I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicare Secondary 

5 Payer and Workers’ Compensation Settlement Agree6 ments Act of 2006’’. 


cchase on PROD1PC60 with BILLS
2 

•HR 5309 IH

1 SEC. 2. APPLICATION OF MEDICARE SECONDARY PAYER 

2 RULES TO CERTAIN WORKERS’ COMPENSA3 TION SETTLEMENT AGREEMENTS AND 

4 QUALIFIED MEDICARE SET-ASIDE PROVI5 SIONS. 

6 (a) EXCEPTION FROM SECONDARY PAYER PROVI7 SIONS FOR CERTAIN WORKERS’ COMPENSATION SETTLE8 MENT AGREEMENTS.—Section 1862 of the Social Security 

9 Act (42 U.S.C. 1395y) is amended— 

10 (1) in subsection (b)(2)(A)(ii), by inserting 

11 ‘‘subject to subsection (l),’’ after ‘‘(ii)’’; and 

12 (2) by adding at the end the following new sub13 section: 

14 ‘‘(l) EXCEPTION FROM SECONDARY PAYER PROVI15 SIONS FOR CERTAIN WORKERS’ COMPENSATION SETTLE16 MENT AGREEMENTS.— 

17 ‘‘(1) IN GENERAL.—A workers’ compensation 

18 law or plan shall not be treated, for purposes of sub19 section (b), as a primary plan with respect to an ex20 empt workers’ compensation settlement agreement. 

21 ‘‘(2) EXEMPT WORKERS’ COMPENSATION SET22 TLEMENT AGREEMENT DEFINED.—For purposes of 

23 this subsection, an ‘exempt workers’ compensation 

24 settlement agreement’ means a workers’ compensa25 tion agreement that is described in any of the fol26 lowing subparagraphs: 


cchase on PROD1PC60 with BILLS
3 

•HR 5309 IH

1 ‘‘(A) PRESENT VALUE OF LESS THAN

2 $250,000.—A workers’ compensation settlement 

3 agreement that has a present value, as deter4 mined under paragraph (3)(A), that is less than 

5 the greater of the following: 

6 ‘‘(i) $250,000. 

7 ‘‘(ii) The product (as published under 

8 paragraph (3)(B)) of $250,000 and the 

9 ratio of— 

10 ‘‘(I) the national average wage 

11 index (as defined in section 209(k)(1) 

12 of the Social Security Act) for the cal13 endar year before the calendar year in 

14 which the workers’ compensation set15 tlement agreement became effective, 

16 to 

17 ‘‘(II) the national average wage 

18 index for 2004, 

19 with such product, if not a multiple of 

20 $1,000, being rounded to the next higher 

21 multiple of $1,000. 

22 ‘‘(B) COMPROMISE AGREEMENT.—A work23 ers’ compensation settlement agreement that is 

24 a compromise agreement (as defined in para25 graph (5)) that has a present value that is not 


cchase on PROD1PC60 with BILLS
4 

•HR 5309 IH

1 more than 20 percent of the present value of 

2 the total amount that could have been payable 

3 under the applicable workers’ compensation law 

4 or similar plan if the claim involved had not 

5 been subject to a compromise agreement. 

6 ‘‘(C) LIKELY INELIGIBILITY OF WORKERS’ 

7 COMPENSATION CLAIMANT FOR MEDICARE BEN8 EFITS.—A workers’ compensation settlement 

9 agreement the claimant of which is not eligible 

10 for benefits under this title as of the effective 

11 date of the agreement and, under paragraph 

12 (4), is unlikely to become so eligible within 30 

13 months after such effective date. 

14 ‘‘(D) NO FUTURE MEDICAL EXPENSES.—A 

15 workers’ compensation settlement agreement 

16 the claimant of which is not eligible for pay17 ment of medical expenses incurred after the ef18 fective date of such agreement that are avail19 able under the workers’ compensation law or 

20 plan of the jurisdiction in which such agree21 ment will be effective. 

22 ‘‘(E) NO LIMITATION ON FUTURE MEDICAL

23 EXPENSES.—A workers’ compensation settle24 ment agreement that does not limit or extin25 guish the right of the claimant involved to payVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
5 

•HR 5309 IH

1 ment of medical expenses incurred after the ef2 fective date of such agreement that are avail3 able under the workers’ compensation law or 

4 plan of the jurisdiction in which such agree5 ment will be effective. 

6 ‘‘(3) DETERMINATION OF PRESENT VALUE OF

7 WORKERS’ COMPENSATION SETTLEMENT AGREE8 MENT.— 

9 ‘‘(A) BY COST OF ANNUITY TO FUND

10 AGREEMENT.— 

11 ‘‘(i) IN GENERAL.—Subject to clause 

12 (ii), for purposes of paragraphs (2)(A) and 

13 (2)(B) and subsection (m) and with re14 spect to a work-related injury or illness 

15 that is the subject of a workers’ compensa16 tion settlement agreement, the present 

17 value of the agreement is the sum of any 

18 of the following amounts that are used to 

19 fund the agreement: 

20 ‘‘(I) The amount of any cash 

21 payment. 

22 ‘‘(II) The amount of the pur23 chase cost of an annuity (and not the 

24 payout or the projected payout paid 

25 during the term of such annuity). 


cchase on PROD1PC60 with BILLS
6 

•HR 5309 IH

1 ‘‘(III) The amount of the sum of 

2 any funds under subclause (I) or (II), 

3 previously paid pursuant to a workers’ 

4 compensation settlement agreement 

5 involved in the workers’ compensation 

6 claim involved. 

