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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2731 Introduced in Senate (IS)]

113th CONGRESS
  2d Session
                                S. 2731

  To amend title XVIII of the Social Security Act to provide for the 
   application of Medicare secondary payer rules to certain workers' 
  compensation settlement agreements and qualified Medicare set-aside 
                              provisions.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 31, 2014

Mr. Nelson (for himself and Mr. Portman) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To amend title XVIII of the Social Security Act to provide for the 
   application of Medicare secondary payer rules to certain workers' 
  compensation settlement agreements and qualified Medicare set-aside 
                              provisions.

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

SECTION 1. APPLICATION OF MEDICARE SECONDARY PAYER RULES TO CERTAIN 
              WORKERS' COMPENSATION SETTLEMENT AGREEMENTS AND QUALIFIED 
              MEDICARE SET-ASIDE PROVISIONS.

    (a) Threshold for 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 (p),'' after ``(ii)''; and
            (2) by adding at the end the following new subsection:
    ``(p) Threshold for Secondary Payer Provisions for Certain Workers' 
Compensation Settlement Agreements.--
            ``(1) In general.--A workers' compensation law or plan 
        shall not be treated as a primary plan for purposes of 
        subsection (b) with respect to a workers' compensation 
        settlement agreement if the agreement (or claimant under the 
        agreement) meets any of the following requirements:
                    ``(A) Total settlement amount not exceeding 
                $25,000.--Such agreement has a total settlement amount 
                (as determined under paragraph (2)) that does not 
                exceed $25,000 or such greater amount as the Secretary 
                may specify in regulations.
                    ``(B) Likely ineligibility of workers' compensation 
                claimant for medicare benefits.--The claimant subject 
                to such agreement--
                            ``(i) is not eligible for benefits under 
                        this title as of the effective date of the 
                        agreement; and
                            ``(ii) is unlikely to become so eligible, 
                        as determined under paragraph (3), within 30 
                        months after such effective date.
                    ``(C) No future workers' compensation medical 
                expenses.--The claimant subject to such agreement is 
                not eligible for payment of medical expenses incurred 
                after the effective date of the agreement from the 
                workers' compensation law or plan of the jurisdiction 
                in which such agreement will be effective.
                    ``(D) No limitation on future workers' compensation 
                medical expenses.--Such agreement does not limit or 
                extinguish the right of the claimant to payment of 
                medical expenses incurred after the effective date of 
                such agreement by the workers' compensation law or plan 
                of the jurisdiction in which the agreement will be 
                effective.
            ``(2) Determination of total settlement amount of workers' 
        compensation settlement agreement.--For purposes of paragraph 
        (1)(A) and subsection (q) and with respect to a work-related 
        injury or illness that is the subject of a workers' 
        compensation settlement agreement, the total settlement amount 
        of the agreement is the sum of monetary wage replacement 
        benefits, attorney fees, all future medical expenses, repayment 
        of Medicare conditional payments, payout totals for annuities 
        to fund the expenses listed above, and any previously settled 
        portion of the workers' compensation claim.
            ``(3) Determination of likely ineligibility of claimant for 
        medicare benefits.--For purposes of paragraph (1)(B)(ii), a 
        workers' compensation claimant shall be deemed unlikely to 
        become eligible for benefits under this title within 30 months 
        after the effective date of the agreement unless, as of the 
        effective date of the agreement, such claimant is insured for 
        disability insurance benefits under section 223(c)(1) and is 
        described in any of the following subparagraphs:
                    ``(A) Awarded disability benefits.--The individual 
                has been awarded such disability insurance benefits.
                    ``(B) Applied for disability.--The individual has 
                applied for such disability insurance benefits.
                    ``(C) Anticipates appeal.--The individual has been 
                denied such disability insurance benefits but 
                anticipates appealing that decision.
                    ``(D) Appealing or refiling.--The individual is in 
                the process of appealing or refiling for such 
                disability insurance benefits.
                    ``(E) Minimum age.--The individual is at least 62 
                years and 6 months of age.
                    ``(F) End-stage renal disease.--The individual is 
                medically determined to have end-stage renal disease 
                but does not yet qualify for health benefits under 
                section 226A based on such disease.
            ``(4) Definitions.--For purposes of this subsection and 
        subsection (q):
                    ``(A) 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 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 that may 
                        be payable under the workers' compensation 
                        claim.
                    ``(B) 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.
                    ``(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; and
                            ``(ii) submits a claim or accepts benefits 
                        under such law or 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) 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.
                    ``(F) Workers' compensation settlement agreement.--
                The term `workers' compensation settlement agreement' 
                means an agreement, which includes a commutation 
                agreement or compromise agreement, or any combination 
                of both, between a claimant and one or more workers' 
                compensation payers which--
                            ``(i) forecloses the possibility of future 
                        payment of some or all workers' compensation 
                        benefits involved; and
                            ``(ii)(I) compensates the claimant for a 
                        work-related injury or illness as provided for 
                        by a workers' compensation law or plan; or
                            ``(II) eliminates cause for litigation 
                        involving issues in dispute between the 
                        claimant and payer.''.
    (b) Satisfaction of Secondary Payer 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:
    ``(q) 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 (as 
                        defined in paragraph (2)), such set-aside shall 
