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Wednesday November 19, 2008
Attorney Information 
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Medicare Secondary Payer - What is it? Medicare Secondary Payer Categories Medicare Secondary Payer Definitions Legislative History of Medicare Secondary Payer Medicare Secondary Payer Subrogation Laws and Regulations Medicare Secondary Payer Procedures Provider Billing Rights and Responsibilities Medicare Secondary Payer Forms Medicare Secondary Payer Contact Listing: Southeast Region Medicare Coordination of Benefits Contractor
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This web page is designed to assist attorneys whose client is receiving Medicare Benefits and Medicare has paid for his/her accident related claims. Attorneys play a vital role in the post payment recovery action and help to protect the Medicare Trust Fund. The purpose of this web page is to help provide an understanding and meet the responsibilities of their role in the Medicare Secondary Payer (MSP) process and to help reduce the benefit dollars depleted from the Medicare Trust Fund. The information found in this web page should improve attorney's understanding of the MSP laws and internal processes which would allow for an open line of communication so that we can all function more productively. This too will help your client at time of settlement. For customer service assistance on Medicare Secondary Payer issues, please contact our office at (706) 571-9586.
Legislative provisions from 1980 to the present have resulted in the methods used for reimbursing health care costs whereby Medicare is no longer the primary payer in certain situations for health care bills. As a result of these laws, the Medicare Secondary Payer (MSP) Program was initiated by the Centers for Medicare and Medicaid Services (CMS), to protect the long term viability of the Medicare Trust Fund by requiring other insurers to pay before Medicare in the situations listed below.
The MSP provision apply to the following groups:
WORKING AGED
Working aged is a term that is given to the Medicare beneficiary who are age 65 or older and have group health insurance based on their own, or their spouse's current employment. Certain rules apply for all employers. When a beneficiary becomes entitled to Medicare, they must give the employer an information decision as to whether they will choose to accept Medicare as their primary payer or choose the employer health plan. The employer must offer all employees the same health insurance benefits and cannot take into account the fact that the employee or the employee's spouse is covered by Medicare and offers a different type of coverage. This rule will apply to all types of MSP provisions involving employer sponsored health insurance coverage. The working aged provision applies to all employers that have 20 or more employees. The employee of any age that has a spouse that is a Medicare beneficiary age 65 or older must be offered the same coverage as the other employees under the age of 65.
*MSP for the working aged provision to domestic partners
(Change Request 2252 Transmittal 1)
Section 1862(b)(1)(A) of the Social Security Act (the Act) states that Medicare is secondary payer for individuals age 65 or over who have group health plan coverage by virtue of their own or a spouse's current employment status. The question has been raised as to whether group health plan coverage provided to domestic (life) partners is secondary to Medicare under this provision.
The CMS' policy has been that this MSP provision applied to a domestic partner if a plan included the domestic partner within the definition of "spouse," i.e., where domestic partners are given "spousal" coverage by the plan. In contrast if a plan provided an individual coverage because it recognized the individual as a "domestic partner" rather than as a spouse the individual was not considered a spouse for MSP purposes.
The CWF currently allows MSP Type "B" (ESRD) and "G" (Working Disabled) with patient relationship 01 (patient is insured); 02 (spouse); 03 (natural child: insured has financial responsibility); 04 (natural child: insured does not have financial responsibility); and 18 (parent). The CWF currently has an edit to reject any other patient relationship code besides "01" and "02" for working aged MSP auxiliary records. Therefore, a working aged record with patient relationship code "20" (life partner") will apply an edit for invalid patient relationship and not allow a record to be applied to CWF.
Policy:
A recent Federal law defines spouse in the context of all Federal statutes, rulings, and regulations as "a person of the opposite sex who is a husband or a wife" (P.L.104-199). Under this law, a domestic partner cannot be recognized as a spouse, and therefore, the Medicare secondary payer provisions for the working aged do not apply in situations where the Federal definition of "spouse" is not met.