7 ‘‘(ii) COSTS EXCLUDED FROM

8 PRESENT VALUE.—The present value of a 

9 workers’ compensation settlement agree10 ment does not include the following pay11 ments made because of the workers’ com12 pensation claim involved: 

13 ‘‘(I) Payments to satisfy previous 

14 unpaid medical expenses. 

15 ‘‘(II) Payments to satisfy third 

16 party claims or liens for amounts pre17 viously paid, such as payments under 

18 this title, payments under the Med19 icaid program under title XIX, pay20 ments under a program of the De21 partment of Veterans Affairs under 

22 title 38, United States Code, pay23 ments under an employee welfare ben24 efit plan (as defined in section 3(1) of 

25 the Employee Retirement and Income 


cchase on PROD1PC60 with BILLS
7 

•HR 5309 IH

1 Security Act of 1974), and other simi2 lar third party payments. 

3 ‘‘(III) The attorney fees for the 

4 claimant involved. 

5 ‘‘(IV) Any other procurement 

6 costs incurred by a party to the agree7 ment to secure the agreement. 

8 ‘‘(B) PUBLICATION IN FEDERAL REGISTER

9 OF AMOUNT OF PRESENT VALUE ADJUSTED

10 FOR INFLATION.—Not later than November 15 

11 of each year (beginning with 2006), the Sec12 retary shall determine and provide for publica13 tion in the Federal Register of the amount de14 scribed in paragraph (2)(A)(ii) for the suc15 ceeding year. 

16 ‘‘(4) DETERMINATION OF LIKELY INELIGI17 BILITY OF CLAIMANT FOR MEDICARE BENEFITS.— 

18 For purposes of paragraph (2)(C), a workers’ com19 pensation claimant shall be deemed unlikely to be20 come eligible for benefits under this title unless, as 

21 of the effective date of the agreement, such claimant 

22 is insured for disability insurance benefits as deter23 mined under subsection (c)(1) of section 223 and 

24 meets any of the following requirements: 


cchase on PROD1PC60 with BILLS
8 

•HR 5309 IH

1 ‘‘(A) AWARDED OR APPEALING DENIAL OF

2 DISABILITY BENEFITS.—The claimant has been 

3 awarded disability insurance benefits or is ap4 pealing a denial of such benefits under sub5 section (a) of such section. 

6 ‘‘(B) MINIMUM AGE.—The claimant is at 

7 least 62 years and 6 months of age. 

8 ‘‘(C) END STAGE RENAL DISEASE.—The 

9 claimant is medically determined to have end 

10 stage renal disease, but does not as of such 

11 date qualify for benefits under this title by rea12 son of such disease. 

13 ‘‘(5) DEFINITIONS.—For purposes of this sub14 section and subsection (m): 

15 ‘‘(A) WORKERS’ COMPENSATION SETTLE16 MENT AGREEMENT.—The term ‘workers’ com17 pensation settlement agreement’ means an 

18 agreement, including a commutation agreement 

19 or compromise agreement, between a workers’ 

20 compensation claimant and one or more work21 ers’ compensation payers which is intended— 

22 ‘‘(i) to foreclose the possibility of fu23 ture payment of some or all workers’ com24 pensation benefits involved; and 


cchase on PROD1PC60 with BILLS
9 

•HR 5309 IH

1 ‘‘(ii)(I) to compensate the claimant 

2 for a work-related injury or illness as pro3 vided for by a workers’ compensation law 

4 or plan; or 

5 ‘‘(II) to eliminate cause for litigation 

6 involving issues in dispute between the 

7 claimant and payer. 

8 ‘‘(B) WORKERS’ COMPENSATION PAYER.— 

9 The term ‘workers’ compensation payer’ means, 

10 with respect to a workers’ compensation law or 

11 plan, a workers’ compensation insurer, self-in12 surer, employer, individual, or any other entity 

13 that is or may be liable for the payment of ben14 efits to a workers’ compensation claimant pur15 suant to the workers’ compensation law or plan. 

16 ‘‘(C) WORKERS’ COMPENSATION CLAIM17 ANT.—The term ‘workers’ compensation claim18 ant’ means a worker who— 

19 ‘‘(i) is or may be covered under a 

20 workers’ compensation law or plan (or 

21 similar compensation plan); and 

22 ‘‘(ii) submits a claim or accepts bene23 fits under such law or plan (or similar 

24 compensation plan) for a work-related in25 jury or illness. 


cchase on PROD1PC60 with BILLS
10 

•HR 5309 IH

1 ‘‘(D) WORKERS’ COMPENSATION LAW OR

2 PLAN.— 

3 ‘‘(i) IN GENERAL.—The term ‘work4 ers’ compensation law or plan’ means a 

5 law or program administered by a State or 

6 the United States to provide compensation 

7 to workers for a work-related injury or ill8 ness (or for disability or death caused by 

9 such an injury or illness), including the 

10 Longshore and Harbor Workers’ Com11 pensation Act (33 U.S.C. 901–944, 948– 

12 950), chapter 81 of title 5, United States 

13 Code (known as the Federal Employees 

14 Compensation Act), the Black Lung Bene15 fits Act (30 U.S.C. 931 et seq.), and part 

16 C of title 4 of the Federal Coal Mine and 

17 Safety Act (30 U.S.C. 901 et seq.), but not 

18 including the Act of April 22, 1908 (45 

19 U.S.C. 51 et seq.) (popularly referred to as 

20 the Federal Employer’s Liability Act). 

