As previously indicated, the following provides a brief overview of the Medicare Secondary Payer Program. Consult the statue at 42 U.S.C. Section 1395y et seq. And Part 42 of the Code of Federal Regulations at Section 411 for the requirements.

Medicare is our country's health insurance program for people age 65 or older, certain people with disabilities who are under the age of 65, and people of any age who have permanent kidney failure, known as End Stage Renal Disease (ESRD). The Centers for Medicare & Medicaid Services (CMS) is the government agency in charge of the Medicare program.

Medicare has two parts:

Medicare Part A is hospital insurance for a person with Medicare. Medicare Part A is financed by a portion of your payroll tax.

Medicare Part B is medical insurance for a person with Medicare which provides partial reimbursement for physician office visits, among other things. Medicare Part B is financed by monthly premiums paid by people with Medicare who choose to enroll in Medicare Part B.

People with Medicare are financially protected for most Medicare covered services they receive. If the doctor or other health care provider accepts assignment, the person with Medicare may be charged only for the coinsurance, plus any unmet deductible. The coinsurance is 20 percent of the Medicare allowed amount. If the provider does not accept assignment, the person with Medicare may be charged no more than 15 percent above Medicare's allowed amount for the service. This limit applies only to physician services; diagnostic tests, physical/occupational therapy, radiation therapy, and injectable drugs furnished incident to a physician's service. There are no charge limits on services and items such as durable medical equipment, ambulance services, and vaccinations. Also, people with Medicare may be charged any amount for services and items not covered by Medicare, such as routine physical examinations, dental services, and personal comfort items.

The Secretary of the Department of Health and Human Services, by her delegate, the Centers for Medicare & Medicaid Services (CMS) administers the Medicare Part A program through private companies called "fiscal intermediaries." 42 U.S. C. Section 1395h et seq. The Medicare Part B program is administered through private insurance companies called "carriers." 42 U.S. C. Section 1395u(a). The fiscal intermediaries and carriers pay federal funds to health care providers on behalf of eligible Medicare beneficiaries for covered services. 42 U.S. C. Section 1395 et seq.

The Medicare Secondary Payer (MSP) Department at each fiscal intermediary and at each carrier site is the coordination of benefits area for the Medicare program. The MSP Department handles situations where there are other payers that, by Federal Law (42 C.F.R. Section 411.20), are required to pay before Medicare. There are several instances where another payer could be primary to Medicare. They are:

Workers Compensation

Federal Black Lung Program

Department of Veteran's Affairs

Public Health Service (e.g. Government Grant Program)

Accidents covered by liability or no fault insurance

Employer Group Health Plans (Working Aged, Disability, ESRD)

WHEN IS MEDICARE SECONDARY IN AN ACCIDENT SITUATION?

Medicare is the secondary payer for medical items and services to the extent that payment has been made, or can reasonably be expected to be made promptly under a worker's compensation law, or plan of the United States or a State, or under an automobile or liability insurance policy or plan, including a self-insured plan or no-fault insurance. (42 U.S.C. Section 1395y(b)(2)(A)). Third parties responsible for covering a person with Medicare's medical expenses may include automobile medical payment insurance, premises medical payments insurance, homeowners medical payments insurance and no-fault insurance (collectively referred to as "no fault"). Liability insurance means insurance (including a self-insured plan) that provides a payment based upon legal liability for injury or illness or damage to property. (42 C.F.R. Section 411.50(b)). Consequently, if Medicare has already made payment for such expenses, Medicare must be reimbursed for these conditional payments if the plan or liability insurance policy later makes payment with regard to the services. For purposes of billing Medicare, liability involvement is determined by the patient stating whether or not he/she feels that someone else is responsible for their injury/illness. (Refer to 42 CFR Section 411.20). If the person with Medicare does feel that someone else is responsible, he or she may pursue the plan or third party payer.

Medicare Providers' Role:

When providing medical services to persons with Medicare, providers should inquire about the nature of an injury and any available third party payment. Generally, with a few exceptions, a provider must pursue both "no fault" and liability insurance for at least 120 days from the date of service of the date the claim is filed. If a provider receives a denial from the insurance company before the 120 days have passed, they may bill Medicare requesting a conditional payment. Conditional payment means a Medicare payment for services for which another payer is responsible.

A conditional payment is made on the basis that Medicare is repaid when the primary payer makes payment. If Medicare makes a conditional payment with respect to services for which the person with Medicare or provider or supplier has not filed a proper claim with a third party payer, and Medicare is unable to recover from the third party payer, Medicare may recover from the person with Medicare or provider or supplier that was responsible for the failure to file a proper claim. (42 C.F.R. Section 411.24(1)).

