MSP: Resolving Medicare Secondary Payer Claims

By law, 42 U.S.C. §1395y(b)(2) and § 1862(b)(2)(A)/Section and § 1862(b)(2)(A)(ii) of the Social Security Act, Medicare may not pay for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Background on how the MSP works is found in MSPA Claims 1, LLC v. Kingsway Amigo Insurance Co., 950 F.3d 764 (11th Cir. 2020) as follows:

Congress created the Medicare program to provide insurance for those over the age of 65. United States v. Baxter Int’l, Inc., 345 F.3d 866, 875 (11th Cir. 2003). In some instances, though, Medicare isn’t the only entity that will end up paying for a beneficiary’s healthcare costs. If, for instance—as here—a Medicare beneficiary is injured in an automobile accident caused by another driver, both Medicare and the other driver’s insurance company could be on the hook for some portion of the beneficiary’s medical bills. MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1316 (11th Cir. 2019). Originally, Medicare was deemed the “primary” payer in these instances—meaning that it paid first—and private insurers were “secondary” payers—meaning that they covered any remainder. Id.

That changed in 1980. To “curb the rising costs of Medicare,” Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229, 1234 (11th Cir. 2016), Congress enacted the Medicare Secondary Payer Act, 42 U.S.C. § 1395y, which flipped the payment order, such that private insurers became the primary payers and Medicare became (as the Act’s name indicates) the secondary payer, see Tenet, 918 F.3d at 1316. In our car-accident example, therefore, the other driver’s insurance company now pays first and Medicare covers any remaining expenses. So, as a general matter the Act now prohibits Medicare from paying for a beneficiary’s treatment to the extent that a primary payer is responsible. § 1395y(b)(1)-(2); MSP Recovery, LLC v. Allstate Ins. Co., 835 F.3d 1351, 1355 (11th Cir. 2016). There is, though, an exception: When a primary-payer plan doesn’t or can’t pay “promptly”—say, for instance, when it is contesting liability—Medicare can make a conditional payment on behalf of a beneficiary, for which it can later seek reimbursement from the primary plan. § 1395y(b)(2)(B)(i)-(ii); Tenet, 918 F.3d at 1316.

If Medicare pays and then seeks reimbursement, only to be refused, the United States can sue the primary plan (or a medical provider) to recover its payment under what we’ll call the Act’s “government cause of action,” codified at § 1395y(b)(2)(B)(iii). See Tenet, 918 F.3d at 1317. Section 1395y(b)(2)(B)(iii) contains a statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay. The Act also contains what we’ll call a “private cause of action,” codified at § 1395y(b)(3)(A), which is available to Medicare beneficiaries and other private entities, who “are often in a better position than the government to know about the existence of responsible primary plans” that haven’t reimbursed Medicare or paid a beneficiary’s healthcare provider. Tenet, 918 F.3d at 1316; see also Humana, 832 F.3d at 1234. The private cause of action rewards successful plaintiffs with double damages—after “giv[ing] Medicare its share of the recovery, [the plaintiff] can keep whatever is left over.” Tenet, 918 F.3d at 1316. Unlike the government cause of action, the private cause of action contains no statute of limitations.

So far, so good (?). But there’s more—another layer of complexity. In 1997, in yet another effort to make Medicare more efficient, Congress enacted Medicare Part C, or the “Medicare Advantage” program. Humana, 832 F.3d at 1235. This amendment created Medicare Advantage Organizations—private insurance companies that provide Medicare benefits in exchange for fixed fees from the Centers for Medicare and Medicaid Services. Id. Now, beneficiaries can choose to receive Medicare benefits through either the traditional, government-run Medicare program or a Medicare Advantage plan. The legislation creating Medicare Part C made MAOs—like Medicare itself—secondary payers. See 42 U.S.C. § 1395w-22(a)(4) (stating that an MAO may charge a primary plan when a payment “is made secondary pursuant to section 1395y(b)(2)”); Humana, 832 F.3d at 1237-38. We have since recognized that MAOs—again, like Medicare—can sue under the Medicare Secondary Payer Act to recover from primary plans that should pay, but don’t. Humana, 832 F.3d at 1238. MAOs, however, must utilize the Act’s private cause of action, rather than the government cause of action. Tenet, 918 F.3d at 1317.

In cases where the claim involves worker’s compensation or a liability policy, such as a motor vehicle collision, 42 USC § 1395y(b)(2)(B)(vii) and 42  C.F.R. 411.39 outline a process for securing a final conditional payment amount prior to settlement, judgment, award or other payment using CMS’s online portal. It also addresses how disputes may be resolved via the portal.

