Medicare Secondary Payer

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Medicare Secondary Payer 

Medicare is the nation’s health insurance program for qualifying individuals who are 65 and older or disabled. The MSP process is supposed to ensure Medicare is reimbursed for medical bills that are the responsibility of another party, so taxpayers do not foot the bill. A senior who has been injured – and later obtains recourse through the legal system – cannot access their settlement until Medicare is reimbursed for any medical costs.

Unfortunately, the current MSP system is often inefficient and slow to return dollars to the Medicare Trust Fund. Seniors can wait years for Centers for Medicare and Medicaid Services (CMS) to report reimbursement amounts to beneficiaries and can even seek multiple reimbursement amounts over time, providing further delay and uncertainty to seniors.

 

AAJ Report - Medicare Secondary Payer: How Streamlining a Broken Bureaucracy Will Protect Seniors and Taxpayers

The Medicare Secondary Payer system is unique in that it is the one government institution that is so obviously and painfully broken that it has done what was previously thought impossible – united all sides in Washington.

In The News

"H.R. 1063 would speed up the system by imposing deadlines on CMS for coming up with a final number, so the parties will know how much Medicare must be reimbursed before entering into settlements."

-Lawyers USA, 9/19/11

"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."

-Business Insurance, 9/11/11

"The situation has become so untenable that the American Association of Justice (AAJ) tells Inside Health Policy that getting Congress to pass the SMART Act is one of their top priorities."

-Inside Health Policy, 8/26/11 

" 'We're typically not on the same side of issues. The fact that we are shows how broken the system is,' said Sarah Rooney, regulatory counsel for the American Association for Justice."

-National Law Journal, 8/15/11

"If a Medicare recipient gets in a car crash or is injured by a defective pacemaker, the government picks up the hospital tab. But if that person receives a payment from a legal settlement, insurance policy, or jury award that covers accident-related medical bills, Medicare is entitled to its money back."

-Mother Jones, 10/8/09

"Usually it's Washington that's trying to squeeze money out of taxpayers. Here's a case of some people trying to pay the government what it's owed, only to learn that Washington doesn't seem to be that interested."

-McClatchy, 7/10/09

Problems with Medicare Secondary Payer

  • No Speedy Resolution: Currently, CMS does not respond timely to requests for reimbursement amounts. This can mean the Medicare reimbursement process can drag on for years.
  • Inefficiency: Often CMS requests payments multiple times for different amounts. They may request additional payment years after you have already provided reimbursement from a legal settlement. This makes it impossible to settle legal claims with confidence.     
  • Uncertainty: Currently, CMS does not provide a final demand letter (reimbursement amount) until after the parties have entered into a legal settlement agreement. This makes it impossible to settle legal disputes because Medicare beneficiaries are unable to determine how much they have to reimburse Medicare. Parties need to know the full value of a claim so that they may be able to successfully negotiate a fair legal settlement.

H.R. 1063: The Strengthening Medicare and Repaying Taxpayers (SMART) Act

Bi-partisan legislation, H.R. 1063, has been introduced into the House by Reps. Tim Murphy (R-Pa.) and Ron Kind (D-Wis.) with support from both AAJ and a diverse coalition of businesses, Medicare Advocacy Recovery Coalition (MARC).

H.R. 1063 would:

  • Require Medicare 65 days to respond to an inquiry regarding a reimbursement claim 
  • Clarify a three year statute of limitations on MSP claims
  • Develop an appeals process
  • Create a threshold amount for reporting claims, ensuring claim amounts are higher than the cost associated to obtain those claims
  • Protect seniors social security numbers by utilizing another means of identification

Background

AAJ's MSP Report

H.R. 1063: The Strengthening Medicare and Repaying Taxpayers (SMART) Act

Protecting Medicare with Improvements to the Secondary Payer Regime Hearing, House Energy and Commerce Oversight Subcommittee

MSP Fact Sheet

MSP Claims Process Flowchart, adapted from MSPRC

 


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