Congress must fix the broken Medicare secondary payer process

Accidents happen every day. From a slip-and-fall at the shopping center to fender-benders on the highway, to more serious cases involving life-threatening injuries. Often these situations resolve through a negotiated settlement, where the entity alleged to have caused the accident ends up settling a portion of the individual’s claims, including claims for medical expenses. In cases where the injured party’s health care is covered by the Medicare program, however, things can get tricky very quickly. 

Take, for example, a slip-and-fall incident, where the injured person’s medical bills are covered by the business where the incident took place. Sometimes, this process is relatively straightforward. The injured person has Medicare pay the initial bill for medical care. Then the injured party brings a claim against the business and they end up settling. Under the law, both the injured party and the business are responsible for paying Medicare back what Medicare paid for the cost of hospital and follow up care. This happens because, in cases like this, the law requires that Medicare serve as the secondary payer to protect taxpayers from having to cover expenses for which another party is liable.

{mosads}It’s a policy that works. Since the Medicare Secondary Payer (MSP) Act was passed in 1980, the Medicare program recuperates nearly $8 billion in direct savings to taxpayers annually. 

Now what happens if the injured person is one of the 22 million Americans with a Medicare Advantage plan instead of the traditional Medicare Part A or B? You would think the settling party would just be able to pay back the government the same way it would if the injured person had been on traditional Medicare. Unfortunately, it doesn’t work that way. The system the Centers for Medicare & Medicaid Services (CMS) has in place to help settling parties coordinate benefits for traditional Medicare has not been set up for Medicare Advantage or Part D prescription drug plans. As a result, there is essentially no transparency and settling parties are unable to even find out which Medicare Advantage or Part D plan the beneficiary has to settle the claim, much less actually resolve a claim if one exists.

This broken process means a claim can stay open for months or even years or be settled with everyone believing it is over, only to years later be confronted with a claim by the Medicare Advantage or Part D plan. Worst case, vulnerable Medicare beneficiaries are placed in the middle, with the risk of having their Medicare benefits turned off due to an unresolved claim – possibly one, two or even five years down the road. Once this occurs, the beneficiary is responsible for covering future health care costs out of his own pocket – potentially for care both related and unrelated to the original accident.

The American taxpayer also loses in this scenario. Because the business where the accident took place doesn’t know which Medicare Advantage plan it needs to pay in order to resolve the claim, the government isn’t getting the money it’s owed. And there’s potentially a lot of money at stake. According to Kaiser Family Foundation, Medicare spent close to $210 billion on Medicare Advantage plans in 2017. Considering approximately 12 percent of claims likely involved a Medicare beneficiary, that means about $25 billion in taxpayer money is on the line.

There’s no reason for things to be this complicated – or for taxpayers to be losing out on this much money. In fact, it’s pretty remarkable that CMS isn’t able to disclose this information to settling parties who want to do the right thing and pay what they owe. 

The good news is that there’s bipartisan legislation to address this issue and require CMS to share information about whether a beneficiary is enrolled in a Medicare Advantage or Part D plan along with the plan’s name and dates of coverage, so the settling parties know who to pay. The Provide Accurate Information Directly (PAID) Act H.R. 1375 sponsored by Reps. Ron Kind (D-Wis.) and Gus Bilirakis (R-Fla.) would allow CMS to make this information available under the “Section 111” query process, the system already in place to share information between Medicare and third parties in cases where the claimant has traditional Medicare. 

Older Americans on Medicare shouldn’t face care delays or unexpected health care costs because of a broken provision in the obscure Medicare Secondary Payer Act. Congress has a real opportunity to fix this issue in a bipartisan way and make the process smoother and fairer for everyone. Many stakeholders, including the Congressional Budget Office, have recognized that this will save Medicare money immediately. Congress should act now and resolve this issue once and for all. 

Re Knack is Chair of the Medicare Advocacy Recovery Coalition (MARC), a national coalition advocating for the improvement of the Medicare and Medicaid Secondary Payer programs, she is also Chair Emeritus for DRI’s MSP Task Force and a member at Ogden Murphy Wallace in Seattle, Wash., where she represents clients in insurance and health care matters.