Filed by KOSU News in Health.
January 29, 2013

Medicare beneficiaries who win a settlement in a personal injury liability case sometimes find their efforts are for naught because the federal Centers for Medicare and Medicaid Services ends up getting the money they thought would be theirs.

A new law is expected to fix problems with the system so seniors can get what’s coming to them.

The snafus arise in what’s called the Medicare Secondary Payer process. If there’s a settlement or judgment against another party in a liability case, Medicare is entitled to reimbursement for the money it spent on a beneficiary’s medical care. It becomes the “secondary payer” while the liability insurer or other responsible party becomes the “primary payer.”

But to collect, Medicare has to tally up and report how much it’s owed. And that process is fraught, say lawyers for victims and defendants alike.

It’s not all that unusual for there to be a discrepancy between Medicare’s initial and final reimbursement demand, says Magruder.

In one case following a car accident, for example, Medicare initially said it believed it was owed $1,000, says Linda Magruder, a plaintiff’s lawyer in Louisville, Ky. The insurance settlement was $25,000, and the money sat in an escrow account awaiting Medicare’s final tally of how much it was owed. A year later, the answer arrived: $30,000.

Under the new law, dubbed the Strengthening Medicare and Repaying Taxpayers Act, such surprises should be history.

Among other things, the law sets deadlines for Medicare to post how much it’s owed on a Web portal that’s accessible to litigants. The new law:

requires Medicare, as part of the settlement process, to post any medical payments it makes to providers within 15 days;

requires Medicare beneficiaries to notify the agency within 120 days of an expected settlement, at which point the agency has 65 days to post what it’s owed. If necessary, the agency can request an additional 30 days;

gives the agency 11 days to respond if a beneficiary disputes how much Medicare is owed; and

limits Medicare repayment demands to three years from the date that an anticipated settlement is reported.

For its part, Medicare says it’s committed to doing a good job.

“CMS’s goal is a Medicare Secondary Payer program that operates at the highest level of customer service,” said Deborah Taylor, director of the CMS Office of Financial Management, in a statement. “We have made numerous improvements that not only improve efficiency in the program but also protect the interests of beneficiaries and the Medicare Trust Fund.” [Copyright 2013 Kaiser Health News]