gation 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, under this title. 
‘‘(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
MEDI-
CARE SET-ASIDE AMOUNT DEFINED.—For pur-
poses of this subsection: 
‘‘(i) 
MEDICARE
SET-ASIDE.—The 
term ‘Medicare set-aside’ means, with re-
spect to a workers’ compensation settle-
ment agreement, a provision in the agree-
ment 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 agree-
ment received or is likely to receive under 
the applicable workers’ compensation law 
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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 MEDI-
CARE
SET-ASIDE.—For purposes of this sub-
section, 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 para-
graph (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 ne-
cessity for future medical expenses for 
treatment of the illness or injury involved. 
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‘‘(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 pay-
ment under this title as of the effective 
date of the workers’ compensation settle-
ment agreement involved and that are cov-
ered 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 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 pay-
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ment amount for items and services 
under the workers’ compensation fee 
schedule (effective as of the date of 
the agreement) applicable to the work-
ers’ compensation law or plan in-
volved. 
‘‘(II) WORKERS’ COMPENSATION 
FEE SCHEDULE DEFINED.—For pur-
poses 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 in-
jury or illness as defined under such 
law or plan (or in the absence of such 
a schedule, the applicable medical re-
imbursement rate under such law or 
plan). 
‘‘(ii) REQUIRED
PAYMENT
ADJUST-
MENT FOR CERTAIN FEES.—The Medicare 
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set-aside amount otherwise computed shall 
be reduced by— 
‘‘(I) the amount of the direct 
costs and expenses incurred in estab-
lishing, administering, or securing ap-
proval for the Medicare set-aside; and 
‘‘(II) the proportional share of 
other costs and expenses (including 
fees for attorneys, third-party ven-
dors, and administrators) incurred by 
the claimant or payer in entering into 
the workers’ compensation settlement 
agreement involved. 
‘‘(iii) OPTIONAL
PROPORTIONAL
AD-
JUSTMENT FOR COMPROMISE SETTLEMENT 
AGREEMENTS.— 
‘‘(I) IN GENERAL.—In the case 
of a compromise settlement agree-
ment, a workers’ compensation claim-
ant 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 a percentage 
reduction to the Medicare set-aside 
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amount 
for 
the 
total 
settlement 
amount that could have been payable 
under the applicable workers’ com-
pensation law or similar plan involved 
had the denied or contested portion of 
the claim not been subject to a com-
promise agreement. The percentage 
reduction shall be equal to the denied 
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 
workers’ compensation claimant or 
workers’ compensation payer elects to 
calculate 
the 
Medicare 
set-aside 
amount under this clause, the Medi-
care set-aside shall be deemed a quali-
fied Medicare set-aside. 
‘‘(3) PROCESS FOR APPROVAL OF QUALIFIED 
MEDICARE SET-ASIDES.— 
‘‘(A) OPTIONAL PRIOR APPROVAL BY SEC-
RETARY.—A party to a workers’ compensation 
settlement agreement that includes a Medicare 
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‘‘(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’ compensa-
tion payer involved may elect direct payment 
under paragraph (6)(A) or an adjustment 
under paragraph (2)(C)(iii) shall not be con-
strued as prohibiting such claimant or payer 
from basing the set-aside amount on the safe 
harbor amount for such agreement. 
‘‘(D) RULES.—The Secretary may adopt 
rules for an increase in the dollar amount speci-
fied under subparagraph (A). Such rules may 
provide that the increase in such dollar amount 
be the same percentage increase as the percent-
age increase in the dollar amount effected 
under the last sentence of subsection (n)(2). 
‘‘(5) APPEALS.— 
‘‘(A) IN GENERAL.—A party to a workers’ 
compensation settlement agreement that is dis-
satisfied with a determination under paragraph 
(3)(B), upon filing a request for reconsideration 
with the Secretary not later than 60 days after 
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the date of notice of such determination, shall 
be entitled to— 
‘‘(i) reconsideration of the determina-
tion by the Secretary (with respect to such 
determination); 
‘‘(ii) a hearing before an administra-
tive 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 Sec-
retary shall conduct and conclude a 
reconsideration of a determination 
under paragraph (3)(B) and mail the 
notice of the decision of such recon-
sideration by not later than the last 
day of the 30-day period beginning on 
the date that a request for such re-
consideration has been timely filed. 
