Medicare Secondary Payer - Attorney

Frequently Asked Questions Regarding Medicare Recovery in Liability, No-Fault, and Workers Compensation Situations

PLEASE NOTE: The new MSP contact telephone number, for Michigan Beneficiaries, is: 414-459-6300.

Background

The purpose of this website is to acquaint you, the attorney representing a Medicare client, with the applicability of the Medicare Secondary Payer laws. Per 42 USC 1395y(b)(2) (Section 1862(b)(2)(A) of the Social Security Act), Medicare is precluded from paying for a beneficiary's medical expenses when payment "has been made or can reasonably be expected to be made promptly…under a Workers' Compensation plan, automobile or liability insurance policy or plan (including a self-insured plan) or under no fault-insurance". Medicare may make conditional payments for Medicare covered services that the third party payer does not pay promptly conditioned on reimbursement to Medicare from proceeds received pursuant to a third party liability settlement, award, judgment, or recovery.

Generally, liability, no-fault, and workers compensation insurance pays claims in full. In some instances, such as policy limits, a claim for specific claims and services may not be fully paid by the insurance. In these instances, Medicare secondary payment may be considered.

Should Medicare make a payment for medical services when another insurance is primary, 42 USC 1395(b)(2) grants Medicare a priority right of recovery which may be exercised directly or through subrogation. The superiority of Medicare's recovery right over other entities, including Medicaid, derives from the Medicare statute. It states that where Medicare is secondary to another insurer:

• Medicare may recover Medicare benefits from the responsible insurer;
• Medicare is subrogated to the right of the Medicare. Medicare's recovery right is greater than any other entity; and
• Medicare may recover its payments from any entity that has been paid by the responsible insurer.

In instances when Medicare has made conditional payments, Medicare's reimbursement is reduced by a pro rata share of procurement costs. It is in the attorney's and client's best interest to keep Medicare's payment and the obligation to satisfy Medicare's claim in mind when negotiating and accepting a final dollar amount in settlement of the claim with the third party. Medicare's claim must be paid or resolved before any other distribution of settlement proceeds occur. Moreover, Federal law requires that interest be assessed on balances not paid within certain time periods. Interest is generally due on Medicare Secondary Payer debts if not paid within 60 days.

If a provider does not receive payment promptly from a third party insurer it has billed in a liability, no-fault, or workers compensation situation, it may bill Medicare for conditional payment. If the provider bills Medicare, it must withdraw all claims with the third party payer in liens against any settlement, judgment, or award for those services.

The Secretary has issued explanatory regulations for these provisions at:

• 42 CFR 411.20 Basis and scope, Statutory basis (a)(2)
• 42 CFR 411.24 Recovery of conditional payments.
• 42 CFR 411.26 Subrogation and right to intervene.
• 42 CFR 411.50 General Provisions.
• 42 CFR 411.52 Basis for conditional Medicare payments in liability cases.
• 42 CFR 411.53 Basis for conditional Medicare payments in no-fault cases.

Whom should the attorney contact to notify Medicare of a reimbursement situation?

When a Medicare beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits (COB) contractor:
Medicare (COB)
P.O. Box 660
New York, NY 10274-0660
(800) 999-1118
TDD/TYY (800) 318-8782

What information should the attorney provide COB?

Client's name
Client's Social Security number and Medicare number
Date of incident
Name, address, and other information pertinent to other insurance

Why is a signed Medical Record Authorization Release Form required before a Medicare contractor can release information to an attorney representing a Medicare beneficiary?

The Privacy Act of 1974 prohibits Medicare contractors from releasing a beneficiary's Health Insurance Claim Number (HICN), claims data, diagnoses, etc., without written authorization from the beneficiary.

What role does the provider play in obtaining accident information from a Medicare patient?

Providers are required to ask Medicare patients, or their representatives, at admission or start of care, if the services are for treatment of an injury or which resulted from an automobile or non-automobile accident for which he/she holds another party responsible. Normally, the provider would bill the alleged responsible party's insurance as the primary payer.

Is the provider required to bill no fault insurance?

If a provider learns that an automobile medical or no fault insurance company may pay for covered services, it is expected to bill the insurance company as the primary payer.

Does Medicare pay claims and seek reimbursement or deny claims and require the primary insurance to pay?

If the other payer does not pay promptly, Medicare may make a conditional payment.

Against whom may Medicare take action to recover payments?

In a Medicare secondary payer situation involving liability, no-fault, workers compensation, Medicare may recover from any entity that has received the proceeds of any settlement, judgment, or award. This includes beneficiaries, their attorneys, providers, suppliers, Medicaid state agencies, and other entities.

How is Medicare made aware of liability, no-fault, workers compensation situations?

Beneficiaries and their attorneys are obligated to notify Medicare when they make a claim against a liability, no-fault, workers compensation insurer. Medicare may also learn of such situations from providers, suppliers, insurers, and other parties.

