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Does the Medicare Secondary Payer Act Apply in Liability Cases?

The MSP has been in effect since 1980, and there has been little effort to enforce its provisions in third-party liability cases. Moreover, there has been no indication from CMS that they would seek to exercise their MSP rights retroactively. Indeed, the workers’ compensation example has shown that CMS is not interested in ‘looking back’ to impose MSP responsibility.
We think that the MSP Act applies to third-party liability cases.

Although Medicare has not traditionally enforced its rights under the MSP with respect to third-party liability cases, it is clear that the Act applies to those cases. Lack of enforcement will likely soon change. All insurers, third-party health plans, self-insured plans, and self-administered plans must identify situations where the Plan is or has been primary to the Medicare program. The requirements of the MMSEA including the carrier/self-insured’s duties to identify claimants and provide “such other information as the Secretary may specify” certainly signal the beginning of an enforcement effort by CMS in third-party liability cases.

It is true that there is not yet a “formal” CMS process in place for reviewing settlements in the liability arena as there is in the workers’ compensation world. However, CMS offices in Dallas and Atlanta have begun reviewing third-party liability settlements and granting approvals of set-aside agreements. At a CMS “town hall” meeting – a dial-in telephone conference call – which took place on March 16, 2010, CMS stated that “the obligation of liability settlements to protect CMS for past-due and future medical bills is exactly the same as the workers’ compensation side.” CMS said “[w]here future medicals are a consideration in arriving at a settlement, then appropriate arrangements should be made for appropriate exhaustion of the settlement before Medicare is billed for related services.”

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