Our Positions | Medicare Secondary Payer
After the Social Security Act of 1980 established Medicare payments as secondary to other payments for health care, the Tax Equity and Fiscal Responsibility Act of 1982 expanded and clarified Medicare as the secondary payer to additional primary plans, such as group health plans, workers’ compensation plans, liability, or no-fault insurance plans. For instance, both underinsured and uninsured motorists are included in the den of liability insurance for Medicare reimbursement purposes, and Personal Injury Protection and medical payments are considered no-fault insurance. Taken together, the statutes provide a right of subrogation for payments made on behalf of those insureds and grant The Centers for Medicare and Medicaid Services (CMS) the right to recover funds from any primary payer even if a third-party payer has already reimbursed the beneficiary or provider.
CMS is primarily responsible for administration of the reporting obligations and has established policies and procedures requiring insurers and other responsible reporting entities (RREs) to register and report payments on behalf of Medicare beneficiaries. After problems arose with the implementation of the Medicare, Medicaid, and SCHIP Extension Act, enacted in 2007, which added a number of new information reporting requirements, Congress enacted the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (The SMART Act). The SMART Act improves the MSP process by enabling parties to settle claims quickly and speed repayments to Medicare, creating a safe harbor from reporting penalties, and allowing parties to settle faster by obtaining the amount of Medicare repayments owed before settlement from CMS, rather than after. The bill also created a MSP appeals process.
While the SMART Act is serving as the catalyst for an array of much-needed improvements, it did not address the issue of Medicare set-asides in liability settlements. Medicare set-aside allocation is necessary in liability settlements where the parties agree to a lump sum settlement closing out all expected rights to further benefits and to expect future medical benefits. CMS currently operates a very informal Medicare set-aside process that lacks predictability and efficiency and leaves questions regarding whether reasonable protections are being provided for injured workers.
NAMIC Position
The process for compliance with secondary payer responsibilities should be streamed lined and straightforward. Any policies and procedures regarding reporting requirements should be designed to minimize the regulatory burden they present to insurers. Additionally, through legislation or regulation straight-forward standards should be established for the administrative processes CMS uses to govern the current set-aside process. NAMIC believes fostering an environment of certainty will pave the way for a more clear-cut settlement process that will benefit both insurers and policyholders.
