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Employers want changes to Medicare rule for comp claims


Employers hope that legislation introduced in the House will reduce the uncertainty and costly delays in closing workers compensation and liability claims that involve reporting to Medicare.

Under the Medicare Secondary Payer System, self-insured employers, insurers and others must notify the Centers for Medicare and Medicaid Services of all workers comp and other liability settlements or payments that involve Medicare recipients.

That way Medicare can recoup the “conditional payments” it makes to medical providers from insurers, employers and others that participate in a settlement. For workers comp claims, this has been the case since Jan. 1. For fiscal 2010, such efforts led to the Medicare Trust Fund recovering about $330 million for non- group health related claims, sources said.

But insurers and employers often are stymied from reaching settlements with workers comp claimants or parties to a liability claim because Medicare can take months to notify insurers and employers of its final demand, said David Farber, a partner at law firm Patton Boggs L.L.P. in Washington.

Without knowing Medicare's final demand, all sides don't know how much they should seek in the potential settlement, added Mr. Farber, who also is legislative and regulatory counsel for the Washington-based Medicare Advocacy Recovery Coalition, which advocates for improvements in the Medicare Secondary Payer program.

While parties to a claim don't want to settle until they learn of Medicare's final demand, Medicare won't disclose the amount in conditional payments it has made until the parties settle, observers say.

“It is almost a chicken and egg problem,” said Melissa Shelk, vp of federal affairs for the American Insurance Assn. in Washington.

The end result is that employers' costs rise when claims remain open, and injured employees have to wait to receive settlements to which they are entitled.

In some cases, claimants died before Medicare released information that would have facilitated a settlement that could have benefitted their families, said William Zachry, vp-risk management at Safeway Inc. in Pleasanton, Calif.

“In certain respects, it's a denial of benefits to the legitimately injured third party or injured worker that this is creating,” Mr. Zachry said. “For (employers), it creates difficulties because we want to settle. We want to get people on with their lives. We don't want to have to keep files open and run into huge delays that are unnecessary and inappropriate.”

But a solution is in the works.

Reps. Tim Murphy, R-Pa., and Ron Kind, D-Wis., have introduced H.R. 1063, the Strengthening Medicare and Repaying Taxpayers Act.

Among other things, the SMART Act would require Medicare to respond within 65 days of a party's request for information on Medicare's final payment demand, said Russell Whittle, senior staff counsel and vp of Medicare secondary payer compliance for consultant Gould & Lamb Inc. in Bradenton, Fla.

Medicare still would have to respond before the parties involved in a claim reached a settlement, although H.R. 1063 would allow Medicare a 30-day grace period from the 65 days, Mr. Whittle said.

While similar legislation failed last year, this bill already has 32 House co-sponsors, and supporters plan to introduce a companion bill in the Senate as soon as this month, Mr. Farber said.

Additionally, the proposal enjoys backing from diverse stakeholders, Mr. Farber said.

In addition to employer and insurer groups, trial attorneys represented by the American Assn. for Justice also support the legislation. The AAJ said plaintiff attorneys are siding with defense attorneys as well as organizations representing their common foes, since the situation adversely affects plaintiffs.

“Industry loves this, and trial attorneys like this,” Mr. Farber said. “When do those sides get on the same page?”

The bill's supporters include the New York-based Risk & Insurance Management Society Inc.

Chances of the bill's success gained a significant boost earlier this summer when the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations held a hearing on improving the Secondary Payer system, sources said.

“That hearing was a huge deal,” Mr. Farber said.

Answers expected soon from Medicare to questions raised during the hearing could encourage Congress to consider problem solutions contained in H.R. 1063, the AIA's Ms. Shelk said.

But with Congress preoccupied with other issues, such as the nation's deficit, it is difficult to handicap the bill's chances of passage, Ms. Shelk added, noting that measures contained in H.R. 1063 could be attached to a larger bill.

H.R. 1063 also would:

c Eliminate insurers' and employers' responsibility to obtain a Social Security number from Medicare beneficiaries with which they settle a claim and require Medicare to find an alternate method of identifying people receiving settlements and awards.

c Set a threshold amount for reporting a claim to ensure that the government does not spend more money collecting small claims than it would recover.

c Change the Medicare Secondary Payer statute so that Medicare is not required to impose a $1,000-a-day penalty for companies failing to report a settlement, though Medicare still would have the discretion to impose such a penalty.