The new policy does not apply with respect to domestic partners under the MSP disability provision. Section 1862(b)(1)(B) of the Act states that Medicare is the secondary payer for disabled individuals who have large group health plan coverage by virtue of their own or a family member's current employment status, provided at least one employer of 100 or more employees participates in the plan. Further the term "family member" is defined in 42 CFR 411.201 as "a person who is enrolled in a large group health plan based on another person's enrollment." The term encompasses not only individuals who are related (by blood, marriage or adoption) but also individuals who are not related, such as other dependents of the insured, provided they are enrolled in the plan based on the insured's enrollment. We point out that the list of family members included in 42 CFR 411.201 of the regulations constitutes examples only. Thus, under the disabled provision, a domestic partner who has coverage under a large group health plan based on the other partner's enrollment in the plan would be considered a family member for purpose of the MSP disabled provision.
Further, the new policy does not apply with respect to domestic partners under the MSP provisions for individuals with end-stage renal disease (ESRD). Section 1862(b)(1)(C) of the Act states that Medicare is secondary to group health plan coverage for individuals eligible for or entitled to Medicare because of ESRD regardless of the number of employees and regardless of the enrollee's employment status. Since this provision applies to all ESRD persons (including domestic partners) who have group health plan coverage, the group health plan is primary.
DISABILITY
A beneficiary under the age of 65 that is not entitled to Medicare due to end stage renal disease has Medicare entitlement on the basis of disability. If the beneficiary has group health insurance based on their own or that of a family member's current employment status, is entitled to Medicare on the basis of a disability and the employer has 100 or more employee, Medicare will not be the primary payer. The primary payer responsibility will be that of the group health plan. This will also include disabled employees who are not able to be at work but are considered to have current employment status based on continued eligibility for the company benefits. For example, the beneficiary has current employment status based on his participation on the Board of Directors. Even if the beneficiary is disabled, the employer or the employer of the spouse, or any family member, must give the Medicare beneficiary the opportunity to make an informed decision to accept or reject the employer's health plan as primary payer.
END STAGE RENAL DISEASE
An individual can have Medicare entitlement on the basis of permanent kidney failure. This type of entitlement is known as End Stage Renal Disease (ESRD). Medicare benefits are secondary to the group health plan for a certain timeframe, known as the coordination period. Prior to the enactment to the Balanced Budget Act (BBA) of 1997, the coordination period was 18 months. The BBA of 1997 permanently extends the coordination period to 30 months for any individual whose coordination period began on or after March 1, 1996. Medicare will assume the primary payer role after the coordination period has been completed. In certain instances where the individual has completed the coordination period, had a successful kidney transplant, remained on Medicare and the beneficiary, spouse or other family member is employed; the beneficiary's reason for entitlement may change to disability and the group health plan may again assume the primary payer role if all criteria is met. In addition, if the transplant fails after 36 months then Medicare may again become secondary for another coordination period when all criteria are met.
WORKERS COMPENSATION/BLACK LUNG/PUBLIC HEALTH
Medicare is secondary payer for services that are a work-related illness or injury. Even if the illness or injury occurred prior to becoming Medicare eligible, there may be primary responsibility of the workers compensation plan.
Medicare is also secondary payer for claims that relate to the Federal Black Lung program or other Public Health Programs.
VETERANS ADMINISTRATION
An individual may have or can receive both Medicare and veterans benefits. The beneficiary has the right to choose to get treatment under either program. Under certain circumstances Medicare cannot pay, such as for treatment received from the Department of Veterans Affairs (DVA) hospitals or other DVA facilities, except in the case of certain emergency hospital services and cannot pay if the DVA pays for DVA authorized services that are received in a non-DVA hospital or from a non-DVA physician.
