Medicare Secondary Payer Act – When, Who, and What? – Part I

Medicare Secondary Payer Act and your clients

If you’re a personal injury attorney in Florida, and your client demographics match those of the state’s population, then more than 20% of your clients qualify for Medicare. That’s a lot of conditional payments to sort through! Good thing the Medicare Secondary Payment Act (MSPA) is so easy to understand.

We kid. Despite that it took effect 40 years ago, the MSPA still causes a lot of confusion, and its fundamental concepts – like who can sue who – are still being litigated. In this two-part post, we’ll answer four questions concerning the “when,” “who,” and “what” of liability under the MSPA.

When does liability arise?
In the typical personal injury context, liability for a conditional payment arises under the following circumstances:

  1. A Medicare beneficiary incurs medical expenses for an injury allegedly caused by the negligence of third party, who’s insured by a private insurer;
  2. The medical expenses are covered by Medicare and potentially by the private insurer (depending on step four below);
  3. While the beneficiary’s injury claim against the third party is pending, Medicare pays for the medical expenses;
  4. There’s a settlement or judgment in favor of the beneficiary; and
  5. Medicare is not reimbursed within 60 days of receiving notice of the settlement or judgment.

Under these circumstances, the private insurer meets the definition of a “primary plan” – as that term “presupposes an existing obligation . . . to pay for covered items or services” – and Medicare’s payment qualifies as a “conditional payment” – i.e., a payment made on the condition that it’s reimbursed by the primary plan.

Who can sue?
There are two causes of action under the MSPA – one for the government, and one for private parties. The government sues when Medicare has made the conditional payment.

But Medicare isn’t the only program that makes conditional payments. Under Part C, private insurers may administer Medicare benefits as “Medicare Advantage Organizations” (MAOs). Thus, if the beneficiary is enrolled in a MAO, then the MAO makes the conditional payment (in lieu of Medicare).

In addition, a MAO can subcontract with another organization for the provision of healthcare or administrative services. This type of organization – often referred to as a “downstream actor” – can also make the conditional payment (in lieu of Medicare and the MAO).

And to take it one step further, the downstream actor can assign its right to reimbursement for the conditional payment to another entity, which otherwise may have no connection to the Medicare system.

With these different types of organizations, and their differing levels of connection to the Medicare system, the question becomes which ones may take advantage of the MSPA private right of action. Well, in the jurisdiction of the Eleventh Circuit Court of Appeals, the answer is all of them.

In 2016, the court confirmed that MAOs have standing to sue under the MSPA private cause of action. And, more recently, in September 2020, the court confirmed that downstream actors also have standing. In fact, the way the court phrased it, any entity that “has a connection to Medicare’s unreimbursed conditional payment” could seek damages under the MSPA private cause of action.

Tune in to our next post to find out who can be sued and what damages can be awarded. And, if you’re looking assistance in identifying or reimbursing conditional payments, contact our lien resolution professionals today.

Disclaimer: The information provided through these blog posts does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available through these blog posts are for general informational purposes only.

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