Supplemental Medicare Plans

Question
I understand Medicare supplements may bolster their ability to obtain reimbursement by including certain language in their plan. Since the NY GOL 5-335 prevents settling insured parties from derogating any of their contractual obligations, does this new law prevent private Medicare Supplemental programs from recovering?

Answer
If the plan is a Medicare supplement (picks up where Medicare falls short), then it is nothing more than an insurance policy that has no direct affiliation with Medicare and none of the rights of Medicare. A supplemental plan is resolved just like any private health insurance plan- it's all based on the plan language and state law. Thus a state anti-subrogation law like NY's 5-335 which prevents subrogation/reimbursement unless the provider has a statutory right, would be applied a Medicare supplemental plan. Such providers may argue that they have the same rights as Medicare but if your client is receiving traditional Medicare (parts A & B) and this supplemental policy is filling the gaps then there is no basis to such an argument.

Please note that there supplemental plans need to differentiated from Medicare Advantage Plans (MA Plans). A MA plan is established under Part C of Title XVIII of the Social Security Act.[1] The MA program allows eligible individuals to elect to receive Medicare benefits through enrollment in private insurance plans. For individuals enrolled in MA plans, the federal government pays for all or most of the premiums for the insurance in lieu of paying Medicare benefits directly to medical providers as under the 'regular' Medicare arrangement. Private insurance carriers, who participate in the MA program, contract with CMS to administer Medicare benefits. Whereas supplemental plans do not have the same rights of recovery as Medicare, MA plans may have the same rights to recover as Medicare and thus would not be subject to state law.

To differentiate between the two types of plans it is necessary to examine the policy or EOB language of a plan and to look at what Medicare has actually paid. I hope you found this response helpful and please let us know if you have any additional questions.

Michael D. Russell, Esq.