Medicare Secondary Payer (MSP) laws require those that settle or pay claims arising from a beneficiary’s personal injury to reimburse Medicare for any injury-related health care costs the program incurs. The recently enacted PAID (Provide Accurate Information Directly) Act is expected to close an information gap and provide valuable data to those settling or funding these claims. Armed with this additional information, these parties will be able to resolve such claims with less concern that the Medicare program could later demand reimbursement of its expenditures.
Medicare’s Legislative History
A brief review of some aspects of Medicare’s legislative history will illustrate the problem the PAID Act addresses.
Medicare health coverage is comprised of Parts A, B, C, and D. Parts A and B were established in 1965 and are administered by the U.S. government. They are sometimes referred to as “public Medicare.” Part C was established in 1996, and Part D was established in 2003. They are administered by insurance companies and are sometimes referred to as “private Medicare.” In the beginning, Medicare was the primary payer of health care costs for its beneficiaries. All others also responsible for the costs of a beneficiary’s medical treatment were secondary to Medicare and had no obligation to reimburse the program. These roles were reversed in 1980 and Medicare became the secondary payer, with all others becoming the primary payer for these expenses. All primary payers were and still are required to reimburse Medicare if the program already paid for a beneficiary’s medical treatment. Medicare (both “public” and “private”) enjoys secondary payer status and is entitled to double damages if it must sue a primary payer for reimbursement.
Prior to 2007, parties settling with a person claiming personal injury due to some tortious act may have been unaware that the person was insured by Medicare. At the same time, Medicare may not have known its beneficiaries had settled injury claims where the program had already paid for medical treatment. Injured parties were also hampered as this failure to communicate delayed resolution of their claims. To foster greater reimbursement of the Medicare program when appropriate, in 2007 Congress put in place a query system to facilitate communication between Medicare and primary payers. However, this system only identified individuals enrolled in Part A or Part B. Primary payers were still in the dark when a claimant was covered under Part C or Part D, and the providers of these coverages still had no way to timely learn of settlements from which they were entitled to reimbursement. Since that time, Part C and Part D providers that later learned of injury settlements by their beneficiaries brought a considerable number of lawsuits nationwide seeking reimbursement from primary payers.
The PAID Act
The sponsors of the PAID Act sought to close this information availability gap by extending Medicare’s query process. The PAID Act bill had bipartisan support and was first introduced in the House in May 2018 (during the 115th Congress). It was again introduced in the House with bipartisan support in February 2019 (during the 116th Congress). An identical version of the bill was introduced in the Senate in June 2019. Activity on this bill heated up in December 2020. It was approved by the House on December 8 as both an independent bill (H.R. 1375) and as a provision of H.R. 2477 [the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act]. On December 9 it was approved as Section 1301 (“Transparency of Medicare Secondary Payer Reporting Information”) of H.R. 8900 (the Further Continuing Appropriations Act, 2021, and Other Extensions Act—a larger bill designed to continue funding government operations). H.R. 8900 passed the Senate on December 11 and was signed into law by the President that same day.
The Paid Act requires the Centers for Medicare and Medicaid Services (CMS) to provide additional information it has not been providing in response to queries. This additional information includes whether an individual that is the subject of the query is or during the preceding three years was entitled to Medicare benefits under any Part (A, B, C, or D). Further, if the subject has been enrolled in Part C or Part D during this time, CMS must also provide the name and address of this insurer. The PAID Act applies to queries made to CMS beginning one year from the date it was enacted. Therefore, CMS has until December 11, 2021, to develop the infrastructure to report the required additional information in response to a query.
Armed with additional details of a claimant’s Medicare status, those that settle claims with Medicare beneficiaries and those that fund the settlements will be in a much stronger position. They will have a greater opportunity to proactively arrange for reimbursement of providers of all Parts of Medicare coverage when appropriate. This should significantly reduce the number of post-settlement demands for reimbursement from Part C and Part D providers.