Medicare Secondary Payer Act

The Medicare Secondary Payer Act is a federal law that makes Medicare a secondary payer when another source, such as a liability settlement, workers' compensation or other insurance, is responsible for a person's medical bills. When Medicare pays first, it must be repaid from the later recovery.

Origin

Congress passed the first secondary payer provisions in 1980 to reduce Medicare costs, and has expanded them since. A 2007 law added mandatory reporting, requiring insurers, self-insured defendants and other payers to report settlements with Medicare beneficiaries.

Significance in Asbestos Context

Many people with asbestos disease are on Medicare, either because of age or because of SSDI, and Medicare usually pays for their diagnosis and treatment while claims are pending. Those payments are called conditional payments. When a lawsuit settles, Medicare is entitled to be reimbursed for the conditional payments related to the asbestos disease, reduced by a share of the attorney's fees and costs. The law gives Medicare strong tools, including the right to recover from the beneficiary, the lawyer or the paying party, and to seek double damages in some cases, so lawyers resolve Medicare's claim before distributing settlement money. Defendants and asbestos trusts commonly ask for Medicare information and require assurances that Medicare's interests are handled. The process involves requesting a statement of conditional payments, disputing charges unrelated to the asbestos disease, and obtaining a final demand. It can delay a final payout, but it protects the claimant from later collection efforts.

Example Sentence

Before the settlement money was released, the firm obtained Medicare's final demand under the Medicare Secondary Payer Act and repaid the conditional payments for his lung cancer treatment.

Related Terms

Medicare Set-Aside, Lien, Subrogation, Collateral Source Rule, Social Security Disability Insurance (SSDI), Release

Notes

• Tell your lawyer if you are on Medicare, including Medicare Advantage or a Part D plan; each can have repayment rights.
• Keep your Medicare Summary Notices; they help identify charges that are not related to the asbestos disease.
• Expect some delay between a settlement and final payment while Medicare's claim is resolved.