Medicare Advantage Plan Language

Question
This is a follow-up question seeking clarification of a response Michael D. Russell of your office was kind enough to provide on August 30, 2010: Client is enrolled in a Medicare Advantage / Medicare Replacement Plan. Subrogation / Reimbursement is sought for all claim payments made by the private insurer. Is it fair then to say that pursuant to, the private insurer only retains a statutory right to reimbursement of those claims actually paid by Medicare? If so, how is one able to distinguish between those claims actually paid by Medicare and those paid by the private insurer?

Notes:
My concern is that private insurers (and their subrogation contractors) are wrongfully relying on the federal statute as a basis for seeking reimbursement of claims that are not subject to subrogation / reimbursement in New York.

New York Attorney

Answer
Thank you for the question. If the plan is truly a Medicare Advantage Plan then the private carrier is responsible for making all payments. A Medicare entitled individual chooses to opt into a Medicare Advantage plan. Private insurance carriers, who participate in the MA program, contract with CMS to administer Medicare benefits. The Federal Government pays for MA coverage on a monthly basis (42 USC 1395w-23) and then annually determines the "per capita" rates for these payments (42 USC 1395mm). However Medicare does not directly make payment for a person's care. Thus a person on MA does not receive any payments from Medicare. NOTE THAT THIS IS NOT THE CASE WITH SUPPLEMENTAL POLICIES. SUPPLEMENTAL POLICIES ACT IN CONCERT WITH MEDICARE AND ARE NOTHING MORE THAN INSURANCE POLICIES WHOSE RIGHT TO REIMBURSEMENT WOULD BE BARRED BY STATE LAW.

The only exception where both the private carrier and Medicare would make payments is a situation where an individual was on Medicare for some period and then opted into a Medicare Advantage program. In such a case be sure that you compare the payments made by both entities as we have seen private carriers attempt to claim identical payments.

So can NY GOL Section 5-335 bar a MA plan's right to reimbursement? Well it depends on the authority cited to substantiate their right. If the MA plan merely points to contractual language then arguably their claim would be barred. However if the basis for their claim is 42 CFR 422.108(f) then arguably they are asserting a statutory right. The overall issue of MA plans and the applicability of state law is hotly contested and I would expect some case law on the matter in the near future.

Michael D. Russell, Esq.