Academic journal article Defense Counsel Journal

The Medicare, Medicaid and SCHIP Extension Act of 2007: A Practitioner's Introduction to Resolving Personal Injury Liability Claims by Medicare Beneficiaries

Academic journal article Defense Counsel Journal

The Medicare, Medicaid and SCHIP Extension Act of 2007: A Practitioner's Introduction to Resolving Personal Injury Liability Claims by Medicare Beneficiaries

Article excerpt

WITH EVER-RISING health care costs and growing federal budget deficits, expansion of government powers to recoup government-provided health care expenditures should come as no surprise. Effective on July 1, 2009, the Medicare, Medicaid and SCHIP Extension Act of 2007 (1) ("MMSEA") substantially expands the federal government's ability to seek reimbursement for past and future Medicare payments. By imposing stringent reporting requirements and stiff penalties on Group Health Plans ("GHPs") and non-Group Health Plans ("non-GHPs") (including self-insurance, no-fault insurance, and workers' compensation insurance plans) involved in an estimated 2.7 million personal injury liability claims annually, the MMSEA provides Medicare additional tools with which to seek reimbursement for Medicare claims. (2) In essence, the MMSEA will require practitioners handling personal injury liability claims brought by Medicare beneficiaries to give serious, ongoing, and proactive consideration to past and future medical expenses covered by Medicare.

For those practitioners heretofore unfamiliar with the Medicare Secondary Payer Act, this article provides an introduction to the Secondary Payer Act and the MMSEA, focusing exclusively on Medicare reimbursement obligations for non-GHPs. In particular, the article explains the MMSEA's implications in the context of personal injury liability claims and provides practitioners with strategies to not only ensure statutory compliance, but also to reduce the risk of increased exposure in such cases. Because the MMSEA is grafted onto existing legislation (the Secondary Payer Act), this article first addresses the Secondary Payer Act and its obligations and potential penalties. In light of the expanded reach of Medicare into the realm of personal injury litigation through the MMSEA, as well as the attendant risks of failing to comply, practitioners cannot overestimate the importance of familiarizing themselves with these statutes.

I. Medicare and the Secondary Payer Act

A. Introduction to Medicare

Medicare is the federal health insurance program for individuals over the age of sixty-five, as well as for individuals under age sixty-five with permanent disabilities and permanent kidney failure. (3) The Centers for Medicare & Medicaid Services ("CMS"), a bureau of the Department of Health and Human Services, oversees the Medicare program and is responsible for implementation of the MMSEA. (4)

B. The Medicare Secondary Payer Act

By statute, Medicare has become generally a payer of "last resort." The Medicare Secondary Payer Act ("MSPA") mandates in all situations where another entity is required to pay for covered services that the other entity pay before Medicare does, and such entity must do so without regard to a patient's Medicare entitlement. (5) The MMSEA is the most recent addition in a series of expansions to the Secondary Payer Act to expand the areas in which Medicare is a "secondary" payer.

At its inception, Medicare was not exclusively a secondary payer. When Medicare was first established, it was the "secondary" payer only for medical services covered by workers' compensation, and the "primary" payer for all other eligible medical services provided to eligible participants. (6) In direct response to increasing financial burdens on Medicare and to shift costs from the Medicare program to private payment sources, in 1980 Congress enacted the first of a series of provisions that collectively made Medicare the secondary payer when additional insurance was available to assume primary responsibility for medical payments. (7) As a result of these expansions, Medicare is rarely the primary payer for medical services if a private payer is available. (8)

In general, Medicare is "secondary" in two situations. First, Medicare is a secondary payer to GHPs for Medicare beneficiaries who are eligible Medicare beneficiaries (e.g. age sixty-five and older or under than age sixty five, have a disability, or have end state renal disease) and who have GHP coverage on the basis of their own or their spouse's current employment with an employer that has least twenty employees for beneficiaries aged sixty-five or older, or at least 100 employees for the disabled, or have end stage Renal Disease and who have GHP coverage on any basis. …

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