CHAPTER § 9.07 Medicare Secondary Payer Act

• Jurisdiction: United States

§ 9.07 Medicare Secondary Payer Act

The Medicare Secondary Payer Statute ("MSP"), enacted in 1980, established Medicare as the secondary payer of a Medicare recipient's medical care.⁴⁵⁷ The purpose of the MSP was to prevent plaintiffs in personal-injury litigation from obtaining a double recovery in circumstances where both Medicare and the defendant pay for plaintiffs' injury-based medical care. Under the MSP, if Medicare pays for the medical care of a plaintiff, Medicare maintains a right of action to recover its payments (known as "conditional payments") from the plaintiff if the plaintiff is later compensated for those same injuries by a third party.⁴⁵⁸ For example, if a Medicare beneficiary sues over her injuries and receives compensation for those injuries—whether by settlement, judgment, or other award—Medicare is entitled to be reimbursed by the beneficiary for the cost of such conditional payments. Medicare also may demand reimbursement directly from the settling defendant or its insurer if Medicare is unable to obtain reimbursement from the plaintiff. Medicare considers settling defendants or their insurers to be "primary payers" under the MSP, just as Medicare is the secondary payer under the statute. Accordingly, the MSP allows Medicare to seek reimbursement directly from the primary payer even if the primary payer has already compensated the plaintiff and received a release of all claims.⁴⁵⁹ In short, Medicare's right of recovery appears to be extraordinarily broad.⁴⁶⁰ And, at this stage in the law's enforcement, loopholes are not easily apparent. For example, according to at least one court, parties to a lawsuit cannot claim that none of the consideration for the release of claims is intended to compensate plaintiff for medical expenses incurred as a result of the inci-dent.⁴⁶¹

To improve monitoring of third-party payments for which Medicare may be entitled to reimbursement, Congress enacted Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007.⁴⁶² Under Section 111, primary payers are now required to register with the Center for Medicare and Medicaid Services ("CMS"). The primary payer is known under Section 111 as a "Responsible Reporting Entity," a term defined to include any entity that self-insures.⁴⁶³ Responsible Reporting Entities ("RRE") were required to begin reporting claim information several years ago, starting in 2011.⁴⁶⁴ This reporting is "retroactive" to the extent that it must include information on claims...