H.R. 2641 (“Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2009”) was introduced by Rep. John Tanner (D-TN) on May 21, 2009.  The bill has been referred to the House Ways and Means Committee (of which Rep. Tanner is a member and chair of the Social Security subcommittee).

Major changes (long overdue) to Medicare set-asides in workers’ compensation cases provided for in the bill are:

a. No MSA would be required in settlements with a present value of $25,000 or less (presently, those low-value settlements of Medicare beneficiaries require an MSA but are not reviewed by CMS).

b. No CMS approval of the MSA would be required in settlements with a present value of $250,000 or less if the MSA is 10% of the present value of the settlement.

c. Excluded in determining “present value” of a settlement would be claimant’s attorney fees, procurement costs incurred by a party to the agreement to secure the agreement, payments to satisfy third party claims or liens and payments to satisfy previous unpaid medical expenses.

d.  The MSA would be reduced by the amount of the direct costs and expenses incurred in establishing, administering and securing approval of the MSA as well as a proportional share of other costs and expenses (including fees for attorneys, third-party vendors and administrators) incurred by the claimant or the settlement payer in entering into the settlement.

e. In the case of a compromise settlement (i.e. settlement of a denied or disputed claim) the parties would have the option to reduce the MSA by a percentage equal to the denied or disputed portion of the case.

f. CMS could only reject an otherwise qualified MSA if there was a “substantial material error” in the calculation of the MSA and was not supported by the documentation submitted.

g. CMS determinations on MSAs submitted for approval would be required within 60 days of submission, and disapprovals would require specific explanation for each deficiency in the submission.