Beware: Double Damages Under Medicare Secondary Payor Act!

The Medicare Secondary Payor Act (MSP) makes Medicare the secondary payer of medical expenses, when a beneficiary has other sources of primary insurance coverage.

Specifically, the MSP provides that a Medicare payment “may not be made . . . with respect to any item or service to the extent that payment has been made or can reasonably be expected to be made under” a primary plan. 42 U.S.C. § 1395y(b)(2)(A). No fault insurance is included as a “primary plan.” 42 U.S.C. § 1395y(b)(2)(A)(ii).

Medicare is able to make “conditional payments” for services when the primary plan “has not made or cannot reasonably be expected to make payment with respect to such item or service promptly.” 42 U.S.C. § 1395y(b)(2)(B)(i). Medicare may seek reimbursement from the primary plan if it had a responsibility to make the payment. 42 U.S.C. § 1395y(b)(2)(B)(ii). 

Importantly, if Medicare is not timely reimbursed, the MSP establishes a private cause of action to enforce the reimbursement provisions by seeking double damages against the primary plan. 42 U.S.C. § 1395y(b)(3)(A). That is, twice the amount of what was paid by Medicare. 

To invoke this cause of action, Medicare must have actually made payments on a beneficiary’s behalf, and the insurer must be “responsible,” for making payments. Responsibility may be demonstrated by a judgment, settlement by a primary payer (even where liability is denied), or by other means. 42 U.S.C. § 1395y(b)(2)(B)(ii).  

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