‘‘(II) APPEALS OF RECONSIDER-
ATIONS.—If a party to the workers’ 
compensation settlement involved is 
dissatisfied with the Secretary’s deci-
sion under subclause (I), that party 
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may file an appeal within the 30-day 
period after the date of receipt of the 
notice of the decision under such sub-
clause 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 de-
scribed in such subclause, the party 
requesting the reconsideration may re-
quest a hearing before an administra-
tive 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 adminis-
trative 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 
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a request for such hearing has been 
timely filed. 
‘‘(II) JUDICIAL REVIEW.—A deci-
sion under subclause (I) by an admin-
istrative law judge constitutes a final 
agency action and is subject to judi-
cial review. 
‘‘(III) FAILURE BY ADMINISTRA-
TIVE 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), not-
withstanding 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
LIABIL-
ITY.— 
‘‘(A) OPTIONAL
DIRECT
PAYMENT
OF 
MEDICARE SET-ASIDE AMOUNT.— 
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‘‘(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 work-
ers’ compensation payer who is party to 
the agreement may elect, but is not re-
quired, to transfer to the Secretary a di-
rect 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 compromise settlement 
agreement 
under 
paragraph 
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(2)(C)(iii), the amount calculated in 
accordance with such paragraph. 
‘‘(III) In the case of any Medi-
care set-aside, the amount based upon 
the payment amount for items and 
services under the workers’ compensa-
tion fee schedule (effective as of the 
date of the agreement) applicable to 
the workers’ compensation law or plan 
involved, in accordance with para-
graph (2)(C)(i)(I). 
‘‘(IV) In the case of any Medi-
care set-aside, the payment amount 
applicable to the items and services 
under this title as in effect on the ef-
fective date of the agreement. 
Such transfer shall be in accordance with 
a procedure established by the Secretary 
and shall be made only upon written con-
sent of the other party to the agreement. 
‘‘(ii) ELECTION
SATISFYING
LIABIL-
ITY.—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 
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workers’ compensation settlement agree-
ment, required under subsection (b)(2) to 
be made by the claimant or payer to the 
Secretary. The Secretary shall have no fur-
ther recourse, directly or indirectly, under 
this title. 
‘‘(B) REQUIREMENT FOR TIMELY NOTICE 
OF MEDICARE REPAYMENTS OWED BY WORK-
ERS’ COMPENSATION CLAIMANT OR PAYER TO 
SECRETARY.— 
‘‘(i) IN GENERAL.—Not later than 90 
days after the date on which the Secretary 
receives a request from a workers’ com-
pensation claimant or workers’ compensa-
tion payer for documentation of any condi-
tional 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 docu-
mentation shall be sufficient for the claim-
ant or payer to make a reasonable deter-
mination 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 
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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 inappro-
priate items or services, shall discharge 
further liability with respect to the condi-
tional payment. 
‘‘(ii) 
LIABILITY
FOR
REIMBURSE-
MENTS RELATED TO REQUESTED INFOR-
MATION.—If the Secretary fails to provide 
information in accordance with clause (i), 
then neither the claimant nor the payer de-
scribed in such clause shall be liable for 
any 
reimbursement 
under 
subsection 
(b)(2)(B) with respect to the conditional 
payment for which information was re-
quested under such clause. 
‘‘(C) PROTECTION FROM CERTAIN LIABIL-
ITY.— 
‘‘(i) LIABILITY FOR MEDICARE SET- 
ASIDE PAYMENT GREATER THAN PAYMENT 
UNDER WORKERS’ COMPENSATION LAW.— 
No workers’ compensation claimant, work-
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ers’ compensation payer, employer, admin-
istrator of the Medicare set-aside, legal 
representative of the claimant, payer, em-
ployer, or administrator, or any other 
party related to the claimant, payer, em-
ployer, 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’ com-
pensation fee schedule (or in the absence 
of such schedule, the medical reimburse-
ment rate) under the compensation law or 
plan of the jurisdiction where the agree-
ment will be effective. 
‘‘(ii) 
LIABILITY
FOR
PROVIDER 
CHARGES
GREATER
THAN
PAYMENT 
UNDER WORKERS’ COMPENSATION AGREE-
MENT.—With respect to a workers’ com-
pensation settlement agreement, a provider 
may not bill (or collect any amount from) 
the workers’ compensation claimant, work-
ers’ compensation payer, employer, admin-
istrator of the Medicare set-aside, legal 
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representative of the claimant, payer, em-
ployer, or administrator, or any other 
party related to the claimant, payer, em-
ployer, 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 pro-
vider 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 accord-
ance with section 1842(j)(2) in the same 
manner as such section applies with re-
spect to a physician. Paragraph (4) of sec-
tion 1842(j) shall apply under this clause 
in the same manner as such paragraph ap-
plies under such section. 
