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Medical Malpractice


The Medicare Secondary Payer Statute


What’s All the Fuss About? Annie B. Hirsch A


s many of us who handle medical malpractice and personal injury litigation know, there is an 800-pound gorilla that figuratively sits beside us


at every mediation, settlement discussion, and trial. Tat unsightly, overwhelming, impossible to ignore beast is Medicare. Tose of us representing injured persons are aware of, and have been coping with, the reality of Medicare liens and their impact on our litigation practice for years. Given recent legislative changes, defense counsel and insurers are beginning to realize that which we are already knew: Yes Virginia, there is a Medicare lien and it comes with a reporting requirement.


Background of the Medicare Secondary Payer Statute


Te Medicare Secondary Payer Statute (MSPS) exists as a


recovery mechanism to ensure that Medicare recovers payment for bills when another party is responsible. 42 U.S.C. §1395y. Historically, it has been the plaintiff’s counsel’s obligation to report settlements to Medicare, and insure the payment of these lien obligations. Prior to 1980 this statute only applied to Worker’s Compensation claims. In 1980, Congress added liability claims to this statute. Compliance with this statute from 1980 through 2003 was looser, entailing the completion of a Scantron form that provided various pieces of logistical information. Tis voluntary compliance was not as effective as the government had hoped, so in December 2003 the Medicare Prescription Drug, Improvement and Modernization Act was adopted. (Medicare Modernization Act, Pub. L. No. 108-173, 117 Stat. 2066 (2003) (codified as amended in scattered sections of 42 U.S.C. §1395)). Te statute essentially provided that no matter how a settlement agreement or release was drafted, the plaintiff could not avoid


reimbursing Medicare for the relevant lien. Tis Act made it clear that plaintiffs’ attorneys had an affirmative duty to verify and resolve any conditional Medicare payments made from the date of injury through the date of settlement. From 2006-2007 Medicare centralized its recovery


efforts through the Medicare Secondary Payer Recovery Contractor (MSPRC). In addition to this organizational effort, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) created an obligation for insurers to report to Medicare every time they settle a case on or after July 1, 2009. After this date, when a settlement is reached, the Responsible Reporting Entity (RRE) (which is typically the defendant’s insurance company) must determine if the injured party is entitled to Medicare benefits. Registered RREs are given access to the Centers for Medicare and Medicaid Services (“CMS”) online Query Access System to aid them in making this determination. If it is determined that the injured party is entitled to these benefits, then the defendant must satisfy the notice requirement by providing approximately 50 points of data to Medicare regarding the Beneficiary and the claim through the Coordination of Benefits website.


Trial Reporter / Summer 2010 13


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