21 ‘‘(ii) INCLUSION OF SIMILAR COM22 PENSATION PLAN.—Such term includes a 

23 similar compensation plan established by 

24 an employer that is funded by such em25 ployer or the insurance carrier of such emVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
11 

•HR 5309 IH

1 ployer to provide compensation to a worker 

2 of such employer for a work-related injury 

3 or illness. 

4 ‘‘(E) COMPROMISE AGREEMENT.—The 

5 term ‘compromise agreement’ means a workers’ 

6 compensation settlement agreement that— 

7 ‘‘(i) applies to a workers’ compensa8 tion claim that is denied or contested, in 

9 whole or in part, by a workers’ compensa10 tion payer involved under the workers’ 

11 compensation law or plan (or similar com12 pensation plan) applicable to the jurisdic13 tion in which the agreement has been set14 tled; and 

15 ‘‘(ii) does not provide for a payment 

16 of the full amount of benefits sought or 

17 payable under the workers’ compensation 

18 claim. 

19 ‘‘(F) COMMUTATION AGREEMENT.—The 

20 term ‘commutation agreement’ means a work21 ers’ compensation settlement agreement to set22 tle all or a portion of a workers’ compensation 

23 claim, in which— 

24 ‘‘(i) liability for past and future bene25 fits is not disputed; and 


cchase on PROD1PC60 with BILLS
12 

•HR 5309 IH

1 ‘‘(ii) the parties to the agreement 

2 agree to include payment for future work3 ers’ compensation benefits payable after 

4 the date on which the agreement becomes 

5 effective.’’. 

6 (b) SATISFACTION OF SECONDARY PAYER REQUIRE7 MENTS THROUGH USE OF QUALIFIED MEDICARE SET8 ASIDES UNDER WORKERS’ COMPENSATION SETTLEMENT

9 AGREEMENTS.—Section 1862 of the Social Security Act 

10 (42 U.S.C. 1395y), as amended by subsection (a), is fur11 ther amended by adding at the end the following new sub12 section: 

13 ‘‘(m) TREATMENT OF QUALIFIED MEDICARE SET14 ASIDES UNDER WORKERS’ COMPENSATION SETTLEMENT

15 AGREEMENTS.— 

16 ‘‘(1) SATISFACTION OF SECONDARY PAYER RE17 QUIREMENTS THROUGH USE OF QUALIFIED MEDI18 CARE SET-ASIDES.— 

19 ‘‘(A) FULL SATISFACTION OF CLAIM OBLI20 GATIONS.— 

21 ‘‘(i) IN GENERAL.—If a workers’ com22 pensation settlement agreement, related to 

23 a claim of a workers’ compensation claim24 ant, includes a qualified Medicare set25 aside, such set-aside shall satisfy any obliVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
13 

•HR 5309 IH

1 gation with respect to the present or future 

2 payment reimbursement under subsection 

3 (b)(2), with respect to such claim. The 

4 Secretary shall have no further recourse, 

5 directly or indirectly, upon a workers’ com6 pensation claimant or workers’ compensa7 tion payer who is a party to such agree8 ment. 

9 ‘‘(ii) RULE OF CONSTRUCTION.— 

10 Nothing in this section shall be construed 

11 as requiring the submission of a Medicare 

12 set-aside to the Secretary. 

13 ‘‘(B) MEDICARE SET-ASIDE AND MEDI14 CARE SET-ASIDE AMOUNT DEFINED.—For pur15 poses of this subsection: 

16 ‘‘(i) MEDICARE SET-ASIDE.—The 

17 term ‘Medicare set-aside’ means, with re18 spect to a workers’ compensation settle19 ment agreement, a provision in the agree20 ment that provides for a payment of a 

21 lump sum, annuity, a combination of a 

22 lump sum and an annuity, or other 

23 amount that is in full satisfaction of the 

24 obligation described in subparagraph (A) 

25 for items and services that the workers’ 


cchase on PROD1PC60 with BILLS
14 

•HR 5309 IH

1 compensation claimant under the agree2 ment received or is likely to receive under 

3 the applicable workers’ compensation law 

4 and for which payment would be made 

5 under this title, but for subsection 

6 (b)(2)(A). 

7 ‘‘(ii) MEDICARE SET-ASIDE

8 AMOUNT.—The term ‘Medicare set-aside 

9 amount’ means, with respect to a Medicare 

10 set-aside, the amount described in clause 

11 (i). 

12 ‘‘(2) QUALIFIED MEDICARE SET-ASIDE.— 

13 ‘‘(A) REQUIREMENTS OF QUALIFIED MEDI14 CARE SET-ASIDE.—For purposes of this sub15 section, the term ‘qualified Medicare set-aside’ 

16 is a Medicare set-aside in which the Medicare 

17 set-aside amount reasonably takes into account 

18 the full payment obligation described in para19 graph (1)(A), consistent with subparagraphs 

20 (B) and (C) and giving due consideration to the 

21 following: 

22 ‘‘(i) The illness or injury giving rise to 

23 the workers’ compensation claim involved. 

24 ‘‘(ii) The age and life expectancy of 

25 the claimant involved. 


cchase on PROD1PC60 with BILLS
15 

•HR 5309 IH

1 ‘‘(iii) The reasonableness of and ne2 cessity for future medical expenses for 

3 treatment of the illness or injury involved. 

4 ‘‘(iv) The duration of and limitation 

5 on benefits payable under the workers’ 

6 compensation law or plan involved. 