42 U.S.C. § 1395y(b)(2)(B)(iii) establishes a three year statute of limitations on claims filed by the United States government. In MSPA Claims 1, LLC v. Kingsway Amigo Insurance Co., it did not bar a claim brought by a Medicare Advantage Organization.

CMS identifies the following as common situations when Medicare and other health insurance or coverage may be present, and which entity will be the primary or secondary payer.

• Working Aged (Medicare beneficiaries age 65 or older) and Employer Group Health Plan (GHP):
  • Individual is age 65 or older, is covered by a GHP through current employment or spouse’s current employment AND the employer has less than 20 employees:
    • Medicare pays Primary, GHP pays secondary
  • Individual is age 65 or older, is covered by a GHP through current employment or spouse’s current employment AND the employer has 20 or more employees (or at least one employer is a multi-employer group that employs 20 or more individuals):
    • GHP pays Primary, Medicare pays secondary
  • Individual is age 65 or older, is self-employed and covered by a GHP through current employment or spouse’s current employment AND the employer has 20 or more employees (or at least one employer is a multi-employer group that employs 20 or more individuals):
    • GHP pays Primary, Medicare pays secondary
• Disability and Employer GHP:
  • Individual is disabled, is covered by a GHP through his or her own current employment (or through a family member’s current employment) AND the employer has 100 or more employees (or at least one employer is a multi-employer group that employs 100 or more individuals)
    • GHP pays Primary, Medicare pays secondary
• End-Stage Renal Disease (ESRD):
  • Individual has ESRD, is covered by a GHP and is in the first 30 months of eligibility or entitlement to Medicare
    • GHP pays Primary, Medicare pays secondary during 30-month coordination period for ESRD
  • Individual has ESRD, is covered by a Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA plan) and is in the first 30 months of eligibility or entitlement to Medicare
    • COBRA pays Primary, Medicare pays secondary during 30-month coordination period for ESRD
    • See the ESRD page for more information.
• Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) – the law that provides continuing coverage of group health benefits to employees and their families upon the occurrence of certain qualifying events where such coverage would otherwise be terminated.
  • Individual has ESRD, is covered by COBRA and is in the first 30 months of eligibility or entitlement to Medicare
    • COBRA pays Primary, Medicare pays secondary during 30-month coordination period for ESRD
  • Individual is age 65 years or older and covered by Medicare & COBRA:
    • Medicare pays Primary, COBRA pays secondary
  • Individual is disabled and covered by Medicare & COBRA:
    • Medicare pays Primary, COBRA pays secondary
• Retiree Health Plans
  • Individual is age 65 or older and has an employer retirement plan:
    • Medicare pays Primary, Retiree coverage pays secondary
• No-fault Insurance and Liability Insurance
  • Individual is entitled to Medicare and was in an accident or other situation where no-fault or liability insurance is involved.
    • No-fault or Liability Insurance pays Primary for accident or other situation related health care services claimed or released, Medicare pays secondary
• Workers’ Compensation Insurance
  • Individual is entitled to Medicare and is covered under Workers’ Compensation because of a job-related illness or injury: Workers’ Compensation pays Primary for health care items or services related to job-related illness or injury claims. Medicare generally will not pay for an injury or illness/disease covered by workers’ compensation. If all or part of a claim is denied by workers’ compensation on the grounds that it is not covered by workers’ compensation, a claim may be filed with Medicare. Medicare may pay a claim that relates to a medical service or product covered by Medicare if the claim is not covered by workers’ compensation. Prior to settling a workers’ compensation case, parties to the settlement should consider Medicare’s interest related to future medical services and whether the settlement is to include a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA).

Resources:

• Regulations: 42 CFR Subpart B
• Attorney Services (CMS) | Proof of Representation | Sample Language
• Non-Group Health Plan Recovery (includes liability insurance)
• Reporting a Case (CMS)
• Medicare’s Recovery Process (CMS)
• Medicare Secondary Payer (CMS)
• Medicare Secondary Payer Manual (CMS)
• Coordination of Benefits (CMS) | Overview of Coordination of Benefits and Recovery
• Benefits Coordination and Recovery Center (CMS) (Contact information for submission of information)
• How Medicare Works with Other Insurance (Medicare.gov)
• Your Guide to Who Pays First (Medicare.gov)
• Workers’ Compensations Medicare Set Aside Arrangements (CMS)
• Medicare Secondary Payer Recovery Portal