When a person with Medicare is pursuing a liability claim, after the first 120 days have passed, the provider may choose to bill Medicare conditionally or they can choose to try to collect from the liability insurance company. Once a provider submits a bill to Medicare they can no longer accept the liability insurance money. By submitting a claim to Medicare they are giving up all rights to collect from a liability settlement.

Medical providers who participate in the Medicare program cannot directly bill the person with Medicare for money received from a liability settlement. A provider can only bill the liability insurance company. If the person with Medicare offers to pay the provider, the provider is only allowed to accept the money as long as they have not submitted a claim to Medicare for payment. The provider may not accept the liability money once they have billed Medicare. Medicare will initiate recovery as soon as it learns that payment has been made or could be made under any liability or no-fault insurance (see 42 C.F.R. Section 411.24).

Attorney/Person with Medicare Role

Persons with Medicare must cooperate by providing appropriate information (including information regarding insurance that is primary to Medicare). 42 C.F.R. Sections 411.23, 411.24(1). Failure to cooperate in a recovery action by Medicare may result in Medicare recovering its payments from the person with Medicare.

With few exceptions, the persons with Medicare are responsible for taking whatever action is necessary to obtain any payment that can reasonably be expected under medical payments or no-fault insurance. (42 C.F.R. Sections 411.51 and 411.53).

Medicare does not pay until the person with Medicare has exhausted his or her remedies under medical payments or no-fault insurance. (42C.F.R. Section 411.51(b)). Medicare does not pay for services that would have been covered by the medical payments or no-fault insurance if the person with Medicare filed a proper claim.

(42 C.F.R. sections 411.51 (c)). Please consult the regulations to review the limited exceptions (42 C.F.R. sections 411.51 and 411.53).

People with Medicare and their attorneys should note that if either or both of them receive a third party payment, Medicare has a right of action to recover its conditional payment from any entity including the person with Medicare and/or the attorney. (42 C.F.R. Section 411.24(g)). Thus, attorneys should be cognizant of, and take into account Medicare's interest when settling lawsuits or claims against third party payers.

Persons with Medicare and their attorneys should contact Medicare, when they decide to initiate pursuit of a third party claim, in order to determine if a Medicare conditional payment has been made.

Please be aware that the statute of limitation for Medicare to recover on an overpayment begins at the time Medicare is made aware that the overpayment exists.Please be aware that the statute of limitation for Medicare to recover on an overpayment begins at the time Medicare is made aware that the overpayment exists.

Interacting with Medicare in an Accident Situation

It is important to always contact Medicare whenever you represent a person with Medicare in a case. Notification to Medicare should be done as soon as possible, as it can take from 6 to 12 weeks for Carefirst of Maryland to receive a response from another Medicare Intermediary/Contractor regarding claims that may have been paid on behalf of your client. If an attorney waits until he or she is ready to settle and needs Medicare's statement of claims paid in order to do so, the tabulation of Medicare's conditional payment will be held up until we have received responses from other Medicare offices. Also, keep in mind that younger people (under 65) can become eligible/entitled to Medicare because of a disability or due to ESRD.

Carefirst of Maryland, Inc. will notify any other Medicare office across the country that may have paid claims on behalf of your client so that you (the attorney) will only have to deal with one Medicare office.

When you represent a person with Medicare, please notify our office in writing. The information we must have to begin our investigation is:

• Your name
• The person with medicare
• The person with Medicare's health insurance claim number (HIC#)
• Date of the accident
• Status of the case
• Projected time frame for settlement
• Description of your client's injuries
• Signed release of information agreement

Notification should go to the Medicare office in the state where the person with Medicare resides. Listed below is the address:

Highmark Medicare Services
PO Box 890386
Camp Hill, PA  17089-0386

After you notify the Medicare fiscal intermediary you should receive an initial recovery letter. This letter explains Medicare's subrogation rights and an important reminder that Medicare also has an independent right of action to recover its payment from any entity. (42 U.S.C. Section 1395y(b)(2)(B)(ii)). The person with Medicare will receive a similar letter. The person with Medicare will also receive copies of any other correspondence that our office sends out concerning their case.

You should notify Medicare (preferably in writing) when a settlement occurs. A Medicare overpayment is created when a settlement occurs and a settlement check has been received.

Notification should include:

• date of the settlement
• amount of the settlement
• amount of procurement costs (including attorney and other legal fees)
• name and address of the liability insurer involved
• signed settlement agreement or a copy of the settlement check

Medicare may reduce the amount it is owed by a pro rata portion of the procurement costs in liability cases. The formula for this reduction is found at 42 C.F.R. Section 411.37. Please include an itemization of the expenses.

