The Medicare Secondary Payer (MSP) system is broken greatly impacting Medicare beneficiaries and other involved parties due to an antiquated “Private Cause of Action” provision in the law.
If a beneficiary is injured and another entity is required to cover their healthcare expenses – such as in a tort case, workers’ compensation claim or auto insurance payment – the impacted individual’s medical care and coverage may be negatively impacted for years to come. For example, someone injured in an auto accident could resolve their claim, only to be sued years later for double damages under the MSP “private cause of action” law.
HOW DID THIS HAPPEN?
In 1986, 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 and allowing 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.
Whether or not the provision made sense when enacted in 1986, Congress changed the MSP statute in 2007 (in Section 111 of the MMSEA) and rendered the “Private Cause of Action” moot by specifically requiring that any entity paying a settlement, judgement, or award to report the payment to Medicare which then shares this information with Medicare Advantage and Part D plans. As a result, there are no longer cases where only private parties, and not the government, are aware of primary plan non-payment, and there is no purpose to empower private collection efforts. Who is Impacted by the Current Private Cause of Action Provision?
Medicare beneficiaries who may be denied the payment/coverage they’re entitled to.
Future Medicare beneficiaries who may face a less tenable Medicare Trust Fund
Businesses and employers who may face private party lawsuits for double damages after they resolve claims with the government.