Medicare Secondary Payor Program, Special Rules | San Diego Injury Law Firm

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.

The court held it was a rational construction of the MSP provisions to allow full reimbursement of conditional Medicare payments, even though the beneficiary receives a discounted settlement because it provides a practical and economical way for Medicare to recover its conditional payments. Id. at 845. In the hypothetical case, the injured victim alleged a variety of damages, some capable of precise computation and some not alleged damages. Id. It was rational to construe the legislation to permit Medicare to recover up to the full amount of its conditional payments to avoid the difficulty of apportioning damages in the context of tort claims. Id.

The court in Zinman accepted the undisputed right of the Secretary to seek reimbursement from “a primary plan, and an entity that receives payment from a primary plan.” It based its decision on subsection (ii), now subsection (iii), which provided: “the United States may bring an action against any entity which is required or responsible under this subsection to pay with respect to such item or service (or any portion thereof) under a primary plan (and may, in accordance with paragraph (3)(A) collect double damages against that entity), or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service, and may join or intervene in any action related to the events that gave rise to the need for the item or service.” 42 U.S.C. § 1395y(b)(2)(B)(ii) (1995).

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