7 ‘‘(B) ITEMS AND SERVICES INCLUDED.— 

8 The Medicare set-aside— 

9 ‘‘(i) shall include payment for items 

10 and services that are authorized for pay11 ment under this title as of the effective 

12 date of the workers’ compensation settle13 ment agreement involved and that are cov14 ered by the workers’ compensation law or 

15 plan involved; and 

16 ‘‘(ii) is not required to provide for 

17 payment for items and services that are 

18 not described in clause (i). 

19 ‘‘(C) PAYMENT REQUIREMENTS.— 

20 ‘‘(i) REQUIRED USE OF WORKERS’ 

21 COMPENSATION FEE SCHEDULE.— 

22 ‘‘(I) IN GENERAL.—Except in the 

23 cases of a deep discount compromise 

24 agreement defined in clause (iii)(II), a 

25 Medicare set-aside deemed a qualified 


cchase on PROD1PC60 with BILLS
16 

•HR 5309 IH

1 Medicare set-aside under paragraph 

2 (4)(A), or an optional direct payment 

3 of a Medicare set-aside made under 

4 paragraph (6)(A), the set-aside 

5 amount shall be based upon the pay6 ment amount for items and services 

7 under the workers’ compensation fee 

8 schedule (effective as of the date of 

9 the agreement) applicable to the work10 ers’ compensation law or plan in11 volved. 

12 ‘‘(II) WORKERS’ COMPENSATION

13 FEE SCHEDULE DEFINED.—For pur14 poses of this subsection, the term 

15 ‘workers’ compensation fee schedule’ 

16 means, with respect to a workers’ 

17 compensation law or plan of a State 

18 or a similar plan applicable in a State, 

19 the schedule of payment amounts the 

20 State has established to pay providers 

21 for items and services furnished to 

22 workers who incur a work-related in23 jury or illness as defined under such 

24 law or plan (or in the absence of such 

25 a schedule, the applicable medical reVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
17 

•HR 5309 IH

1 imbursement rate under such law or 

2 plan). 

3 ‘‘(ii) REQUIRED PAYMENT ADJUST4 MENT FOR CERTAIN FEES.—The Medicare 

5 set-aside amount otherwise computed shall 

6 be reduced by— 

7 ‘‘(I) the amount of the direct 

8 costs and expenses incurred in estab9 lishing, administering, or securing ap10 proval for the Medicare set-aside; and 

11 ‘‘(II) the proportional share of 

12 other costs and expenses (including 

13 fees for attorneys, third-party ven14 dors, and administrators) incurred by 

15 the claimant or payer in entering into 

16 the workers’ compensation settlement 

17 agreement involved. 

18 ‘‘(iii) OPTIONAL ADJUSTMENT FOR

19 DEEP DISCOUNT COMPROMISE AGREE20 MENTS.— 

21 ‘‘(I) IN GENERAL.—Notwith22 standing clause (i), in the case of a 

23 deep discount compromise agreement, 

24 a workers’ compensation claimant or 

25 workers’ compensation payer who is 


cchase on PROD1PC60 with BILLS
18 

•HR 5309 IH

1 party to the agreement may elect (but 

2 is not required) to calculate the Medi3 care set-aside amount of the agree4 ment by applying the denied or con5 tested percentage described in sub6 clause (II) to the unadjusted Medicare 

7 set-aside amount for the denied or 

8 contested portion of the claim other9 wise calculated before the application 

10 of clause (ii). Such election may be 

11 made by a party to the agreement 

12 only with the written consent of the 

13 other party to the agreement. 

14 ‘‘(II) DEEP DISCOUNT COM15 PROMISE AGREEMENT.—For purposes 

16 of this subsection, the term ‘deep dis17 count compromise agreement’ means 

18 a compromise agreement in which the 

19 present value of the amount included 

20 in the agreement for the portion of 

21 the worker’s compensation claim in22 volved that was denied or contested by 

23 the workers’ compensation payer in24 volved is a percentage of more than 

25 20 percent, and less than 90 percent, 


cchase on PROD1PC60 with BILLS
19 

•HR 5309 IH

1 of the amount that could be the 

2 present value of the denied or con3 tested portion of the claim if the 

4 agreement provided for the total 

5 amount that could have been payable 

6 under the applicable workers’ com7 pensation law or plan involved had the 

8 denied or contested portion of the 

9 claim not been subject to a com10 promise agreement. 

11 ‘‘(III) APPLICATION.—If the 

12 workers’ compensation claimant or 

13 worker’s compensation payer elects to 

14 calculate the Medicare set-aside 

15 amount under this clause, the Medi16 care set-aside shall be deemed a quali17 fied Medicare set-aside under para18 graph (4)(A) if the amount of the set19 aside after such calculation satisfies 

20 the requirement of such paragraph. 

21 ‘‘(3) PROCESS FOR APPROVAL OF QUALIFIED

22 MEDICARE SET-ASIDES.— 

23 ‘‘(A) OPTIONAL PRIOR APPROVAL BY SEC24 RETARY.—A party to a workers’ compensation 

25 settlement agreement that includes a Medicare 


cchase on PROD1PC60 with BILLS
20 

•HR 5309 IH

1 set-aside may submit to the Secretary the set2 aside, including appropriate supporting docu3 mentation specified by the Secretary, for ap4 proval of the set-aside as a qualified Medicare 

5 set-aside. The set-aside shall be submitted in 

6 accordance with a procedure specified by the 

7 Secretary. 

8 ‘‘(B) AUTOMATIC APPROVAL UNLESS DIS9 APPROVED.—A Medicare set-aside submitted 

10 under subparagraph (A) shall be deemed a 

11 qualified Medicare set-aside unless the Sec12 retary determines and provides notice under 

13 subparagraph (C) that the Medicare set-aside 

14 does not satisfy the requirements of paragraph 

15 (2)(A) because the amount of the proposed 

16 Medicare set-aside is based on a substantial 

17 material error and is not supported by the doc18 umentation submitted under subparagraph (A). 