INTERMEDIARY
CARRIER
CONDITIONAL PAYMENT
MEDICARE PART A PROVIDER
MEDICARE PART B PROVIDER
MEDICARE OVERPAYMENT
CMS
FCCA
MEDICARE STATUTORY RIGHT TO RECOVERY
PURGED HISTORY
LEAD ROLE
July 1, 1966
1980 OBRA
1981 OBRA
TEFRA
DEFRA
COBRA
1986 OBRA
1989 OBRA
1990 OBRA
1993 OBRA
Federal statutory right of Medicare Program as secondary payer in relation to automobile medical/no-fault insurance, liability insurance, Workers' Compensation insurance. The establishment of Medicare as a secondary payer and authorization of the Medicare program to seek reimbursement of its overpayment has its basis in ss1862 (b) of the Social Security Act [42 usc ss 1395] as amended by ss953 of the Omnibus Budget Reconciliation Act of 1980[Pub. L. 96-499,94 Stat.2647 (1980)]. Prior to the adoption of ss953, this legislation had originally focused on Medicare as a secondary payer when another insurance policy, plan or law such as Workers' Compensation coverage could also make payment. With the adoption of ss953, this secondary payer status was expanded to specifically include "an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance." The specific legislation intent was to establish Medicare as a secondary payer in instances where an automobile medical or no-fault or liability plan or policy was available, and that Medicare, once it had made a payment, would seek reimbursement. In April 1983, the Secretary for the Department of Health and Human Services issued a final rule designed to implement the statutes. This rule presently codified at 42 CFR 411.20 et seq. includes a description of the various types of insurance's which are to be deemed primary, and the procedures involved for recovering its overpayment when a situation involving a primary insurer exists. The regulations regarding Medicare's right to reimbursement on conditional overpayments in liability situations can be found under 42 CFR s411.23, 411.24,411.26,411.37,411.50,411.52, and 411.54. It is important to note at this point that "liability insurance" means insurance (including a self-insured pan) that provides payment based on legal liability for injury or illness or damage to property. It includes, but is not limited to automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowners' liability insurance, malpractice insurance, product liability insurance and general casualty insurance. These regulations also established that Medicare would be secondary to no-fault insurance, which is defined as "insurance that pays for medical expenses for injuries sustained on the property or premises of the insured." This insurance includes, but is not limited to automobile, homeowners, and commercial plans. This insurance is sometimes called "medical payments coverage", "personal injury protection", or "medical expense coverage". 42 CFR ss411.50 You may refer to Colonial Penn Ins. Co. v. Heckler, 721 F. 2d 432 (3rd Cir. 1983) and Abrams v. Heckler, 582 F. Supp 1155 (S.D. New York 1984). These cases recognized the congressional intent to establish Medicare as a residual rather than primary payer, and recognized that any State Law, which would interfere with this intent, would be superseded. In addition to judicial decisions establishing the Federal right of recovery, Congress, in enacting the Deficit Reduction Act of 1984 (Pub. L 98-369), specifically established the right of the United States to bring direct legislative action against any entity responsible for primary payment and clarified the ability of the United States to be subrogated to "any right of an individual or any other entity to payment". Another modification to the enforcement abilities of the United States in regard to Medicare as a secondary payer came about with the passage of the Omnibus Reconciliation Act of 1986 (Pub. L. 99-509, Stat, 1974(1986). This act amended 1862(b) of the Social Security Act to create a private cause of action for damages " in law or plan, automobile or liability insurance policy or plan or no-fault insurance plan, group health plan, or large group health plan" which has been deemed primary and "fails to provide from primary payment (or appropriate reimbursement)..." 42USC ss1395(b), 1985. An often asked question in regard to the Medicare program's primary right of overpayment reimbursement has been whether beneficiary counsel is entitled to collect a fee for recovery of its overpayments expressly stated in Federal law. This legislation has provided for several methods of collecting its reimbursement, including direct litigation against any entity responsible for payment, and offset against any moneys owed the beneficiary by the Federal government, such as Social Security benefits. 20 CFR ss404.502. If an automobile medical or no-fault insurance plan, policy or coverage, or a Workers' Compensation plan policy or coverage has made payment (or can reasonably be expected to make payment) for services which Medicare has made payment as well, the Medicare program will seek reimbursement up to amount paid by Medicare for that good or service. There are situations, however, where the Medicare program will accept less that its actual payment as payment in full. Should the Medicare's Program's reimbursement be made from moneys received as a liability insurance payment (regardless of its designation), the Medicare program will permit a reduction from the amount due for a proportionate share of the costs of procuring the payment. The computation set forth at 42 CFR ss411.37, will allow costs the beneficiary has incurred (including the fee arrangement between the beneficiary and Counsel) in order to obtain payment. It may be necessary for Counsel to submit a copy of the settlement sheet, listing the procurement costs at time of settlement and a copy of the retainer agreement. In addition, Medicare contractors have been given the authority to render waiver decisions. Full or partial waivers may be granted when repayment of the Medicare debt would cause financial hardship or that repaying the Medicare debt would be unfair for some other reason. All waiver requests must be submitted in writing and be accompanied by supporting documentation. The Medicare Overpayment Questionnaire must also be submitted. A waiver determination can only be decided after a case has settled between the beneficiary and the liable party and could take up to 120 days for a determination. Failure to protect the Medicare program: Section 42 CFR 411.23 states that a beneficiary must cooperate in any action taken by the Centers for Medicare and Medicaid Services in recovering conditional payments. Failure to do so or not protecting the Medicare program during and after settlement negotiations may result