Fix Medicare’s Broken Secondary Payer System

By Roy Franco|December 12, 2019
Inside Sources

The deadline has come and gone, and Congress is still working on funding the government for the fiscal year. In late November, lawmakers passed a continuing resolution to give themselves another month to pass required appropriations bills, but important questions remain on how to fund key tax and spending proposals. 

No doubt lawmakers will be looking for any savings they can get. Here’s an idea that is projected to save the government millions of dollars per year while fixing a misunderstood Medicare program that has caused insurer, risk manager and Medicare beneficiary headaches for decades. It’s called the Provide Accurate Information Directly (PAID) Act, and it’s a plan to fix America’s broken Medicare Secondary Payer (MSP) process. 

The MSP system has been in place in various iterations since the 1980s and was designed to protect taxpayers from having to shoulder a Medicare beneficiary’s health care expenses when someone else is responsible for paying them. In these instances, Medicare’s responsibility to pay for a beneficiary’s care is secondary because the beneficiary received some sort of settlement, judgment, or other award from another party. 

For example, if a beneficiary receives a settlement in a personal injury suit — following a car accident or your classic slip-and-fall — the settling party is responsible for covering any medical expenses associated with that incident and must pay Medicare back for what it spent when the beneficiary initially sought care. This system has worked pretty well over the years and helps the government recuperate nearly $8 billion annually. 
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But it’s not perfect. If the beneficiary is one of the 22 million people enrolled in a Medicare Advantage plan, chances are there will be difficulties recuperating these payments due to a lack of information sharing between the government, settling parties and plan sponsors. 

To illustrate this, let’s look at a hypothetical example of a beneficiary with a Medicare Advantage plan who recently won a settlement after a slip-and-fall incident at the local grocery store. We’ll call him Jim. 

Jim’s plan — which is directly subsidized through Medicare — pays for his immediate hospital expenses as well as any follow-up care that he needs. But because the grocery store was found to be liable for Jim’s health care expenses, the Medicare system is entitled to get that money back under the grocer’s liability insurance. 

Unfortunately, the process by which the government recuperates these funds is far from straightforward. Today, the Centers for Medicare & Medicaid Services will not disclose even the most basic details about Jim’s Medicare Advantage plan enrollment, which makes it hard for the grocery store to know who to pay. Because of this, the claim may stay open on the grocery store’s books for months or even years after it should have been resolved. For Jim, this means his settlement may be delayed as his lawyers, the grocery store’s lawyers, and his insurance plan try to figure out who to pay and how much is owed. It causes an enormous backlog forcing American taxpayers to cover the costs until claims are resolved. 

The good news is there’s a simple legislative fix to this mess. The PAID Act is a bipartisan and bicameral bill that would require CMS to provide settling parties with the beneficiary’s plan name and dates of coverage upon request via the Section 111 query process — an established means of passing Medicare-related information between CMS and third parties. 

By making a small change to the law, Congress can create a smoother, fairer and more efficient Medicare Secondary Payer program that would benefit beneficiaries and settling parties and save taxpayers money. An informal score found the bill will save $25 million over 10 years and the actual savings may be far higher — money that can help fund other spending priorities or be used to reduce the deficit. 

The PAID Act certainly won’t fix all of Medicare’s problems on its own, but it’s a sound bipartisan solution that will go a long way toward making the Medicare system work better for beneficiaries, settling parties, insurers and taxpayers.  I urge lawmakers to support this legislation and include it in the coming end-of-year spending package to resolve this issue for good. 

Roy Franco is chief client officer at Franco Signor and past co-chair of the Medicare Advocacy Recovery Coalition. He wrote this for InsideSources.com. 

https://www.insidesources.com/fix-medicares-broken-secondary-payer-system/ ​