Resolution in Support of Strengthening the Medicare Secondary Payer System Exposed

The Resolution in Support of Strengthening the Medicare Secondary Payer System was considered by ALEC's Civil Justice Task Force at the Spring Task Force Summit on May 11 2012. This bill was part of the ALEC task force agenda between 2010 and 2012, but due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Draft Bill Text

Summary

This resolution supports efforts to amend the federal Medicare secondary payer law (42 U.S.C. § 1395y(b)) by establishing clear procedures for parties to follow when reimbursing Medicare for payments made on behalf of its beneficiaries. Medicare conditionally pays medical expenses to ensure that beneficiaries receive proper care, and when this occurs Medicare is permitted to recoup such payments to the extent the payments are included in a personal injury claim against an alleged defendant, and that claim is resolved by a judgment or settlement. This reimbursement, however, is often delayed where the Medicare beneficiary is involved in litigation over his or her personal injury because the parties are uncertain as to the correct amount owed to Medicare, and Medicare does not provide the amount it expects to recover until after a judgment or settlement has been reached in the litigation. The result is uncertainty for all parties and an information bottleneck that impedes fair and efficient settlement of the claim. Further, there is currently no method by which a defendant can tender the correct amount owed to the Medicare beneficiary (or his or her attorney) without still being liable for the reimbursement amount in the event the beneficiary or attorney does not make the required reimbursement. This resolution urges Congress and the President of the United States to enact legislation to remove the costly bottleneck in the current system and provide certainty in how Medicare is repaid.

Resolution

PURPOSE: Urging Congress and the President of the United States to improve the federal Medicare secondary payer law (42 U.S.C. § 1395y(b)) by establishing clear rules and procedures for the beneficiaries or others to follow when reimbursing Medicare for payments made on behalf of Medicare’s beneficiaries.

WHEREAS, the federal Medicare secondary payer law is an important law designed to protect the Medicare Trust Fund and ensure that Medicare pays only for medical expenses for which it is responsible; and

WHEREAS, Medicare beneficiaries periodically make claims seeking compensation for personal injuries that are covered by insurance plans or self-insured defendants, and these payers, under current law, are jointly liable with the Medicare beneficiary to repay Medicare in the event of a settlement of the claim or a judgment in favor of the claimant; and

WHEREAS, the manner in which Medicare secondary payer law is currently being administered with respect to claims involving individuals who are eligible for the Medicare Program has caused unnecessary delay and unfairness in the settlement of claims, and substantial additional transaction costs, which are often incurred by defendants or insurance companies, even though they are not Medicare beneficiaries and receive no benefit from Medicare payments to a claimant; and

WHEREAS, the delays in the settlement of claims and the uncertainty of the scope of the Medicare Program as the secondary payer has increased settlement costs for all parties involved in litigation regarding a Medicare beneficiary’s personal injury; and

WHEREAS, the delay and uncertainty caused by the Medicare secondary payer law has increased costs to states and local jurisdictions; and

WHEREAS, the complexity of the current Medicare repayment system has prevented beneficiaries from being able to resolve their claims without assistance; and

WHEREAS, the Centers for Medicare & Medicaid Services (CMS) could greatly reduce the delays, uncertainty, costs, and complexity in the present system by providing more timely confirmation of conditional payments in which repayment is sought; and

WHEREAS, procedures that promote parties’ timely notice of claims information to Medicare and focus collection efforts on the Medicare beneficiary could streamline the reimbursement process; and

WHEREAS, clear rules regarding the scope of parties’ potential liability and responsibilities for compliance with the Medicare secondary payer law could provide certainty and consistency in how Medicare is repaid.

THEREFORE, BE IT RESOLVED, that the American Legislative Exchange Council supports amendment of the federal Medicare secondary payer law or the CMS’ procedures that would:

1. Provide timely information on the existence of conditional payments, and the amount of such payments, to all parties involved; and

2. Provide simple, web-based, automated, self-service options to Medicare beneficiaries who receive a settlement, judgment, or payment to permit the beneficiary to calculate and repay the final conditional payment amount and to resolve compromised claims for future benefits; and

3. Provide a method by which a defendant can tender the correct amount owed to the Medicare beneficiary (or his or her attorney) without still being liable for the reimbursement amount in the event the beneficiary or attorney does not make the required reimbursement; and

4. Provide certainty in the parties’ obligations by making the Medicare beneficiary primarily responsible for repayment of conditional payments and relieving insurers and other parties of such liability where timely reporting of claims information to the CMS occurs; and

5. Provide certainty for who is obligated to reimburse Medicare such that only persons who are entitled to Medicare at the time the claim is settled are responsible for reimbursement.

BE IT FURTHER RESOLVED, that the American Legislative Exchange Council encourages state courts and legislatures that have modeled laws and regulations based upon the federal Medicare secondary law to take similar action.