Rep. Diana DeGette, D-Colo., has also signed on as a co-sponsor.

The legislation would clarify industry reporting requirements under the 2007 bill, which requires reimbursement to Medicare for payments made to people who are also paid later through worker's compensation or liability claims.

But, Deborah Taylor, CMS director of Financial Management, defended the current policies for handling reimbursement issues. She testified that the reporting process for reimbursement created through the 2007 law "has significantly increased the number of NGHP cases that have been identified and, as a result, provided additional recoveries for the Medicare Trust Funds."

She said any restrictions on existing Medicare Secondary Payer (MSP) reporting and recovery policies regarding Non Group Health Plans "would adversely affect savings that would otherwise accrue to the Medicare Trust Funds through MSP recovery activities, as well as the $1 billion per year in cost-avoided savings that CMS is able to track."

She said provisions in the legislation reported by industry and plaintiff lawyers that would impose mandatory process changes may affect Medicare's status as a secondary payer or its priority right of recovery, as well as CMS' ability to prioritize its own workload.

"These changes may also have the unintended effect of undercutting the underlying intent of the statute, increasing costs, and reducing existing savings," Taylor said.

Scott Gilliam, a vice president of the Cincinnati Insurance Companies said the current MSP system "is making it extremely difficult to settle claims in the prompt and efficient manner we believe injured parties deserve and is having a significant negative impact on claimants who are Medicare beneficiaries."

He added, "Without knowing what the conditional payment to Medicare will be, the parties can not reach a decision about an appropriate settlement."

Marc Salm, vice president of Risk Management for Publix Super Markets, Inc. testified that under the current MSP system, payments are delayed when beneficiaries are injured.

"Today's system harms beneficiaries, who may be denied—and at best are delayed in receiving—their intended payments," Salm said.

He said it also harms retailers and other businesses, which want to resolve claims to the benefit of their customers, but cannot due the increased risk of potential double liability.

"Ironically, and equally important, the current MSP system harms the Medicare Trust Fund, which is unable to recover at all if settlements are not concluded," Salm said.