Anyone who has been working in Worker’s Compensation over the past twenty years knows the importance of considering Medicare’s interests when evaluating and settling claims. I write with an overview of the Medicare Secondary Payer Act and the implications of the new PAID Act.
The Medicare Secondary Payer Act (MSP) is a group of statutory provisions and amendments. The MSP provides that Medicare is a secondary payer, and it should not be responsible for paying for medical treatment costs associated with a work comp claim.
Compliance with the MSP is essential and failure to comply can be costly and complicated. There are three issues involved in complying with the MSP.
Mandatory Reporting of Claims: Most settlements involving Medicare-eligible claimants must be reported to Medicare pursuant to Section 111 of the Medicare, Medicaid & SCHIP Extension Act of 2007.
Conditional Payments: A Conditional Payment is defined as “a Medicare payment for which another payer is responsible.” See 42 C.F.R. § 411.21. The “condition” is that these payments were made by Medicare but are subject to reimbursement.
Medicare has broad authority to enforce recovery of its conditional payments from a primary payer and powerful subrogation rights. Medicare has a direct right of reimbursement from the primary insurer or any party that received a payment from the primary payer (including lawyers). Medicare can (and will) sue for double damages to recover its conditional payment. U.S.C. 1395y (b)(2)(B)(iii).
Medicare Set-Asides: When settling a worker’s compensation claim that includes closing claims for future medical expenses, a Medicare Set-Aside (WCMSA or MSA) or other arrangement must be considered to protect Medicare’s future medical interests in cases where the claimant is a Medicare beneficiary or is likely to become a Medicare beneficiary shortly.
The Provide Accurate Information Directly (PAID) Act was passed on December 11, 2020. It was implemented on December 21, 2021.
This law requires the Centers for Medicare and Medicaid Services (CMS) to provide settlement data to primary plans/worker’s compensation carriers to assist with reimbursement of Medicare Conditional Payments.
The PAID Act was so important because while traditional Medicare (Parts A and B) Conditional Payments are collected by Medicare Contractors, these contractors do not collect payments made by Medicare Part C (Medicare Advantage) or Medicare Part D (Drugs) Plans.
Medicare Advantage plans and Medicare Drug plans are run by private insurers who receive a fee from Medicare to provide Medicare coverage. Those insurers have a right to reimbursement, but prior to the PAID Act, it was very difficult to know if such an insurer even existed. This made compliance frustrating and uncertain.
Worker’s Compensation Insurers and Self-Insureds need to have procedures in place to comply with the Medicare Secondary Payor Act. Failure to do so can be extremely costly.
With regard to Conditional Payments (Medicare’s rights to reimbursement), I recommend the following actions in every case involving a plaintiff who is a known Medicare beneficiary or of Medicare age:
Obtain a copy of the Medicare and any health insurance cards.
Assume any health insurance plan is a Medicare Advantage Plan unless and until proven otherwise.
Reach out early to look for any liens. (They will come back after you have settled the case!)
Address conditional payments at the time of settlement – either through the CMS Contractor or from the Medicare Advantage Plan.