MSP statute: 42 U.S.C. § 1395y(b)(2) & the Zinman Court
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.
In Zinman, Medicare beneficiaries brought an action challenging the interpretation of this statute by the Health and Human Services Secretary (HHS)2 to allow recovery of an amount equal to the Medicare payment or the amount paid by the third-party primary payer, which ever is less, when beneficiaries’ liability settlements are less than their total damages. The court rejected the beneficiaries’ argument that the recovery should be reduced proportionately when a beneficiary received a discounted settlement, so for example, if the victim recovered only 25% of her claim, Medicare should recover no more that 25% of its outlay.
The beneficiaries argued that on its face the MSP legislation mandated apportionment rather than full recovery of conditional Medicare payments when there was a discounted settlement. They argued that Congress intended to limit Medicare’s right to reimbursement to the extent the beneficiary’s settlement actually covered the items or services for which Medicare paid. The court agreed that the statutory references to “items or services” defines Medicare’s right to reimbursement, but found nothing in the statute suggesting Congress intended to limit the amount of this recovery. Therefore, Medicare is entitled to full recovery of what it conditionally paid for these items or services.
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