‘‘(D) AUTHORITY TO MODIFY OR TERMI-
NATE QUALIFIED MEDICARE SET-ASIDES.— 
‘‘(i) IN CASE OF DEATH OF CLAIM-
ANT.—At any time after the death of a 
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workers’ compensation claimant, an indi-
vidual entitled (after such death) to dis-
bursement 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 termi-
nate the Medicare set-aside upon a show-
ing of the death and payment of all claims 
that are subject to this subsection. 
‘‘(ii) IN THE CASE OF MEDICAL IM-
PROVEMENT
OR
CHANGE
OF
CIR-
CUMSTANCES.—At any time after the date 
that is five years after the date of quali-
fication of a Medicare set-aside involved, 
the workers’ compensation claimant in-
volved may submit to the Secretary a re-
quest 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 per-
cent. 
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‘‘(iii) NOTICE
REQUIRED.—The Sec-
retary may not approve a request sub-
mitted 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 claim-
ant or individual entitled to disburse-
ment sent notice of such request to 
any party that has a reversionary in-
terest to such request and that is spe-
cifically 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 AP-
PLICATIONS
TO
MODIFY
OR
TERMINATE 
QUALIFIED MEDICARE SET-ASIDES IN THE 
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CASE
OF
MEDICAL
IMPROVEMENT
OR 
CHANGE
OF
CIRCUMSTANCES.—Subpara-
graphs (B) and (C) of paragraph (3) shall 
apply to requests submitted to the Sec-
retary under clause (ii) to modify or termi-
nate 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 sub-
paragraphs (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 require-
ments of paragraph (2)(A)’ shall be 
deemed to include a reference to the show-
ing required under clause (ii). 
‘‘(v) EFFECTIVE
DATES
FOR
MODI-
FICATIONS AND TERMINATIONS.— 
‘‘(I) FOR
DEATH
OF
CLAIM-
ANT.—In the case of a termination re-
quest under clause (i) that is ap-
proved, the termination shall take ef-
fect on the latter of the date on which 
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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 dis-
bursement 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
IMPROVE-
MENT
OR
CHANGE
OF
CIR-
CUMSTANCES.—In the case of a modi-
fication request or termination request 
under clause (ii) that is approved ac-
cording 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 ter-
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mination or modification under this para-
graph, 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’ COM-
PENSATION LAW.—For purposes of this subsection 
and subsection (n), if a workers’ compensation set-
tlement agreement is accepted, reviewed, approved, 
or otherwise finalized in accordance with the work-
ers’ compensation law of the jurisdiction in which 
such agreement will be effective, such acceptance, re-
view, approval, or other finalization shall be deemed 
conclusive as to any and all matters within the juris-
diction 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 para-
graph (2)(C)(iii). A determination made by applica-
ble authority for a jurisdiction that a workers’ com-
pensation settlement agreement is in accordance 
with the workers’ compensation law of the jurisdic-
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tion shall not be subject to review by the Sec-
retary.’’. 
(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 pri-
mary plan’’ and inserting ‘‘Subject to subsections 
(n) and (o), a primary plan’’; 
(2) in paragraph (2)(B)(iii)— 
(A) in the first sentence, by striking ‘‘In 
order to recover payment’’ and inserting ‘‘Sub-
ject to subsection (o), in order to recover pay-
ment’’; and 
(B) in the third sentence, by striking ‘‘In 
addition’’ and inserting ‘‘Subject to subsection 
(o), in addition’’; and 
(3) in paragraph (3)(A), by striking ‘‘There is 
established a private cause of action’’ and inserting 
‘‘Subject to subsection (o), there is established a pri-
vate 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’ com-
pensation law or plan’’ each place it appears. 
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SEC. 3. LIMITATION ON ADDITIONAL LIABILITY; SEVER-
ABILITY. 
(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 (42 U.S.C. 1395y(b)) 
shall authorize the Secretary of Health and Human Serv-
ices to impose liability that is additional to the liability 
in effect on the date of the enactment of this Act with 
respect to a workers’ compensation settlement agreement 
the effective date of which is before such date of enact-
ment, except in the case of fraud. 
(b) SEVERABILITY.—If any provision of this Act or 
the amendments made by this Act or the application there-
of to any person or circumstance is held invalid, the re-
mainder 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 ef-
fective date on or after the date of the enactment of this 
Act. 
Æ 
VerDate Nov 24 2008 
00:08 May 27, 2009
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