Medicare Secondary Payor Program, Sections 1-3 | San Diego Injury Law Firm

MSP statute: 42 U.S.C. § 1395y(b)(2)
Congress enacted Medicare in 1965, “a federally funded program of health insurance for the aged, disabled and persons suffering from end-stage renal disease.” (Ds’ MSJ at 4.) The Secretary of the Department of Health and Human Services is charged with broad authority to “prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this subchapter.” Id. (citing 42 U.S.C. § 1395hh(a)(1)). She acts through the Administrator of the CMS program.

In 1980, Congress enacted the MSP provisions at issue in this case in an effort to “stem the skyrocketing costs of the Medicare program.” Id. (citation omitted). The MSP provisions “– require liability and no-fault insurance to be the primary payers for services rendered to Medicare beneficiaries, leaving the Medicare program to provide benefits only as a ‘secondary’ payer.” Id. (citation omitted). Two mechanisms protect Medicare funds and ensure that Medicare is the secondary payer.

Subsection B of section 1395y(b)(2) is captioned: “Repayment required.” It is broken into six subsections, as follows: (i) “Authority to make conditional payment”; (ii) “Primary plans”; (iii) “Action by United States”; (iv) “Subrogation rights”; (v) “Waiver of rights,” and (vi) “Claims-filing period.” The subsections at issue here are (i) through (iii).

Subsection (i) provides generally for the Secretary to make a conditional payment with respect to an item or service if a primary plan has not made or cannot reasonably be expected to make payment promptly.

Subsection (ii), Primary plans, provides as follows:

A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate [Medicare] Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan's responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).

42 U.S.C. § 1395y(b)(2)(B)(ii) (2010) (emphasis added).

Subsection (iii) provides a cause of action to the United States to recover payment against “any and all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator . . . or other-wise) to make payment with respect to [a Medicare] item or service . . . under a primary plan . . . and may in accordance with paragraph (3)(A) collect double damages. In addition, the United States may recover from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” 42 U.S.C. § 1395y(b)(2)(B)(iii) (2010). The provision for double damages is expressly included under the statutes enforcement section, 42 U.S.C. § 1395y(b)(3)(A), “in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) . . ..”

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