If there is a significant delay in time between the initial notification and settlement, or if there are numerous services, you may receive an interim itemization letter which gives you a listing of claims paid to date. This letter will instruct you not to submit a refund to Medicare until you receive a final notification, which will include the final amount owed to Medicare.

After our office is notified that a final settlement has been made, you will receive a final determination letter which provides the amount of Medicare's claim including a reduction for the percentage of Medicare's share of procurement costs. This letter will inform you that payment must be made within 30 days of the date of settlement. If Medicare does not receive payment within 30 days, interest will begin to accrue.

If the person with Medicare feels that there is a good reason why he/she should not have to repay Medicare with money received from a liability settlement, he/she may request that Medicare waive repayment either in part or in full. Medicare's overpayment should be repaid within 30 days even if the person with Medicare wishes to file a waiver request. Repaying Medicare will not affect the person with Medicare's right to request a waiver, but rather will prevent interest from accruing during the waiver process. A request for waiver must be made in writing within 60 days of the final determination letter.

Waiver Requests/Process

Medicare contractors have the authority to consider a waiver request for the person with Medicare on behalf of CMS, under 1870 © of the Social Security Act.

CMS may waive all or part of its recovery in any case where an overpayment under Title XVIII has been made with respect to a person with Medicare:
(a) who is without fault
(b) when adjustment or recovery would either:

(1) defeat the purpose of Title II or Title XVIII of the Act, OR
(2) be against equity and good conscience

When considering whether recovery of Medicare's claim would defeat the purpose of Title II or Title XVIII of the Act, CareFirst of Medicare Inc takes into account the totality of the person with Medicare's circumstance on a case-by-case basis.

Please do not request a waiver until you have received the settlement check. A waiver request cannot be considered until a Medicare overpayment actually exists.

Once our office receives a waiver request, you will receive an Overpayment Recovery Questionnaire (632 form) to complete and return to our office. This questionnaire requests information on the person with Medicare's monthly income and expenses and the reasons for requesting a full or partial waiver. Please complete all sections of this document before returning it to our office. If your client incurred any accident related out-of-pocket medical expenses please include that information when submitting the Overpayment Recovery Questionnaire. Proper documentation of out-of-pocket medical expenses must be submitted before they can be considered in the waiver request.

Examples of proper documentation include cancelled checks (which correlate to bills received), notarized/sworn statement which attests to the validity of the expenses, receipts for services furnished and copies of bills demonstrating services furnished.

Maryland Medicare has 120 days to make a decision from the date your request for waiver was received in our mailroom. The decision is based on the criteria found under Section 1870(c) of the Social Security Act, 42 C.F.R. Section 405 and 42 C.F.R. Sections 404.506-512.

Once a waiver determination has been made you will be notified in writing of the decision. A copy of the waiver decision will be sent to the person with Medicare. If you do not agree with the decision made in the waiver determination, you will be provided with instructions on how to request a reconsideration of the decision. The reconsideration request must be made in writing within 60 days of receipt of the waiver determination.

Another party who was not a part of the original waiver process will make the reconsideration determination. CareFirst of Maryland Inc has 60 days from the date of receipt of the reconsideration request to make the determination. Again, you and the person with Medicare will be notified in writing of the decision.

Compromise of Claim

CMS is given authority to consider the compromise of Medicare's claim under the Federal Claims Collection Act (FCCA) at 31 U.S.C. Section 3711 et seq. and 42 C.F.R. Section 401.613. Medicare contractors are not permitted to compromise a claim. Compromise requests should be directed through CareFirst of Maryland Inc who will forward these to the CMS Regional Office for consideration. A compromise may be granted if the debtor does not have the present or prospective ability to pay the full amount of Medicare's claim. Whether or not a compromise will be granted depends on a number of factors and each matter is considered on a case-by-case basis. A compromise decision made by CMS is final and is not subject to appeal. Resolution through FCCA is available through the CMS Regional Office at any time after the underlying case is settled.

PLEASE BE REMINDED THAT THIS PROVIDES A BRIEF OVERVIEW OF THE MEDICARE SECONDARY PAYER PROGRAM. PLEASE REVIEW THE STATUTE AT 42 U.S.C. SECTION 1395y ET SEQ. AND THE REGULATIONS AT PART 42 OF THE CODE OF FEDERAL REGULATIONS AT SECTION 411 FOR REQUIREMENTS.