19 ‘‘(C) NOTICE OF DETERMINATION OF DIS20 APPROVAL.—Not later than 60 days after the 

21 date on which the Secretary receives a submis22 sion under subparagraph (A), the Secretary 

23 shall notify in writing the parties to the work24 ers’ compensation settlement agreement of the 

25 determination under subparagraph (B). If the 


cchase on PROD1PC60 with BILLS
21 

•HR 5309 IH

1 determination disapproves such submission the 

2 Secretary shall include with such notification 

3 the specific reasons for the disapproval. A de4 termination that disapproves a submission is 

5 not valid if the determination does not include 

6 a specific explanation of each deficiency of the 

7 submission. 

8 ‘‘(4) SAFE HARBOR FOR CERTAIN MEDICARE

9 SET-ASIDES.— 

10 ‘‘(A) IN GENERAL.—A Medicare set-aside 

11 of a workers’ compensation settlement agree12 ment shall be deemed a qualified Medicare set13 aside if the Medicare set-aside amount is the 

14 safe harbor amount for the agreement. 

15 ‘‘(B) SAFE HARBOR AMOUNT DEFINED.— 

16 For purposes of this paragraph, the term ‘safe 

17 harbor amount’ means, for a workers’ com18 pensation settlement agreement, the greater 

19 of— 

20 ‘‘(i) the amount that is 10 percent of 

21 the present value of the agreement (as de22 termined under subsection (l)(3)); or 

23 ‘‘(ii) the amount that is 15 percent of 

24 the payments provided by the agreement 

25 for medical expenses, including payments 


cchase on PROD1PC60 with BILLS
22 

•HR 5309 IH

1 for both items and services that are cov2 ered under this title and that are not cov3 ered under this title. 

4 ‘‘(C) RULE OF CONSTRUCTION.—In the 

5 case of a workers’ compensation settlement 

6 agreement with a Medicare set-aside that is 

7 deemed a qualified Medicare set-aside under 

8 subparagraph (A), the fact that the workers’ 

9 compensation claimant or workers’ compensa10 tion payer involved may elect direct payment 

11 under paragraph (6)(A) or an adjustment 

12 under paragraph (2)(C)(iii) shall not be con13 strued as prohibiting such claimant or payer 

14 from basing the set-aside amount on the safe 

15 harbor amount for such agreement. 

16 ‘‘(5) APPEALS.— 

17 ‘‘(A) IN GENERAL.—A party to a workers’ 

18 compensation settlement agreement that is dis19 satisfied with a determination under paragraph 

20 (3)(B), upon filing a request for reconsideration 

21 with the Secretary not later than 60 days after 

22 the date of notice of such determination, shall 

23 be entitled to— 


cchase on PROD1PC60 with BILLS
23 

•HR 5309 IH

1 ‘‘(i) reconsideration of the determina2 tion by the Secretary (with respect to such 

3 determination); 

4 ‘‘(ii) a hearing before an administra5 tive judge thereon; and 

6 ‘‘(iii) judicial review of the Secretary’s 

7 final determination after such hearing. 

8 ‘‘(B) DEADLINES FOR DECISIONS.— 

9 ‘‘(i) RECONSIDERATIONS.— 

10 ‘‘(I) IN GENERAL.—The Sec11 retary shall conduct and conclude a 

12 reconsideration of a determination 

13 under paragraph (3)(B) and mail the 

14 notice of the decision of such recon15 sideration by not later than the last 

16 day of the 30-day period beginning on 

17 the date that a request for such re18 consideration has been timely filed. 

19 ‘‘(II) APPEALS OF RECONSIDER20 ATIONS.—If a party to the workers’ 

21 compensation settlement involved is 

22 dissatisfied with the Secretary’s deci23 sion under subclause (I), that party 

24 may file an appeal within the 30-day 

25 period after the date of receipt of the 


cchase on PROD1PC60 with BILLS
24 

•HR 5309 IH

1 notice of the decision under such sub2 clause and request a hearing before 

3 an administrative law judge. 

4 ‘‘(III) FAILURE BY SECRETARY

5 TO PROVIDE NOTICE.—In the case of 

6 a failure by the Secretary to mail the 

7 notice of the decision under subclause 

8 (I) by the last day of the period de9 scribed in such subclause, the party 

10 requesting the reconsideration may re11 quest a hearing before an administra12 tive law judge, notwithstanding any 

13 requirements for a reconsideration of 

14 a determination for purposes of the 

15 party’s right to such hearing. 

16 ‘‘(ii) HEARINGS.— 

17 ‘‘(I) IN GENERAL.—An adminis18 trative law judge shall conduct and 

19 conclude a hearing on a decision of 

20 the Secretary under clause (i) and 

21 render a decision on such hearing by 

22 not later than the last day of the 90- 

23 day period beginning on the date that 

24 a request for such hearing has been 

25 timely filed. 


cchase on PROD1PC60 with BILLS
25 

•HR 5309 IH

1 ‘‘(II) JUDICIAL REVIEW.—A deci2 sion under subclause (I) by an admin3 istrative law judge constitutes a final 

4 agency action and is subject to judi5 cial review. 

