Ron M. Landsman, P.A., lawyers in Bethesda, MD, Maryland

Secondary Payer Program

There are times when a person's health services may be covered both by Medicare and by another type of insurance, such as group health insurance, workers' compensation, or automobile insurance. In these cases, Medicare provides only secondary coverage, meaning that the other insurance is primarily liable on the claim. When Medicare has paid out an amount on a claim for which its coverage is secondary, it attempts to recover those payments under the Medicare Secondary Payer (MSP) program.

When Does The MSP Seek Reimbursement?

The MSP usually applies when medical services have been obtained due to an accident. This is because dual coverage typically arises under an automobile insurance policy, workers' compensation coverage, or a group health insurance policy.

From Whom Does The MSP Seek Reimbursement?

Medicare, through the Health Care Financing Administration (HCFA), can seek reimbursement from the other service provider, including group health care plans and Medicaid, or from the person or entity that provided the medical care. If the other insurance paid an amount directly to its beneficiary, Medicare may also seek recovery against the individual. This may be accomplished directly or by offsetting the amount due from the individual's Social Security pension or disability benefits.

How Will I Know If The MSP Is Claiming Dual Coverage?

A prerequisite to Medicare recovery under its MSP program is notification to the covered individual and his or her attorney. The notice must include the amount Medicare is claiming and must tell the individual about available waiver and appeal processes. The notice must also inform the individual of the potentially negative consequences of unsuccessful waivers or appeals. For instance, interest may be due on unpaid claims, or Medicare may deduct the amount due from the individual's Social Security pension or disability benefits.

How Will This Affect My Medicare Coverage?

If medical services might be covered by another insurance program, Medicare will not pay claims for the services unless the other program's payment is delayed. After the other program has made payment or could have made payment, Medicare can recover the amount it paid out. The amount received from the other insurance program will then be credited to the individual's deductibles, copayments, and statutory limits on service amounts.

What Are The Requirements For Medicare To Waive Its Recovery?

Medicare has the power to waive its right to recover any part of the amount it paid out on a claim. Three general avenues are available: (1) the general provisions of the Social Security Act; (2) the specific provisions in the MSP statute; and (3) the general provisions of a federal claims collection statute. The threshold determination under the Social Security Act is that the individual must lack fault. Additionally, Medicare's potential recovery must either be against equity and good conscience or it must contravene the purposes of either Social Security or Medicare. Similarly, an individual seeking a waiver under the MSP statute must show that a waiver would be in the best interest of the program. Lastly, a waiver under the claims collection statute essentially requires that the costs of potential recovery outweigh the benefits of that recovery. For instance, this type of waiver might apply when it would cost more to obtain the recovery than the actual recovery amount or when the individual is unable to pay the amount due in a reasonable time.