Medicare Secondary Payer Act

The Medicare Secondary Payer Act (the “MSP Act”) was enacted in 1980 to reduce the costs of Medicare. More than one insurer is often liable for an individual’s medical costs. For example, a car accident victim who is covered by Medicare may also be entitled to recover medical expenses under both his own health insurance and the tortfeasor’s car insurance policies. To address this overlap in coverage, the MSP Act allocates liability between Medicare and other insurers. The MSP Act uses the term “primary plan” to describe entities with a primary responsibility to pay and defines the term broadly to include “an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance.” 42 U.S.C. § 1395y(b)(2)(A). Before the MSP Act went into effect, “Medicare often acted as a primary insurer; that is, Medicare paid for enrollees’ medical expenses, even when an enrollee carried other insurance that covered the same costs, or when a third party had an obligation to pay for them.” As its name suggests, the Medicare Secondary Payer Act was enacted to ensure Medicare acts as a secondary payer. “This means that if payment for covered services has been or is reasonably expected to be made by someone else, The MSP Act prohibits Medicare from paying for items or services if “payment has been made or can reasonably be expected to be made under . . . an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” But if a primary plan “has not made or cannot reasonably be expected to make payment with respect to [the] item or service promptly,” Medicare may make the initial payment, “conditioned on reimbursement” from the primary plan. A primary plan must reimburse Medicare for these conditional payments “if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” This mandate is known as the “demonstrated responsibility requirement.” A primary plan’s responsibility for payment may be shown by: a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. To facilitate recovery of conditional payments, Congress created government and private causes of action for double damages against primary plans that fail to provide primary payment or appropriate reimbursement. There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with [its primary payment obligations].Id. § 1395y(b)(3)(A). The 11th Circuit Court of Appeals has held that the demonstrated responsibility requirement is a prerequisite to pursuing this private cause of action—a primary plan’s responsibility to pay or reimburse Medicare must have been demonstrated in some way before a private plaintiff can sue.