6 ‘‘(III) FAILURE BY ADMINISTRA7 TIVE LAW JUDGE TO RENDER TIMELY

8 DECISION.—In the case of a failure by 

9 an administrative law judge to render 

10 a decision under subclause (I) by the 

11 last day of the period described in 

12 such subclause, the party requesting 

13 the hearing may seek judicial review 

14 of the decision under clause (i), not15 withstanding any requirements for a 

16 hearing for purposes of the party’s 

17 right to such judicial review. 

18 ‘‘(6) ADMINISTRATION OF MEDICARE SET-ASIDE

19 PROVISIONS; PROTECTION FROM CERTAIN LIABIL20 ITY.— 

21 ‘‘(A) OPTIONAL DIRECT PAYMENT OF

22 MEDICARE SET-ASIDE AMOUNT.— 

23 ‘‘(i) ELECTION FOR DIRECT PAYMENT

24 OF MEDICARE SET-ASIDE.—With respect to 

25 a claim for which a workers’ compensation 


cchase on PROD1PC60 with BILLS
26 

•HR 5309 IH

1 settlement agreement is established, a 

2 workers’ compensation claimant or work3 ers’ compensation payer who is party to 

4 the agreement may elect, but is not re5 quired, to transfer to the Secretary a di6 rect payment of the qualified Medicare set7 aside or an annuity purchased to directly 

8 fund the set-aside amount. With respect to 

9 a qualified Medicare set-aside paid directly 

10 to the Secretary, the parties involved may 

11 calculate the Medicare set-aside amount of 

12 such set-aside using any of the following 

13 methods: 

14 ‘‘(I) In the case of any Medicare 

15 set-aside deemed a qualified Medicare 

16 set-aside under paragraph (4)(A), the 

17 amount calculated in accordance with 

18 such paragraph. 

19 ‘‘(II) In the case of any Medicare 

20 set-aside of a deep discount com21 promise agreement under paragraph 

22 (2)(C)(iii), the amount calculated in 

23 accordance with such paragraph. 

24 ‘‘(III) In the case of any Medi25 care set-aside, the amount based upon 


cchase on PROD1PC60 with BILLS
27 

•HR 5309 IH

1 the payment amount for items and 

2 services under the workers’ compensa3 tion fee schedule (effective as of the 

4 date of the agreement) applicable to 

5 the workers’ compensation law or plan 

6 involved, in accordance with para7 graph (2)(C)(i)(I). 

8 ‘‘(IV) In the case of any Medi9 care set-aside, the payment amount 

10 applicable to the items and services 

11 under this title as in effect on the ef12 fective date of the agreement. 

13 Such transfer shall be in accordance with 

14 a procedure established by the Secretary 

15 and shall be made only upon written con16 sent of the other party to the agreement. 

17 ‘‘(ii) ELECTION SATISFYING LIABIL18 ITY.—An election made under clause (i), 

19 with respect to a qualified Medicare set20 aside shall satisfy any payment, in relation 

21 to the underlying claim of the related 

22 workers’ compensation settlement agree23 ment, required under subsection (b)(2) to 

24 be made by the claimant or payer to the 

25 Secretary. The Secretary shall have no furVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
28 

•HR 5309 IH

1 ther recourse, directly or indirectly, upon a 

2 workers’ compensation claimant or work3 ers’ compensation payer to the agreement. 

4 ‘‘(B) REQUIREMENT FOR TIMELY NOTICE

5 OF MEDICARE REPAYMENTS OWED BY WORK6 ERS’ COMPENSATION CLAIMANT OR PAYER TO

7 SECRETARY.— 

8 ‘‘(i) IN GENERAL.—Not later than 60 

9 days after the date on which the Secretary 

10 receives a request from a workers’ com11 pensation claimant or workers’ compensa12 tion payer for documentation of any condi13 tional payment made under subsection 

14 (b)(2)(B)(i) on behalf of the claimant, the 

15 Secretary shall provide to the claimant or 

16 payer such documentation. Such docu17 mentation shall be sufficient for the claim18 ant or payer to make a reasonable deter19 mination whether such a payment was for 

20 an item or service furnished in connection 

21 with the claimant’s work related injury or 

22 illness involved. The claimant or payer may 

23 rely on the documentation provided under 

24 this clause in making such determination. 

25 Payment of the amount of the conditional 


cchase on PROD1PC60 with BILLS
29 

•HR 5309 IH

1 payment, after deducting from such 

2 amount any procurement costs involved 

3 and any costs for unrelated and inappro4 priate items or services, shall discharge 

5 further liability with respect to the condi6 tional payment. 

7 ‘‘(ii) LIABILITY FOR REIMBURSE8 MENTS RELATED TO REQUESTED INFOR9 MATION.—If the Secretary fails to provide 

10 information in accordance with clause (i), 

11 then neither the claimant or the payer de12 scribed in such clause shall be liable for 

13 any reimbursement under subsection 

14 (b)(2)(B) with respect to the conditional 

15 payment for which information was re16 quested under such clause. 