in CMS taking action against the beneficiary to collect the mistaken payment. In the event that reimbursement is not made to Medicare as required by 42 USC 1395y(b)(2)(B)(I), action may be brought against any entity responsible for payment (and may collect double damages from insurance companies), or any entity that has received a third-party settlement. Under 42 CFR 411.24(g), this includes attorneys whose fees are paid from settlement proceeds. Please refer to US v. Sosnowski, et. al. where judgement was entered against a beneficiary and his attorney for failing to reimburse Medicare after receiving settlement proceeds on a personal injury case. CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24. In addition, Medicare has the authority to refer non-collectible debts over to the United States Department of Treasury for possible offset of a beneficiary's benefits. If a case cannot be settled without satisfying the Medicare debt, then a pre-settlement compromise of Medicare's rights may be requested. The request must be in writing and include an explanation why the debt should be compromised. In addition, the amount that you are asking Medicare to accept in full satisfaction should be included along with your attorney fees, out of pocket expenses (to date), and the proposed settlement amount. The Medicare Overpayment Questionnaire will also need to be completed. The authority to compromise or suspend the Medicare debt as outlined in the Federal Claims Collection Act is reserved only for the Centers for Medicare and Medicaid Services. No Medicare contractor or intermediary has the authority to negotiate or compromise the Medicare debt. The criteria for this request is when it appears that the beneficiary does not have the ability to pay a significant amount of the claim or the cost of collecting the claim is likely to be more that the amount recovered. This type of request cannot be appealed at a later date; however, the offer can be rejected and a waiver request pursued.
The Medicare Secondary Payer activities begin when a Medicare Intermediary (Part A), Carrier (Part B), or the Coordination of Benefits (COB) Contractor becomes aware of a situation when a Medicare beneficiary was involved in an accident that could or should be paid for by a liability or auto/no-fault insurance coverage. This notification may be received in several ways: Correspondence from:
NOTE: If a client is over 65, disabled, or has End Stage Renal Disease, Medicare should be notified to see if an overpayment exists. The COB Contractor needs to obtain the following information to have a complete file and determine the lead role:
Once all this information is obtained, the Coordination of Benefits (COB) Contractor, GHI, will update the Medicare system records and designate the lead role to assume the recovery effort functions. If all needed information is not provided, GHI will be responsible for the gathering of this information. NOTE: All written and telephone correspondence should be directed to the COB Contractor until such time the lead role is determined. The lead role for the contractor will be to coordinate with the other intermediaries and carriers that have paid benefits on behalf of the beneficiary as a result of injuries sustained in the accident in an effort to obtain the total amount due Medicare. Also, the lead contractor will be responsible for responding to all correspondence received. The procedure normally takes approximately four to six weeks to allow for coordination with the COB Contractor and other Medicare Intermediary's and Carrier's to determine their involvement in the case and to obtain their responses in writing. If a final response to your inquiry cannot be made within 45 days from receipt, an interim response will be provided for notification that your request has been received and is being reviewed. The information requested will be provided as soon as possible thereafter. Please note older cases can take longer to determine the full overpayment amount because purged histories may need to be ordered. Therefore, it is advisable that once you become aware that Medicare has paid claims on a case, you contact one of the Medicare offices that may have made payments on behalf of your client. Due to the large number of cases that are being handled, the only time a case will be a priority and our procedures expedited is when there is a court date deadline. The normal time frame to respond to inquires is within 45 days. As stated above, if a final response to your inquiry cannot be made within 45 days from receipt, an interim response will be provided for notification that your request has been received and is being reviewed. Overview:
Unfortunately, there are instances in which Medicare does not become aware of a MSP recovery case until after insurance benefits or settlement awards have been disbursed to the beneficiary. In these situations, it is necessary for Medicare to seek reimbursement directly from the beneficiary; however, this does not relieve the insurance company and/or attorney of their obligations to Medicare. If the overpayment is not received from the beneficiary, CMS may offset the overpayment from the beneficiary's Social Security Income payments or make the insurance company and/or attorney liable to pay the Medicare debt. Once Medicare's overpayment is satisfied, a release of satisfaction will be issued and the case closed. Medicare has specific model language provided by CMS, therefore, Medicare representatives cannot sign a release issued from another entity. The sooner Medicare is notified if there is possible overpayment, the easier it is for all parties involved. If attorneys would notify Medicare that their client may have received Medicare benefits as soon as they take the case, the entire process would run much more efficiently. The Medicare Intermediaries and Carriers would have the time required to determine the overpayment amount, which, in turn, enables the attorneys to better negotiate a settlement figure. Once Medicare is informed of the settlement figures, the recovery amount is determined and, in most instances, the settlement proceeds may be disbursed upon receipt. In the event a settlement check is made out to a beneficiary, his/her attorney, and Medicare, then all endorsements must be on the check and sent to Medicare. Medicare will then deposit the check, satisfy the debt, and issue a refund for the difference. The time frame to receive the refund is approximately 10-15 days. Medicare will not endorse settlement checks where Medicare has an interest without satisfying the debt first. This endorsement will terminate Medicare's collection rights.
