A Medicare Supplement Question

Posted by Elizabeth Vish

Question:
I ran across your site while researching a Medicare Supplement question and wondered if you might be kind enough to help. Here's the question:

Does Medicare's Super Lien subrogation powers go to supplemental coverage as well? The state that I am referring to is Missouri, a non-subrogation state. If not, are there any different or other special lien subrogations for these policies? If not, do normal state lien and subrogation rules apply?

Thank you.
Missouri Attorney

Answer:
Medicare supplemental plans (Part C, Medicare HMOs) “may” have the same right of recovery of traditional federal Medicare, but they must have the “magic” language in their plan. See Care Choices HMO v. Engstrom 330 F3d 786 (6th 2003) saying these plans can create the same reimbursement right as Federal Medicare has IF it is in their plan agreement with the Medicare beneficiary.

There continues to be a debate as to whether state law (defenses) applies (b/c these clearly aren’t ERISA plans) – the plan will argue that state law is preempted if they have contractual reimbursement language since the language (if the plans included it) gives the plan a reimbursement right arising out of federal law (42 U.S.C. §1395mm(e)(4)).

Surprisingly, we find that about 50% of the Medicare Advantage Plans we review don’t have the contractual reimbursement language in them. The reason is that they originally thought they could get by with out it and still enjoy the reimbursement right arising out of federal law... Then, Engstrom comes down and they are caught in a situation where the court is saying, "No, you only get the strength of the federal reimbursement right" IF and only IF you included reimbursement language in your plan documents". So, you might be surprised that some of the older plans (which may have covered your clients at the date of injury) did not have the right language.I hope this helps. I have also copied, our in house ERISA/private lien subject matter expert, who can provide additional guidance.

My best,
Libby