17 ‘‘(C) PROTECTION FROM CERTAIN LIABIL18 ITY.— 

19 ‘‘(i) LIABILITY FOR MEDICARE SET20 ASIDE PAYMENT GREATER THAN PAYMENT

21 UNDER WORKERS’ COMPENSATION LAW.— 

22 No workers’ compensation claimant, work23 ers’ compensation payer, employer, admin24 istrator of the Medicare set-aside, legal 

25 representative of the claimant, payer, emVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
30 

•HR 5309 IH

1 ployer, or administrator, or any other 

2 party related to the claimant, payer, em3 ployer, or administrator shall be liable for 

4 any payment amount established under a 

5 Medicare set-aside for an item or service 

6 provided to the claimant that is greater 

7 than the payment amount for the item or 

8 service established under the workers’ com9 pensation fee schedule (or in the absence 

10 of such schedule, the medical reimburse11 ment rate) under the compensation law or 

12 plan of the jurisdiction where the agree13 ment will be effective. 

14 ‘‘(ii) LIABILITY FOR PROVIDER

15 CHARGES GREATER THAN PAYMENT

16 UNDER WORKERS’ COMPENSATION AGREE17 MENT.—With respect to a workers’ com18 pensation settlement agreement, a provider 

19 may not bill (or collect any amount from) 

20 the workers’ compensation claimant, work21 ers’ compensation payer, employer, admin22 istrator of the Medicare set-aside, legal 

23 representative of the claimant, payer, em24 ployer, or administrator, or any other 

25 party related to the claimant, payer, emVerDate Aug 31 2005 18:21 May 07, 2006 Jkt 049200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H5309.IH H5309

cchase on PROD1PC60 with BILLS
31 

•HR 5309 IH

1 ployer, or administrator an amount for 

2 items and services provided to the claimant 

3 that is greater than the payment rate for 

4 such items and services established under 

5 the Medicare set-aside of the agreement. 

6 No person is liable for payment of any 

7 amounts billed for an item or service in 

8 violation of the previous sentence. If a pro9 vider willfully bills (or collects an amount) 

10 for such an item or service in violation of 

11 such sentence, the Secretary may apply 

12 sanctions against the provider in accord13 ance with section 1842(j)(2) in the same 

14 manner as such section applies with re15 spect to a physician. Paragraph (4) of sec16 tion 1842(j) shall apply under this clause 

17 in the same manner as such paragraph ap18 plies under such section. 

19 ‘‘(D) AUTHORITY TO MODIFY OR TERMI20 NATE QUALIFIED MEDICARE SET-ASIDES.— 

21 ‘‘(i) IN CASE OF DEATH OF CLAIM22 ANT.—At any time after the death of a 

23 workers’ compensation claimant, an indi24 vidual entitled (after such death) to dis25 bursement of the funds remaining in the 


cchase on PROD1PC60 with BILLS
32 

•HR 5309 IH

1 Medicare set-aside involved in the workers’ 

2 compensation claim of the claimant may 

3 submit to the Secretary a request to termi4 nate the Medicare set-aside upon a show5 ing of the death and payment of all claims 

6 that are subject to this subsection. 

7 ‘‘(ii) IN THE CASE OF MEDICAL IM8 PROVEMENT OR CHANGE OF CIR9 CUMSTANCES.—At any time after the date 

10 that is five years after the date of quali11 fication of a Medicare set-aside involved, 

12 the workers’ compensation claimant in13 volved may submit to the Secretary a re14 quest to modify or terminate the Medicare 

15 set-aside upon a showing of a substantial 

16 medical improvement of the claimant, with 

17 respect to the injury or illness involved, or 

18 of changed circumstances of the claimant 

19 that justify a reduction of the funds of the 

20 Medicare set-aside (as in existence on the 

21 date of such request) by at least 25 per22 cent. 

23 ‘‘(iii) NOTICE REQUIRED.—The Sec24 retary may not approve a request sub25 mitted under clause (i) or (ii) to modify or 


cchase on PROD1PC60 with BILLS
33 

•HR 5309 IH

1 terminate a Medicare set-aside unless the 

2 workers’ compensation claimant involved or 

3 the individual entitled to disbursement (as 

4 described in clause (i)) includes with such 

5 request the following: 

6 ‘‘(I) Assurances satisfactory to 

7 the Secretary that at the time of the 

8 submission of such request the claim9 ant or individual entitled to disburse10 ment sent notice of such request to 

11 any party that has a reversionary in12 terest to such request and that is spe13 cifically designated in the Medicare 

14 set-aside for receipt of such notice. 

15 ‘‘(II) Assurances satisfactory to 

16 the Secretary that such notice was 

17 sent by certified mail to the address 

18 of record of such designated party. 

19 ‘‘(III) A copy of such notice. 

20 ‘‘(iv) PROCESS FOR APPROVAL OF AP21 PLICATIONS TO MODIFY OR TERMINATE

22 QUALIFIED MEDICARE SET-ASIDES IN THE

23 CASE OF MEDICAL IMPROVEMENT OR

24 CHANGE OF CIRCUMSTANCES.—Subpara25 graphs (B) and (C) of paragraph (3) shall 


cchase on PROD1PC60 with BILLS
34 

•HR 5309 IH

1 apply to requests submitted to the Sec2 retary under clause (ii) to modify or termi3 nate a Medicare set-aside in the same 

4 manner as such subparagraphs apply to 

5 Medicare set-aside agreements submitted 

6 to the Secretary under subparagraph (A) 

7 of such paragraph to be deemed qualified 

8 Medicare set-asides. In applying such sub9 paragraphs (B) and (C), any reference to 

10 such subparagraph (A) shall be deemed a 

11 reference to clause (ii), and any reference 

12 in such subparagraph (B) to ‘the require13 ments of paragraph (2)(A)’ shall be 

14 deemed to include a reference to the show15 ing required under clause (ii). 