                        satisfy any obligation with respect to the 
                        future payment reimbursement under subsection 
                        (b)(2) with respect to such claim.
                            ``(ii) Rule of construction.--Nothing in 
                        this section shall be construed as requiring 
                        the submission of a Medicare set-aside to the 
                        Secretary.
                    ``(B) Medicare set-aside and medicare set-aside 
                amount defined.--For purposes of this subsection:
                            ``(i) Medicare set-aside.--The term 
                        `Medicare set-aside' means, with respect to a 
                        workers' compensation settlement agreement, a 
                        provision in the agreement that provides for a 
                        payment of a lump sum, 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 actual dollar 
                        amount provided for in clause (i).
            ``(2) Qualified medicare set-aside.--
                    ``(A) Requirements of qualified medicare set-
                aside.--For purposes of this subsection, a Medicare 
                set-aside shall be deemed to be a qualified Medicare 
                set-aside if the Medicare set-aside amount reasonably 
                takes into account the full payment obligation 
                described in paragraph (1)(A), while meeting the 
                requirements of subparagraphs (B) and (C) and is 
                determined based on the following:
                            ``(i) The illness or injury giving rise to 
                        the workers' compensation claim involved.
                            ``(ii) The age and life expectancy of the 
                        claimant involved.
                            ``(iii) The reasonableness of and necessity 
                        for future medical expenses for treatment of 
                        the illness or injury involved.
                            ``(iv) The duration of and limitation on 
                        benefits payable under the workers' 
                        compensation law or plan involved.
                            ``(v) The regulations and case law relevant 
                        to the State workers' compensation law or plan 
                        involved.
                    ``(B) Items and services included.--A qualified 
                Medicare set-aside--
                            ``(i) shall include payment for items and 
                        services that are covered and otherwise payable 
                        under this title as of the effective date of 
                        the workers' compensation settlement agreement 
                        and that are covered by the workers' 
                        compensation law or plan; and
                            ``(ii) is not required to provide for 
                        payment for items and services that are not 
                        described in clause (i).
                    ``(C) Payment requirements.--
                            ``(i) Required use of workers' compensation 
                        fee schedule.--
                                    ``(I) In general.--Except in the 
                                case of an optional direct payment of a 
                                Medicare set-aside made under paragraph 
                                (5)(A), the set-aside amount shall be 
                                based upon the payment amount for items 
                                and services under the workers' 
                                compensation 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) Optional proportional adjustment for 
                        compromise settlement agreements.--
                                    ``(I) In general.--In the case of a 
                                compromise settlement agreement, a 
                                claimant or workers' compensation payer 
                                who is party to the agreement may elect 
                                to calculate the Medicare set-aside 
                                amount of the agreement by applying a 
                                percentage reduction to the Medicare 
                                set-aside amount for the total 
                                settlement amount that could have been 
                                payable under the applicable workers' 
                                compensation law or similar plan 
                                involved had the denied, disputed, or 
                                contested portion of the claim not been 
                                subject to a compromise agreement. The 
                                percentage reduction shall be equal to 
                                the denied, disputed, or contested 
                                percentage of such total settlement. 
                                Such election may be made by a party to 
                                the agreement only with the written 
                                consent of the other party to the 
                                agreement.
                                    ``(II) Application.--If the 
                                claimant or workers' 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.
            ``(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 Medicare set-aside amount for approval of 
                the set-aside as a qualified Medicare set-aside.
                    ``(B) Notice of determination of approval or 
                disapproval.--Not later than 60 days after the date on 
                which the Secretary receives a submission under 
                subparagraph (A), the Secretary shall notify in writing 
                the parties to the workers' compensation settlement 
                agreement of the determination of approval or 
                disapproval. If the determination disapproves such 
                submission the Secretary shall include with such 
                notification the specific reasons for the disapproval.
                    ``(C) Failure by secretary to provide notice.--In 
                the case of a failure by the Secretary to mail or 
                deliver the notice of the determination under 
                subparagraph (B) by the last day of the period 
                described in such subparagraph, the party involved may 
                file an appeal directly to the administrative law judge 
                within 30 days after such failure.
            ``(4) Appeals.--
                    ``(A) In general.--A party to a workers' 
                compensation settlement agreement that is dissatisfied 
                with a determination under paragraph (3)(B), upon 
                filing a request for reconsideration with the Secretary 
                not later than 60 days after the date of notice of such 
                determination, shall be entitled to--
                            ``(i) reconsideration of the determination 
                        by the Secretary (with respect to such 
                        determination);
                            ``(ii) a hearing before an administrative 
                        law judge thereon after such reconsideration; 
                        and
                            ``(iii) judicial review of the Secretary's 