If the attorney representing a Medicare beneficiary was not notified of a Medicare payment of a claim(s) prior to the settlement, can Medicare still collect reimbursement?

Yes. Medicare may recover for all payments made for items and services that were included in a beneficiary's claim against the alleged tort feasor and/or liability, no-fault, workers compensation insurance.

If a case involves auto/liability, is the client's personal automobile insurance considered a third party payer?

A client's personal insurance is considered primary to Medicare. Both underinsured motorist and uninsured motorist are included in the definition of liability insurance for Medicare reimbursement purposes. Personal Injury Protection (PIP) and medical payments are considered no-fault insurance.

What if a beneficiary neglects to repay Medicare after the proceeds of a settlement have been made available to him/her?

CMS can collect the recovery claim through deductions from the beneficiary's Social Security benefits, Railroad Retirement Benefits, or other U.S. Treasury payment to which the beneficiary is entitled. CMS may also recover from other parties that receive proceeds from the settlement such as the attorney that represented the beneficiary.

What if the settlement proceeds have been disbursed prior to Medicare being aware of a reimbursement situation?

Medicare may still recover from the beneficiary or any other entity that received any portion of the proceeds of a settlement judgment or award.

Should Medicare be expected to accept less than its full recovery amount when other claim holders exist?

According to the Social Security Act, 42 USC 1395y (b)(2), Medicare has priority in a liability case when Medicare has made payments on behalf of the beneficiary. Therefore Medicare must be paid first.

How much will Medicare seek to recover if the settlement amount is less than the Medicare amount?

If Medicare payments equal or exceed the amount of the liability insurance payment, Medicare may recover up to the total judgment or settlement minus the total procurement costs, 42 CFR 411.37 (d).

Can participating providers of service file a claim against the liability proceeds and not bill Medicare?

Providers must bill the third party payer in liability situations. Providers have the option of requesting a conditional payment from Medicare if the third party payment will be delayed beyond 120 days. Should a provider bill Medicare, the provider is required to withdraw all claims against the liability insurer and/or liens placed on the beneficiary's settlement.

When is liability insurance considered to be primary over Medicare?

If liability insurance pays a claim, it must be a primary payment. Medicare will not assert a claim against the beneficiary for recovery of payments it has made until there is a settlement, judgment, or award with the beneficiary.

Is Medicare allowed to obtain recovery from a claim, settlement, or judgment based on a survivor's recovery for wrongful death?

Based on Wisconsin's wrongful death statute, Medicare is allowed to obtain recovery of medical expenses without a recovery limit, Wisc. Stat. Section 895.04.

Does Medicare enter into pre-settlement negotiations regarding the compromise of the recovery amount?

In those limited situations where a beneficiary has received a firm binding settlement offer, Medicare may enter into presettlement discussion regarding compromise of Medicare's claim against that firm binding settlement offer. A beneficiary has no further appeal rights if CMS and the beneficiary agree to a compromise.

Can the Medicare recovery amount be waived in favor of the beneficiary?

Medicare may grant a full or partial waiver of its recovery amount with respect to the beneficiary. The criteria for a waiver a)requires the beneficiary be without fault and the recovery b)would effect financial hardship or be against equity and good conscience, Section 1870 (c) of the Social Security Act. The attorney representing the beneficiary may request a waiver by completing CMS/SSA Form SSA-632-BK and returning the form to the lead contractor. The Medicare contractor is required to make a waiver decision within 120 days from the date the waiver request is received at the contractor site.

What is meant by "…the beneficiary be without fault…" when a full or partial waiver of the Medicare recovery amount is under consideration?

"Without fault" refers to the information the patient gave to the provider/supplier/physician or Medicare regarding the details of the accident. The information was correct and complete as far as he/she knew, and; when the Medicare payment was made, the beneficiary believed it to be the right payment for his/her claim.

What is meant by "…financial hardship…" when a full or partial waiver of the Medicare recovery amount is under consideration?

Medicare will consider the impact of unforeseen severe financial circumstances existing at the time of Medicare's claim as well as the impact of out-of-pocket medical expenses versus the beneficiary's resources to meet these obligations. Medicare may grant a full or partial waiver if recovery would have an adverse effect on the beneficiary's standard of living as it existed prior to the accident/injury/illness.

What items are included in ordinary and necessary living expenses?

Ordinary and necessary living expenses include items such fixed expenses as food, clothing, rent or mortgage payments. utilities, maintenance, insurances, and taxes. Also included are medical expenses not covered by Medicare, expenses for the support of others for whom the beneficiary is legally responsible, and other miscellaneous expenses considered necessary to maintain the beneficiary's current standard of living as it existed prior to the accident/injury/illness.

What is meant by "…against equity and good conscience…" when a full or partial waiver of the Medicare recovery amount is under consideration?

