In 1986, shortly after the MSP laws were enacted, a problem arose – how would the government know when a group health insurer refused to repay the government, thus forcing the government to pay a Medicare secondary payer claim? To address this issue, Congress added a “private cause of action” to the MSP law allowing anyone who incurred “damages” to bring a double damage lawsuit against the insurer. Strangely, the law allows the person suing to keep the money (rather than return it to the Medicare Trust Fund).
In recent years, a proliferation of unwarranted, unfair, and unnecessary double damage claims has been brought against Medicare beneficiaries, their lawyers, insurers, retailers, unions, and manufacturing companies, among others. As a result, all parties are finding it more difficult to settle and resolve claims involving Medicare beneficiaries.
In 2007, Congress enacted Medicare Secondary Payor (MSP) “Reporting” requirements, known as “Section 111” Reporting. The requirements obligate any party settling or paying a claim involving a Medicare beneficiary to report to Medicare the settlement, payment or judgment, along with other specified information related to the claim.
Reporting is difficult, and an entity must be registered with Medicare as a “Responsible Reporting Entity” (or RRE) to be able to report. Although it is estimated that millions of claims are reported each year, millions more may not be.
When Congress enacted the statute, it imposed a severe strict liability penalty of $1,000 per day per claim for failure to report. MARC intervened with Congress and in 2012 the statutory penalty was modified to a sliding scale of “up to $1,000 for each day of noncompliance with respect to each claimant.”
MSP TOP Program
MARC members and other stakeholders are receiving notices from the Treasury Department that the government is deducting Medicare secondary payer (MSP) payments from tax refunds otherwise payable by the government.
Notices are often going to corporate Chief Financial Officers or Tax departments unfamiliar with MSP issues. In many cases, neither the company nor Treasury can identify the MSP claims for which the deduction is made. In cases where the MSP claims can be identified, usually the company has had no notice of the claims at issue, either because they were never received, or were received by branch offices or closed facilities. And in many cases Treasury is sending collection notices while companies are appealing an MSP debt through the Administrative Law process. The MSP TOP program must be reformed.
The Center for Medicare and Medicaid Services (CMS) has incorrectly stated on numerous occasions that there is an obligation to protect Medicare’s interest in the payment of future medical costs arising from liability (and other) claim settlements. CMS, however, has neither defined this obligation, nor demonstrated a legal basis for such position. The MSP statute is clear that it is Medicare’s obligation to protect its own interests, and Congress has prohibited CMS from any role in addressing “future medical” issues.
Although CMS is prohibited from recovering amounts allocated to non-medical loss in liability settlements,1 in 2012 CMS published in the Federal Register an Advanced Notice of Proposed Rulemaking (ANPRM) seeking input on how to address MSP future medicals in liability cases. 77 Fed. Reg. 35917 (June 15, 2012).
CMS has a unique reporting requirement for those claims in which the reporting entity has an “ongoing responsibility” to pay medical claims, either because the entity has accepted that obligation voluntarily or because state workers compensation or no-fault laws require that result for a fixed period or for the lifetime of the claimant.
Although initial ORM reporting is understandable, the Agency has made it unnecessarily difficult to terminate such reports. More specifically, as set out in Chapter III, Section 6.3 of the NGHP User Manual, ORM reporting can only terminate when a state statute of limitations has expired on future claims or when a beneficiary’s treating physician issues a letter stating no further treatment is necessary. These letters are near impossible to secure. In addition, several states have no limitations period for claims repayment. As a result, many ORM claims remain open for years, and may be open for decades.
MARC is grateful to the Centers for Medicare and Medicaid Services (CMS) for its timely and efficient implementation of the PAID Act in December 2021. CMS is now providing extensive Medicare Advantage and Part D enrollment information in response to MSP “Query” requests as required under the law. More work, however, needs to be done to ensure that Medicare Advantage and Part D Plans provide accurate coordination of benefit contact information to CMS, so that settling parties can resolve MSP claims with those Plans in a timely manner.
Congress directed CMS to coordinate with industry MSP stakeholders. This has required, and will continue to require, close communication and information exchange from industry Medicare secondary payer (MSP) experts MARC has been and will continue to be at the forefront of these discussions, as the lead Coalition in Washington D.C. dedicated to MSP reform.
Medicare Secondary Payer (MSP)
When Congress enacted the Medicare law in 1965, little thought was given to situations where another payer, such as an insurer or self-insured, was available to pay for health care costs. By 1980, however, with the number of Medicare beneficiaries enrolled in the program far exceeding Congressional expectations, Congress realized it would need to modernize the statute.
As part of that modernization, Congress enacted the MSP statute, which for the first time prohibited the Medicare program from paying claims that were covered by, or were reasonably expected to be covered by, another payer. Congress initially focused on group health plans, and throughout the 1980s passed multiple laws to implement a comprehensive group health plan MSP program. Congress recognized, however, that no-fault, worker’s compensation, and liability coverage should also be primary to Medicare, and as part of the 1980s amendments Congress added what is today referred to as “non-group health” or NGHP coverage into the MSP program as well.
When adding the NGHP plans into the law, Congress recognized that, particularly (but not only) in liability situations, the identity of the primary payer may not be known at the time health care must be provided. For example, if a Medicare beneficiary is hit by a car, the car driver’s liability for the accident may not be established for years. Thus, in those cases Congress permitted Medicare to pay for healthcare on the condition that if a primary payer were later to be identified Medicare could recover its payments from the entity that received the primary payment or the primary payer itself. These recoveries, known as “conditional payment” cases, have led to significant controversy and program dysfunction for many years, and in the early decades of the MSP program the Medicare program often spent more money on trying to recover NGHP payments than it actually recovered. However, the “repayment” obligation has been the law for decades.
After the first two decades of the MSP program, the group health system worked relatively well – employers were required to report to Medicare who was covered in group health plans and the Center for Medicare and Medicaid Services (CMS, initially known as HCFA) was able to communicate with group health plans about claims to coordinate benefits. The NGHP program, however, was not successful as in the vast majority of cases CMS was never able to identify a primary payer. To remedy that issue, in 2007 CMS persuaded Congress to pass a reporting law, today known as “Section 111” (because it is found in Section 111 of the Medicare, Medicaid and SCHIP Extension Act), requiring all group health plans and NGHPs to affirmatively (1) identify whether an individual for whom they are paying a claim, settlement, judgment or award is a Medicare beneficiary, and if so (2) report extensive information about the claim payment, settlement, judgement or award to CMS. was in many cases able to identify the CMS implemented the “reporting” program in 2011 and today group health and non-group health plans have both a “reporting” and a “repayment” obligation under the statute.
The MSP program is one of the most far-reaching provisions of the Medicare statute, affecting tens of millions of Medicare and non-Medicare individuals alike, and touching nearly every insurer and company in the country today.
There are dozens of complex MSP implementation issues that impact the ability of companies generally, and NGHP insurers and self-insureds specifically, to settle and resolve first party and third-party claims. Ironically, the more difficult the MSP laws make the settlement process, the more often settlements cannot be concluded, and Medicare remains the primary payer.
MARC is dedicated to resolving these MSP issues,
improving operation of the MSP program for beneficiaries, industry, and the Medicare program alike.