16 ‘‘(v) EFFECTIVE DATES FOR MODI17 FICATIONS AND TERMINATIONS.— 

18 ‘‘(I) FOR DEATH OF CLAIM19 ANT.—In the case of a termination re20 quest under clause (i) that is ap21 proved, the termination shall take ef22 fect on the latter of the date on which 

23 the showing described in such clause 

24 has been provided to the Secretary, or 

25 the date that is 60 days after the date 


cchase on PROD1PC60 with BILLS
35 

•HR 5309 IH

1 on which the individual entitled to dis2 bursement of the funds remaining in 

3 the Medicare set-aside involved sends 

4 the notice under clause (iii) to the 

5 party designated for receipt of such 

6 notice. 

7 ‘‘(II) FOR MEDICAL IMPROVE8 MENT OR CHANGE OF CIR9 CUMSTANCES.—In the case of a modi10 fication request or termination request 

11 under clause (ii) that is approved ac12 cording to clause (iv), the modification 

13 or termination, respectively, shall take 

14 effect on the latter of the date of the 

15 approval or the date that is 60 days 

16 after the date on which the workers’ 

17 compensation claimant involved sends 

18 the notice under clause (iii) to the 

19 party designated for receipt of such 

20 notice. 

21 ‘‘(vi) TREATMENT OF REMAINING

22 MEDICARE SET-ASIDE FUNDS.—Upon ter23 mination or modification under this para24 graph, any funds released from the set25 aside shall revert pursuant to the terms of 


cchase on PROD1PC60 with BILLS
36 

•HR 5309 IH

1 the settlement agreement, or if there is no 

2 reversionary clause, then such remaining 

3 funds shall be disbursed pursuant to the 

4 applicable State law. 

5 ‘‘(7) TREATMENT OF STATE WORKERS’ COM6 PENSATION LAW.—For purposes of this subsection 

7 and subsection (l), if a workers’ compensation settle8 ment agreement is accepted, reviewed, approved, or 

9 otherwise finalized in accordance with the workers’ 

10 compensation law of the jurisdiction in which such 

11 agreement will be effective, such acceptance, review, 

12 approval, or other finalization shall be deemed con13 clusive as to any and all matters within the jurisdic14 tion of the workers’ compensation law, including the 

15 determination of the total amount that could have 

16 been payable for a claim which is the subject of a 

17 compromise agreement in accordance with para18 graph (2)(C)(iii). A determination made by applica19 ble authority for a jurisdiction that a workers’ com20 pensation settlement agreement is in accordance 

21 with the workers’ compensation law of the jurisdic22 tion shall not be subject to review by the Sec23 retary.’’. 


cchase on PROD1PC60 with BILLS
37 

•HR 5309 IH

1 (c) CONFORMING AMENDMENTS.—Section 1862(b) 

2 of the Social Security Act (42 U.S.C. 1395y(b)), as 

3 amended by subsection (a), is further amended— 

4 (1) in paragraph (2)(B)(ii), by striking ‘‘A pri5 mary plan’’ and inserting ‘‘Subject to subsections (l) 

6 and (m), a primary plan’’; 

7 (2) in paragraph (2)(B)(iii)— 

8 (A) in the first sentence, by striking ‘‘In 

9 order to recover payment’’ and inserting ‘‘Sub10 ject to subsection (m), in order to recover pay11 ment’’; and 

12 (B) in the third sentence, by striking ‘‘In 

13 addition’’ and inserting ‘‘Subject to subsection 

14 (m), in addition’’; and 

15 (3) in paragraph (3)(A), by striking ‘‘There is 

16 established a private cause of action’’ and inserting 

17 ‘‘Subject to subsection (m), there is established a 

18 private cause of action’’. 

19 (d) MODERNIZING TERMINOLOGY FOR PURPOSES OF

20 MEDICARE SECONDARY PAYER PROVISIONS.—Paragraph 

21 (2)(A) of such section is amended by striking ‘‘workmen’s 

22 compensation law or plan’’ and inserting ‘‘workers’ com23 pensation law or plan’’ each place it appears. 


cchase on PROD1PC60 with BILLS
38 

•HR 5309 IH

1 SEC. 3. LIMITATION ON ADDITIONAL LIABILITY; SEVER2 ABILITY. 

3 (a) LIMITATION ON ADDITIONAL LIABILITY UNDER

4 CURRENT AGREEMENTS EXCEPT FOR FRAUD.—Nothing 

5 in the Medicare secondary payer provisions in section 

6 1862(b) of the Social Security Act shall authorize the Sec7 retary of Health and Human Services to impose liability 

8 that is additional to the liability in effect on the date of 

9 the enactment of this Act on the parties to a workers’ com10 pensation agreement the effective date of which is before 

11 such date of enactment, except in the case of fraud. 

12 (b) SEVERABILITY.—If any provision of this Act or 

13 the amendments made by this Act or the application there14 of to any person or circumstance is held invalid, the re15 mainder of this Act, the amendments made by this Act, 

16 or the application thereof to other persons not similarly 

17 situated or to other circumstances shall not be affected 

18 by such invalidation. 

19 SEC. 4. EFFECTIVE DATE. 

20 The amendments made by section 2 shall apply to 

21 a workers’ compensation settlement agreement with an ef22 fective date on or after the date of the enactment of this 

23 Act. 

Æ 


cchase on PROD1PC60 with BILLS