MMSEA: New Teeth for the Medicare Secondary Payer Act

By Jason D. Lazarus

To understand the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) and its Mandatory Insurer Reporting (MIR), one must first understand the Medicare Secondary Payer Act (MSP).

Many injury victims are Medicare beneficiaries, which implicates the MSP. The MSP is a series of statutory provisions, found at Section 1862(b) of the Social Security Act, enacted in 1980 as part of the Omnibus Reconciliation Act to reduce federal health care costs. The MSP provides that if a primary payer exists, Medicare pays only for medical treatment relating to an injury to the extent that the primary payer does not pay. The MSP deals with two issues: (1) Medicare payments made prior to the date of settlement (conditional payments); and (2) future Medicare payments for covered services. The MMSEA deals only with conditional payments and has nothing to do with future Medicare payments, also called Medicare Set-Asides. (For a discussion of the implications for Medicare Set-Asides, click here.)

On December 29, 2007, President Bush signed the MMSEA (P.L. 110-173), which extends the governments ability to enforce the MSP and includes a significant appropriation for this. As of July 1, 2009, "responsible reporting entities" (RREs) -- liability insurers, self-insurers, no-fault insurers and workers compensation carriers -- shall determine whether a claimant is a Medicare beneficiary and, if so, provide certain information to the Secretary of Health and Human Services when the claim is resolved. The Act does not require trial lawyers to report the information that RREs must report to CMS under the MMSEA.

The insurers listed above must report the identity of the Medicare beneficiary to the Secretary and any other information that the Secretary deems appropriate to determine the coordination of benefits, including any applicable recovery of claim.

These new reporting requirements will make it easy for CMS to review settlements to determine whether settling parties adequately address Medicare's interests. Through the collection of this data, the government will now have the information at its disposal to make sure conditional payment liens are satisfied in every personal injury case. Creating a reporting obligation, providing for stiff fines and appropriating money for the purpose of enforcing the new Act seems to signal the government's seriousness about this issue. A recent federal district court case, U.S. v. Harris, 2009 WL 891931 (N.D.W.Va.), appears to indicate that the government is willing to sue trial lawyers for failing to repay a conditional payment.

When dealing with this complex area of the law, it is imperative to work with someone knowledgeable about the MSP's rules as well as the process itself. Ignorance of the law in this area can affect a client's future Medicare eligibility and create exposure to legal malpractice claims.