Difference between liability insurance and other primary insurers: Liability insurance differs from the other insurance policies or plans that under ssl862(b) of the Social Security Act, are primary to Medicare. In the case of other types of insurance which are primary to Medicare, i.e., automobile medical and no-fault insurance, group health plans, and worker's compensation, there is a contractual relationship between the injured party and the third party. Thus, the provider has the right to bill the third party. In the case of liability insurance, unlike the other policies or plans, there is no direct or indirect contractual relationship to the liability insurer of the alleged tortfeasor. A provider, in contract, has no standing to sue the tortfeasor: its relationship is solely to the injured party whom it has furnished Medicare covered services. Billing Medicare for conditional payment: Although services are needed because of an accident, a provider may (but is not required to) bill Medicare for a conditional payment. However, before a provider bills Medicare for a conditional payment, it must first attempt to determine whether there are potential primary payers other than Medicare that can make a prompt payment (prompt being defined as 120 days) i.e., no-fault insurer, automobile medical, or group health plan. When services are rendered by a provider or supplier, they are required to ask a Medicare beneficiary a series of questions, found in the provider manuals supplied by the Centers for Medicare and Medicaid Services. This must be completed at every inpatient admission,outpatient encounter, or start of care. Such payers must be billed prior to billing Medicare. In addition, the liability insurer must be billed as well. AHA v. Shalala ruled that health care providers can bill the primary payer (liable party) for total charges. Because of this decision, health care providers are required to bill the liable party and the beneficiary's insurance prior to billing Medicare, taking the burden of a primary payment from Medicare. If the provider has documentation that the liability insurer is not going to settle within the 120 days, it may bill Medicare during the 120-day wait. If 120 days have passed since the liability insurer was billed, the provider may, but is not required to, bill Medicare for a conditional payment. The Medicare timely filing limitations found in 42 CFR 424 continue to apply. If the provider or supplier chooses not to bill Medicare during the Medicare filing period, it may not bill Medicare after this period has expired, even if it is unable to collect from the proceeds of the liability insurance settlement. If a conditional payment is made, the provider may only collect for a Medicare deductible, coinsurance, and non-covered services from the third party payer. Once a claim has been submitted to Medicare for payment, the right to bill for total charges or file a lien has been voided. In addition, a provider may not bill Medicare and still have an active lien in place. The lien must be dropped prior to submitting a claim to Medicare for payment.
File(s) available for download on this page may be in portable document format (PDF). In order to view documents in this format, you must have the Adobe Acrobat® Reader™ which can be downloaded at no cost. For help with downloading, please visit http://www.adobe.com/support/downloads/help.html.
The Medicare Consent Form to Release Medical Information
The Medicare Overpayment Questionnaire (hardship forms)
On November 1, 1999, The Centers for Medicare and Medicaid Services awarded the Coordination of Benefits, (COB) Contract to GHI., Group Health Inc., of New York. The COB Contractor will consolidate activities that support the collection, management, and reporting of all other health insurance coverage's of Medicare beneficiaries, as well as, all insurance coverage obligated to pay primary to Medicare. This will save the Medicare Trust Fund monies paid in mistaken overpayments and allow Medicare contractors and Fiscal Intermediary's to pay claims right the first time. For more information concerning the COB Contractor, log onto CMS's website at: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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