"Equity and good conscience" refers to the total impact upon the beneficiary of granting or not granting a full or partial waiver. In applying the standards of "equity and good conscience" possible factors which might be included could be:

1. the degree of financial hardship caused by the recovery,
2. the extent the beneficiary's state in life would be altered,
3. Medicare's recovery amount exceeds the settlement amount and,
4. the extent the beneficiary can meet non-covered out-of-pocket accident related expenses.

When is the appropriate time for the attorney to request waiver forms from Medicare?

A waiver request should not be submitted until after a third party liability settlement, award, judgment, or recovery. Because Medicare's recovery claim does not arise until there is a settlement, judgment, or award, the waiver request should not be submitted until then.

Can an unfavorable waiver decision be appealed?

The attorney or beneficiary may appeal if the waiver determination is denied or a partial waiver is granted.

If a waiver is requested, can the monies due Medicare be held in escrow until a determination is made?

Yes. However, a waiver request does not eliminate the requirement to pay Medicare interest. Medicare must be paid within 60 days of receipt of proceeds from the third party. To avoid interest, the amount indicated in the demand letter should be paid within the timeframe stated. If a waiver determination is in the beneficiary's favor, Medicare will issue a refund.

In a liability case involving several Medicare contractors, which contractor should the attorney specifically deal with?

After the attorney has contacted the Medicare Coordination of Benefits Contractor involving the representation of a Medicare beneficiary in a liability case, the COB will forward the name of the contractor to the attorney who will lead Medicare's recovery efforts. All written and telephone communication should be with the lead contractor.

Once a settlement has been reached, what information is the attorney required to send to the lead contractor?

Information needed by the lead contractor after a settlement has been reached should include the date of the settlement, the settlement amount, as well as the attorney's fee and costs. This information is needed to calculate Medicare's recovery amount. Medicare will share the costs associated with recovery and reduce its amount proportionately. Of course, the attorney needs to share particulars about the beneficiary's claim against the alleged tort feasor or insurance company so that the lead contractor can determine which Medicare claims are related to the beneficiary's claim against the third party.

Does Medicare share proportionately in the costs associated with medical payments benefits?

Medical payments benefits are considered no-fault benefits. No-fault benefits should be paid to Medicare up to the full amount as stated in the policy or up to the recovery amount. Procurement costs are not a factor with no-fault benefits.

When should an attorney send payment to Medicare for the amount due?

When the lead contractor is informed of the settlement, judgment, or award, it will determine the amount of Medicare's recovery claim and send a recovery demand letter. Upon receipt of the demand letter, the attorney should repay Medicare.

Can the attorney expect any changes to the Medicare claim totals once the lead contractor has provided total claim information?

Medicare's recovery claim is based on Medicare's conditional payments for services prior to the date of the settlement, judgment, or award.

Will Medicare pursue recovery from the estate of a deceased beneficiary?

A beneficiary's death does not materially change Medicare's interest in recovery payments made on behalf of the beneficiary while alive. The executor of the estate has the responsibility of concluding all business and financial matters remaining open at the time of the beneficiary's death. If a Medicare recovery claim was waiting on the outcome of a third party liability suit, Medicare would continue its claim against the estate.

Does a settlement made between the beneficiary and the liable party bind Medicare to that settlement?

The fact that a settlement has been reached between the beneficiary and the liable party does not bind Medicare to that settlement. Medicare does not recognize a settlement that appears to have been designed to circumvent Medicare's recovery interest.

Following a third party liability settlement, award, judgment, or recovery, when can Medicare begin to assess interest on the unpaid balance of Medicare's recovery amount?

Medicare requires that a beneficiary or other entity repay Medicare within 60 days of receipt of a demand letter. If it is not received within that timeframe, interest is due. Consistent with the Federal Claims Collection Act (FCCA), if Medicare does not receive a full refund within 60 days of the beneficiary and/or representative being notified by demand letter of Medicare's claim, interest will be assessed against the unpaid balance. Interest will be calculated retroactive to the date of the mailing of the demand letter.

What rights does Medicare waive in the Release Agreement Form?

Generally, Medicare agrees not to pursue further recovery for those claims identified by Medicare as related to the alleged tort or underlying illness or injury from the particular settlement to which the release applies. If Medicare's recovery claim was compromised or waived, and there is a subsequent settlement from another third party payer related to the same alleged tort or underlying illness/injury, Medicare may pursue recovery from that settlement, judgment, or award.

Can the beneficiary apply for a waiver after executing the Release Agreement Form?

Upon executing the Release Agreement Form, the beneficiary "waives any and all rights to appeal, waiver, or (further) compromise of Medicare's interest in claims for items or services" relating to the alleged tort or the underlying illness/injury.

Will Medicare pay any claims related to the accident submitted after execution of the Release Agreement Form?

Assuming that the settlement, judgment, or award did not include payment for future medical, Medicare will pay claims for services provided subsequent to the settlement date.