                        final determination after such hearing.
                    ``(B) Deadlines for decisions.--
                            ``(i) Reconsiderations.--
                                    ``(I) In general.--The Secretary 
                                shall conduct and conclude a 
                                reconsideration of a determination 
                                under subparagraph (A)(i) and mail or 
                                deliver electronically the notice of 
                                the decision of such reconsideration to 
                                the party involved 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 or 
                                deliver the notice of the decision 
                                under subclause (I) by the last day of 
                                the period described in such subclause, 
                                the party involved may file an appeal 
                                directly to an administrative law judge 
                                not later than 30 days after such 
                                failure.
                            ``(ii) Hearings.--
                                    ``(I) In general.--An 
                                administrative law judge shall conduct 
                                and conclude a hearing on a decision of 
                                the Secretary or a determination with 
                                respect to which the Secretary failed 
                                to render a decision under paragraph 
                                (3)(B) or 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 shall be entitled to 
                                judicial review of the decision under 
                                subparagraph (A), notwithstanding any 
                                requirements for a hearing for purposes 
                                of the party's right to such judicial 
                                review.
            ``(5) 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.--Effective January 1, 2015, 
                        with respect to a claim for which a workers' 
                        compensation settlement agreement is or has 
                        been established, a claimant or workers' 
                        compensation payer who is party to the 
                        agreement may elect, but is not required, to 
                        transfer to the Secretary a direct payment of 
                        the qualified Medicare set-aside. 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 of a compromise settlement 
                                agreement under paragraph (2)(C)(ii), 
                                the amount calculated in accordance 
                                with such paragraph.
                                    ``(II) In the case of any Medicare 
                                set-aside, the amount based upon the 
                                payment amount for items and services 
                                under the workers' compensation 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).
                                    ``(III) In the case of any Medicare 
                                set-aside, the payment amount 
                                applicable to the items and services 
                                under this title as in effect on the 
                                effective date of the agreement.
                        Such transfer shall be made only upon written 
                        consent of the other party to the agreement.
                            ``(ii) Election satisfying liability.--An 
                        election made under clause (i), with respect to 
                        a qualified Medicare set-aside shall satisfy 
                        any payment, in relation to the underlying 
                        claim of the related workers' compensation 
                        settlement agreement, required under subsection 
                        (b)(2) to be made by the claimant or payer to 
                        the Secretary.
                    ``(B) 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.
                    ``(C) Election of professional or beneficiary self 
                administration of medicare set-aside payments.--Nothing 
                in this subsection or subsection (p) prohibits an 
                individual from electing to utilize professional 
                administration services or to self-administer payments 
                of their Medicare Set-Aside in accordance with existing 
                law.
            ``(6) Treatment of state workers' compensation law.--For 
        purposes of this subsection and subsection (p), if a workers' 
        compensation settlement agreement is accepted, reviewed, 
        approved, or otherwise finalized in accordance with the 
        workers' compensation law of the jurisdiction in which such 
        agreement will be effective, such acceptance, review, approval, 
        or other finalization shall be deemed final and conclusive as 
        to any and all matters within the jurisdiction of the workers' 
        compensation law, including the determination of reasonableness 
        of the settlement value; any allocations of settlement funds; 
        the projection of future indemnity or medical benefits that may 
        be reasonably expected to be paid under the State workers' 
        compensation law; and, in the case of a compromise agreement, 
        the total amount that could have been payable for a claim which 
        is the subject of such agreement in accordance with paragraph 
        (2)(C)(ii).''.
    (c) Conforming Amendments.--Subsection (b) of such section is 
further amended--
            (1) in paragraph (2)(B)(ii), by striking ``paragraph (9)'' 
        and inserting ``paragraph (9) and subsections (p) and (q)'';
            (2) in paragraph (2)(B)(iii)--
                    (A) in the first sentence, by striking ``In order 
                to recover payment'' and inserting ``Subject to 
                subsection (q), in order to recover payment''; and
                    (B) in the third sentence, by striking ``In 
                addition'' and inserting ``Subject to subsection (q), 
                in addition''; and
            (3) in paragraph (3)(A), by striking ``There is established 
        a private cause of action'' and inserting ``Subject to 
        subsection (q), there is established a private cause of 
        action''.
    (d) Modernizing Terminology for Purposes of Medicare Secondary 
Payer Provisions.--Subsection (b)(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.
    (e) Limitation on Liability.--The parties to a workers' 
compensation settlement agreement which met the provisions of section 
1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) on the 
effective date of settlement shall be accepted as meeting the 
requirements of such section notwithstanding changes in law, 
regulations, or administrative interpretation of such provisions after 
the effective date of such settlement.
    (f) Effective Date.--The amendments made by this section, unless 
otherwise specifically specified, shall apply to a workers' 
compensation settlement agreement with an effective date on or after 
October 1, 2015.
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