MEDICARE SECONDARY PAYER ENHANCEMENT ACT (MSPEA) of 2010

BACKGROUND:

IIn 1980, Congress adopted the Medicare Secondary Payer (MSP) law to clarify that Medicare was secondary to other forms of payment for medical expenses, and to allow the Medicare Trust Fund to expend and later recover "conditional payments" from responsible parties. From the time it was passed, , the Center for Medicare and Medicaid Services (CMS), an agency of the US Department of Health and Human Services, rarely enforced the statute against entities other than group health plans and in certain workers compensation cases. Indeed, even today many companies are unaware of the statute.

In December 2007 Congress enacted Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) which required any entity making a payment to a beneficiary to report that payment to CMS. "Section 111" created a new and significant enforcement tool for the CMS Agency to pursue MSP claims, both by creating a new reporting regime and shifting significant compliance responsibilities upon the regulated community of group health plans, workers compensation plans and insurers, liability insurers, self-insureds, others. The 2007 statute requires a "responsible reporting entity" – anyone making a payment to a Medicare beneficiary (normally a defendant in a liability claim or their insurer) -- to report to CMS each and every settlement or other payment to a beneficiary to resolve a claim. Failure to report triggers a $1,000 per day per claim penalty. The impending reporting requirements will, for the first time, provide the federal government with an understanding of where settlements and judgments have occurred, allowing CMS to seek recovery from settlement payments from beneficiaries or insurers, self-insured, and others. CMS implementation of the statute also shifts to the RRE the responsibility of determining whether the person receiving payment even is a Medicare beneficiary. For all entities other than group health plans, reporting begins in 2011.

Given the greater scrutiny that the government will soon devote to MSP issues, as well as the significant reporting obligations and potential penalties, all parties to liability and workers compensation cases are reluctant to settle cases or paying funds without first resolving the Medicare liability issue. However, to do so the settlement parties must have the "conditional payment" amount - the amount that Medicare actually paid in health care expense for the claim at issue, and which Medicare claims is owed to the Medicare Trust Fund. Today, however, this information is rarely available before a settlement takes place, which harms beneficiaries, the Trust Fund, and settling parties. As a consequence, settlements either cannot be concluded or at best, settlements will be delayed and distributions stalled waiting for CMS to provide the demand/recovery calculation letter, postponing for months or years beneficiaries receiving their recoveries. Experts have predicted that lawyers soon may stop taking cases on behalf of beneficiaries altogether.

In sum, Medicare's ever increasing role in MSP creates a critical and challenging environment for Medicare beneficiaries and the entities that might be responsible for their claims. The extremely high risk of future MSP liability presents significant obstacles for beneficiaries to initiate claims, and for all parties to reach settlements on liability claims involving Medicare beneficiaries. In addition, the MSP reporting requirement mandated by Section 111 is fast becoming a national issue affecting the Medicare beneficiary's ability to obtain legal representation.

THE SOLUTION - The MEDICARE SECONDARY PAYER ENHANCEMENT ACT (MSPEA) OF 2010

The Medicare Secondary Payer Enhancement Act of 2010 contains many important improvements to the Medicare Secondary Payer statute, including several changes that will bring certainty and predictability to beneficiaries and all others participating in resolving beneficiary claims. Among other provisions, the legislation would:

Revise the Information Flow so that Medicare Secondary Payer (MSP) can be Determined, and Paid, BEFORE Settlement
Right of Appeal
Adopt Sensible MSP Recovery Thresholds
Take Social Security Numbers (SSN) and Health Insurance Card Numbers (HICN) Out of the Reporting Process
Set a Limitations Period for MSP Claims
Correct MMSEA §111 Penalty Provisions
Adopt a User Fee to Offset Legislative Cost

MSPEA Legislative Summary
MSPEA/H.R. 4796 Bill
Congressional Co-Sponsors