of the Medicare set-aside, legal 
                        representative of the claimant, payer, 
                        employer, or administrator, or any other party 
                        related to the claimant, payer, employer, or 
                        administrator an amount for items and services 
                        provided to the claimant that is greater than 
                        the payment rate for such items and services 
                        established under the Medicare set-aside of the 
                        agreement. No person is liable for payment of 
                        any amounts billed for an item or service in 
                        violation of the previous sentence. If a 
                        provider willfully bills (or collects an 
                        amount) for such an item or service in 
                        violation of such sentence, the Secretary may 
                        apply sanctions against the provider in 
                        accordance with section 1842(j)(2) in the same 
                        manner as such section applies with respect to 
                        a physician. Paragraph (4) of section 1842(j) 
                        shall apply under this clause in the same 
                        manner as such paragraph applies under such 
                        section.
                    ``(D) Authority to modify or terminate qualified 
                medicare set-asides.--
                            ``(i) In case of death of claimant.--At any 
                        time after the death of a workers' compensation 
                        claimant, an individual entitled (after such 
                        death) to disbursement of the funds remaining 
                        in the Medicare set-aside involved in the 
                        workers' compensation claim of the claimant may 
                        submit to the Secretary a request to terminate 
                        the Medicare set-aside upon a showing of the 
                        death and payment of all claims that are 
                        subject to this subsection.
                            ``(ii) In the case of medical improvement 
                        or change of circumstances.--At any time after 
                        the date that is five years after the date of 
                        qualification of a Medicare set-aside involved, 
                        the workers' compensation claimant involved may 
                        submit to the Secretary a request to modify or 
                        terminate the Medicare set-aside upon a showing 
                        of a substantial medical improvement of the 
                        claimant, with respect to the injury or illness 
                        involved, or of changed circumstances of the 
                        claimant that justify a reduction of the funds 
                        of the Medicare set-aside (as in existence on 
                        the date of such request) by at least 25 
                        percent.
                            ``(iii) Notice required.--The Secretary may 
                        not approve a request submitted under clause 
                        (i) or (ii) to modify or terminate a Medicare 
                        set-aside unless the workers' compensation 
                        claimant involved or the individual entitled to 
                        disbursement (as described in clause (i)) 
                        includes with such request the following:
                                    ``(I) Assurances satisfactory to 
                                the Secretary that at the time of the 
                                submission of such request the claimant 
                                or individual entitled to disbursement 
                                sent notice of such request to any 
                                party that has a reversionary interest 
                                to such request and that is 
                                specifically designated in the Medicare 
                                set-aside for receipt of such notice.
                                    ``(II) Assurances satisfactory to 
                                the Secretary that such notice was sent 
                                by certified mail to the address of 
                                record of such designated party.
                                    ``(III) A copy of such notice.
                            ``(iv) Process for approval of applications 
                        to modify or terminate qualified medicare set-
                        asides in the case of medical improvement or 
                        change of circumstances.--Subparagraphs (B) and 
                        (C) of paragraph (3) shall apply to requests 
                        submitted to the Secretary under clause (ii) to 
                        modify or terminate a Medicare set-aside in the 
                        same manner as such subparagraphs apply to 
                        Medicare set-aside agreements submitted to the 
                        Secretary under subparagraph (A) of such 
                        paragraph to be deemed qualified Medicare set-
                        asides. In applying such subparagraphs (B) and 
                        (C), any reference to such subparagraph (A) 
                        shall be deemed a reference to clause (ii), and 
                        any reference in such subparagraph (B) to `the 
                        requirements of paragraph (2)(A)' shall be 
                        deemed to include a reference to the showing 
                        required under clause (ii).
                            ``(v) Effective dates for modifications and 
                        terminations.--
                                    ``(I) For death of claimant.--In 
                                the case of a termination request under 
                                clause (i) that is approved, the 
                                termination shall take effect on the 
                                latter of the date on which the showing 
                                described in such clause has been 
                                provided to the Secretary, or the date 
                                that is 60 days after the date on which 
                                the individual entitled to disbursement 
                                of the funds remaining in the Medicare 
                                set-aside involved sends the notice 
                                under clause (iii) to the party 
                                designated for receipt of such notice.
                                    ``(II) For medical improvement or 
                                change of circumstances.--In the case 
                                of a modification request or 
                                termination request under clause (ii) 
                                that is approved according to clause 
                                (iv), the modification or termination, 
                                respectively, shall take effect on the 
                                latter of the date of the approval or 
                                the date that is 60 days after the date 
                                on which the workers' compensation 
                                claimant involved sends the notice 
                                under clause (iii) to the party 
                                designated for receipt of such notice.
                            ``(vi) Treatment of remaining medicare set-
                        aside funds.--Upon termination or modification 
                        under this paragraph, any funds released from 
                        the set-aside shall revert pursuant to the 
                        terms of the settlement agreement, or if there 
                        is no reversionary clause, then such remaining 
                        funds shall be disbursed pursuant to the 
                        applicable State law.
            ``(7) Treatment of state workers' compensation law.--For 
        purposes of this subsection and subsection (l), 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 conclusive as to any and 
        all matters within the jurisdiction of the workers' 
        compensation law, including the determination of the total 
        amount that could have been payable for a claim which is the 
        subject of a compromise agreement in accordance with paragraph 
        (2)(C)(iii). A determination made by applicable authority for a 
        jurisdiction that a workers' compensation settlement agreement 
        is in accordance with the workers' compensation law of the 
        jurisdiction shall not be subject to review by the 
        Secretary.''.
    (c) Conforming Amendments.--Section 1862(b) of the Social Security 
Act (42 U.S.C. 1395y(b)), as amended by subsection (a), is further 
amended--
            (1) in paragraph (2)(B)(ii), by striking ``A primary plan'' 
        and inserting ``Subject to subsections (l) and (m), a primary 
        plan'';
            (2) in paragraph (2)(B)(iii)--
                    (A) in the first sentence, by striking ``In order 
                to recover payment'' and inserting ``Subject to 
                subsection (m), in order to recover payment''; and
                    (B) in the third sentence, by striking ``In 
                addition'' and inserting ``Subject to subsection (m), 
                in addition''; and
            (3) in paragraph (3)(A), by striking ``There is established 
        a private cause of action'' and inserting ``Subject to 
        subsection (m), there is established a private cause of 
        action''.
    (d) Modernizing Terminology for Purposes of Medicare Secondary 
Payer Provisions.--Paragraph (2)(A) of such section is amended by 
striking ``workmen's compensation law or plan'' and inserting 
``workers' compensation law or plan'' each place it appears.

SEC. 3. LIMITATION ON ADDITIONAL LIABILITY; SEVERABILITY.

    (a) Limitation on Additional Liability Under Current Agreements 
Except for Fraud.--Nothing in the Medicare secondary payer provisions 
in section 1862(b) of the Social Security Act shall authorize the 
Secretary of Health and Human Services to impose liability that is 
additional to the liability in effect on the date of the enactment of 
this Act on the parties to a workers' compensation agreement the 
effective date of which is before such date of enactment, except in the 
case of fraud.
    (b) Severability.--If any provision of this Act or the amendments 
made by this Act or the application thereof to any person or 
circumstance is held invalid, the remainder of this Act, the amendments 
made by this Act, or the application thereof to other persons not 
similarly situated or to other circumstances shall not be affected by 
such invalidation.

SEC. 4. EFFECTIVE DATE.

    The amendments made by section 2 shall apply to a workers' 
compensation settlement agreement with an effective date on or after 
the date of the enactment of this Act.
                                 <all>
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