Protecting The Interests Of Medicare Advantage Plans In Settlement Involving Plan Beneficiaries

Since at least 1980, federal law has permitted Medicare to recover payments made for medical care provided to beneficiaries when there is liability or workers' compensation insurance that would otherwise be available to the beneficiary. Practitioners and claims professionals are (or should be) familiar with the process of requesting information concerning the amount of these payments and Medicare's claims for reimbursement through the Center for Medicare and Medicaid Services ("CMS") when finalizing the terms and conditions of settlements involving Medicare beneficiaries. However, CMS claims information does not include information concerning payments made by certain private health insurers administering Medicare Advantage Plans. This article will discuss a recent decision in the Eleventh Circuit holding that such plans also have a right to reimbursement under federal law that should be considered when negotiating settlements involving plan members.

Medicare is entitled to reimbursement for certain medical payments made to beneficiaries when other insurance is available.

Before 1980, "Medicare paid for all medical treatment within its scope and left private insurers merely to pick up whatever expenses remained." Bio-Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277, 278 (6th Cir. 2011). In 1980, in an effort to curb the rising costs of Medicare, Congress enacted the Medicare Secondary Payer Act ("MSP"), which "made private insurers covering the same treatment the 'primary' payers and Medicare the 'secondary' payer." Id.

The MSP, 42 U.S.C. § 1395y(b), is located in Part E of the Medicare Act, and establishes Medicare's status as a secondary payer to a primary plan. Id. § 1395y(b)(2). Paragraph (2)(B), entitled "Conditional payment" describes the circumstances and procedures under which Medicare can make a conditional payment notwithstanding its status as secondary payer. Id. § 1395y(b)(2)(B). Under paragraph (2)(B), when the primary plan does not fulfill its duties, the Secretary of Health & Human Services may make a payment conditioned on reimbursement. Id. § 1395y(b)(2)(B)(i). If the Secretary makes a conditional payment, the primary plan must reimburse the Secretary. Id. § 1395y(b)(2)(B)(ii). Paragraph (2)(B) also establishes and defines a cause of action by the United States to recover from a primary plan. Id. § 1395y(b)(2)(B)(iii); see also 42 C.F.R. § 411.24 (describing a Government...