Medicare Secondary Payer or “MSP” refers to circumstances where another entity, usually an insurer, is contractually obligated to pay for covered services before Medicare does, and must do so without regard to a patient’s Medicare entitlement. Since the early 1980s, Centers for Medicare & Medicaid Services (“CMS”) has been empowered to recover any overpayments from the entities which are primarily responsible for payments to Medicare beneficiaries. In order to facilitate these recoveries, Congress imposed reporting requirements beginning in 2009 for “Responsible Reporting Entities” or “RREs.” Notably, RREs include not only insurers, but also companies that self insure their liabilities or health care plans.
Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA Section 111), 42 U.S.C. 1395y(b)(7)&(b)(8), added mandatory reporting requirements for insurers with respect to Medicare beneficiaries who have coverage under group health plan (“GHP”) arrangements, as well as Medicare beneficiaries who receive settlements, judgments, awards or other payments from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation. See http://www.cms.hhs.gov/MandatoryInsRep/ (herein “User Guide”).
In general, Medicare is a secondary payer to GHPs for Medicare beneficiaries who: (1) are age 65 and older and who have GHP coverage on the basis of their own or their spouse’s current employment with an employer that has at least 20 employees; (2) are younger than 65 and disabled and who have GHP coverage on the basis of their own or a family member’s current employment with an employer having at least 100 employees; or (3) have End Stage Renal Disease (“ESRD”) and who have GHP coverage on any basis; in this instance, Medicare is secondary for a 30-month “coordination period”. As noted above, Medicare is also a secondary payer with respect to certain types of “non-GHP” insurance coverage — liability insurance (including self-insurance), no-fault insurance and workers’ compensation.
Self-insured business entities, including those with a significant self-insured retention under an excess coverage or reinsurance arrangement, will satisfy the definition of Section 111 “self-insurance” and are thus RREs for purposes of Section 111’s reporting requirements, in the event of a lawsuit by a Medicare-eligible plaintiff. In that event, the defendant business should seek advice concerning the reporting requirements of Section 111, as amplified by the User Guide, etc., before making a settlement with the plaintiff, because information about the Medicare recipient will have to be reported to the CMS.