Liability Payments in Medicare Cases

Question
A driver in NY was involved in an accident. His hospital bill was mistakenly paid by Medicare (instead of No-fault). The driver eventually settled his bodily injury liability claim against a third party. Does Medicare have any reimbursement claim against the settlement for the money it paid out since in NY the third party in a car accident pays only for pain and suffering and not for medical bills?

New York Attorney

Answer
Yes. Medicare has a right to recover for pain and suffering and other nonmedical services. The only situation in which Medicare recognizes liability payments to nonmedical losses is when payment is based on a court order on the merits of the case. Since liability payments are considered to have been made "with respect to" medical services related to the injury event when the settlement does not expressly include an amount for medical expenses and non-medical expenses.

Federal law takes precedence over State law and private contracts. Medicare is the secondary payer regardless of state law or plan provisions. These Federal requirements are found in Section 1862(b) of the Social Security Act {42 USC Section 1395y(b)(5).

Section 42 CFR 411.23 states that a beneficiary must cooperate in any action taken by the Centers for Medicare and Medicaid Services in recovering conditional payments. Failure to do so or not protecting the Medicare program during and after settlement negotiations may result in CMS taking action against the beneficiary to collect the mistaken payment.

CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24. Medicare is a claimant against the no-fault insurer to the extent that Medicare has made payments to or on behalf of the beneficiary for services related to claims against the no-fault insurer.

Mary Skinner